Operations

The materials used in the products manufactured consist ~~primarily~~ of a variety of plastic and synthetic films, paper, metal and metal foil, cloth, fiberglass, inks, dyes, adhesives, pigments, natural and synthetic rubber, organic chemicals, polymers, and solvents for consumable identification products in addition to electronic components, molded parts and sub-assemblies for printing systems. The Company operates a coating facility that manufactures bulk rolls of label stock for internal and external customers. In addition, the Company purchases finished products for resale.

The Company purchases raw materials, components and finished products from many suppliers. Overall, ~~the Company is~~we are not dependent upon any single supplier for ~~its~~our most critical base materials or components; however, ~~the Company has~~we have chosen in certain situations to sole source, or limit the sources of materials, components, or finished items for design or cost reasons. As a result, disruptions in supply could have an impact on results for a period of time, but we believe any disruptions would simply require qualification of new suppliers and the disruption would be modest. In certain instances, the qualification process could be more costly or take a longer period of time and in rare circumstances, such as a global shortage of critical materials or components, the financial impact could be ~~significant.~~material. The Company currently operates 5042 manufacturing orand distribution facilities globally.

The Company carries working capital mainly related to accounts receivable and inventory. Inventory consists of raw materials, work in process and finished goods. Generally, custom products are made to order while an on-hand quantity of stock product is maintained to provide customers with timely delivery. Normal and customary payment terms range from net 30 to 90 days from date of invoice and varies by geographies.

The Company has a broad customer base, and no individual customer is 5%10% or more of total net sales.

Average delivery time for customer orders varies from same-day delivery to one month, depending on the type of product, customer request, and whether the product is stock or custom-designed and manufactured. The Company's backlog is not material, does not provide significant visibility for future business and is not pertinent to an understanding of the business.

Environment

Compliance with federal, state and local environmental protection laws during fiscal ~~2014~~2016 did not have a material impact on the Company’s business, financial condition or results of operations.

Employees

As of July 31, ~~2014~~2016, the Company employed approximately ~~7,200~~6,500 individuals. Brady has never experienced a material work stoppage due to a labor dispute and considers its relations with employees to be good.

(d) Financial Information About Foreign and Domestic Operations and Export Sales

The information required by this Item is provided in Note 98 of the Notes to Consolidated Financial Statements contained in Item 8 — Financial Statements and Supplementary Data.

(e) Information Available on the Internet

The Company’s Corporate Internet address is http://www.bradycorp.com. The Company makes available, free of charge, on or through its Internet website copies of its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to all such reports as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. The Company is not including the information contained on or available through its website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.

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Item 1A. Risk Factors

Investors should carefully consider the risks set forth below and all other information contained in this report and other documents we file with the SEC. The risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties facing us. Our business is also subject to general risk and uncertainties that affect many other companies, such as market conditions, geopolitical events, changes in laws or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected economic or business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business ~~including our results of operations, liquidity~~ and financial ~~conditions.~~results.

Business Risks

Failure to successfully implement our strategy in the Healthcare sector, or if successfully implemented, failure to realize the benefits expected from the strategy, may adversely affect our business, sales, results of operations, cash flow and liquidity.

In December 2012, Brady acquired Precision Dynamics Corporation (“PDC”) to establish a base for our healthcare strategy. In fiscal 2014, PDC represented 12.5% of our total sales from continuing operations. Sales declined approximately 2% at PDC in fiscal 2014 and the healthcare industry continues to be in a state of change with the uncertainty relating to government healthcare reforms. During fiscal 2014, we recorded impairment charges of $148.6 million, primarily related to the goodwill and other intangible assets in the PeopleID reporting unit, which consists primarily of the PDC business. The Company’s strategy to grow this business includes: key account focus offering customers a broad range of products to meet their complete identification needs, development and launch of proprietary new products, full continuum of care in the healthcare industry, and international sales penetration. There is a risk that the Company will not be able to return the business to growth and grow the business consistently, the strategy will fail, or the business will face increased levels of competition and pricing pressure. If these risks materialize, their effects could adversely impact our business, sales, results of operations, cash flow and liquidity.

Failure to successfully implement our Workplace Safety strategy, or if successfully implemented, failure to realize the benefits expected from the strategy, may adversely affect our business, sales, results of operations, cash flow and liquidity.

~~In fiscal 2014, the Workplace Safety segment represented~~ ~~32.6%~~ of our total sales from continuing operations. Beginning in the second quarter of fiscal 2012, the WPS segment experienced deterioration in sales and profits due to a reduction in direct catalog mailings, increased e-commerce competition, and pricing adjustments. While traditional direct marketing channels such as catalogs are important means of selling WPS products, an increasing number of customers are purchasing products on the Internet. The Company's strategy to grow this business includes: increased volume of catalog mailings, expanded e-commerce presence, further developed pricing capabilities, growing the customer base, and the expansion of products offered. The rate of sales decline in fiscal 2014 lessened each quarter and the segment returned to positive organic growth of 0.9% in the fourth quarter of fiscal 2014 as the strategy began to take hold. There is a risk that the Company will not continue to successfully implement this strategy, or if successfully implemented, not realize its expected benefits, due to the continued levels of increased competition and pricing pressure brought about by the Internet. There is also a risk that the Company may not be able to permanently reverse the downward trends in this business and return the segment to historic levels of sales and profits. If these risks materialize, their effects could adversely impact our business, sales, results of operations, cash flow and liquidity.

Failure to compete effectively or ~~remain competitive~~to successfully execute our strategy may have a negative impact on our business ~~sales, results of operations, cash flow~~ and ~~liquidity.~~financial results.

We actively compete with companies that produce and market the same or similar products, and in some instances, with companies that sell different products that are designed for the same end user. ~~Additionally, we continue to face competition through the Internet in our entire business.~~ Competition may force us to reduce prices or incur additional costs to remain competitive. We compete on the basis of price, customer support, product innovation, product offering, product quality, expertise, production capabilities, and for multinational customers, our global footprint. Present or future competitors may develop and introduce new and enhanced products, offer products based on alternative technologies and processes,, accept lower profit, have greater financial, technical or other resources, or have lower production costs or other pricing advantages. Any of these could put us at a disadvantage by threatening our share of sales or reducing our profit margins, which could adversely impact our ~~results of operations, cash flow~~business and ~~liquidity.~~financial results. Additionally, throughout our global business, distributors and customers may seek lower cost sourcing opportunities, which could result in a loss of business that may adversely impact our business and financial results.

Our strategy is to expand into higher-growth adjacent product categories and markets with technologically advanced new products, as well as to grow our sales ~~results~~generated through the digital channel. While traditional direct marketing channels such as catalogs are an important means of ~~operations, cash flow and liquidity.~~

~~Failure~~selling our products, an increasing number of customers are purchasing products on the internet. Our strategy to increase sales through the digital channel is an investment in our internet sales capabilities. There is a risk that we may not continue to successfully ~~complete~~implement this strategy, or if successfully implemented, not realize its expected benefits due to the continued levels of increased competition and pricing pressure brought about by the internet. Our failure to successfully implement our ~~facility consolidation plans may~~strategy could adversely impact our business ~~sales, results~~and financial results.

Failure to develop technologically advanced products that meet customer demands, including price expectations, could adversely impact our business and financial results.

Development of ~~operations, cash flow~~technologically advanced new products is targeted as a driver of our organic growth and ~~liquidity.~~

profitability. Technology is changing rapidly and our competitors are innovating quickly. If we do not keep pace with developing technologically advanced products, we risk product commoditization, deterioration of the value of our brand, and reduced ability to effectively compete. We must continue to ~~implement measures~~develop innovative products, as well as acquire and retain the necessary intellectual property rights in these products. If we fail to ~~reduce~~make innovations, or we launch products with quality problems, or if customers do not accept our ~~cost structure, simplify~~products, then our business ~~structure, and standardize our processes. In fiscal 2013, we incurred approximately $26 million in restructuring costs associated with the reorganization of the~~

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Company along global product lines, which included the standardization of business systems and a restructuring of the global workforce. At the end of fiscal 2013 and into fiscal 2014, our focus turned to the consolidation of facilities, which resulted in approximately $15 million of restructuring expense in fiscal 2014. Facility consolidation activities will extend into fiscal 2015 as we slowed certain consolidation activities to ensure the highest levels of quality and delivery throughout the transition. Successfully completing the facilities consolidations is critical to our future competitiveness and to improve profitability. Facility consolidations will result in a higher concentration of operations in certain locations. Risks related to facility consolidations include poor execution impacting customer service, customer acceptance of these changes, inability to implement standard processes and systems, resource allocation among competing priorities, employee disruption and turnover, inability to manufacture and supply products in the event of a material casualty event at one of our principal facilities, and additional or higher than anticipated charges related to these actions. These actions to reduce our cost structure and the charges related to these actions could have a material adverse impact on our business, sales, results of operations, cash flow and liquidity.

~~Deterioration of or instability in the global economy~~ and financial ~~markets may adversely affect our business, sales, results of operations, cash flow and liquidity.~~

~~Our business and operating~~ results could be affected by global economic conditions. In fiscal 2013, our business was negatively impacted by the weak economy in Europe, Australia and Brazil. In fiscal 2014, Brazil continued to weaken. When global economic conditions deteriorate or economic uncertainty continues, customers and potential customers may experience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products. Our sensitivity to economic cycles and any related fluctuations in the businesses of our customers or potential customers could have a material adverse impact on our business, sales, results of operations, cash flow and liquidity.adversely affected.

Our failure or the failure of third-party service providers to protect our sites, networks and systems against security breaches, or otherwise to protect our confidential information, ~~may substantially harm~~could adversely affect our business ~~sales, results of operations, cash flow~~ and ~~liquidity.~~financial results.

Our business systems collect, maintain, transmit and store data about our customers, vendors and others, including credit card information and personally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers that store, process and transmit proprietary, personal and confidential information on our behalf. We rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and sensitive information, including credit card numbers. Our security measures, and those of our third-party service providers, may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our sites, networks and systems or that we or our third-party service providers otherwise maintain. We and our service providers may not have the resources or technical sophistication to anticipate or prevent all types of attacks, and techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers. In addition, security breaches can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships. Although we maintain privacy, data breach and network security liability insurance, we cannot be certain that our coverage will be adequate ~~for~~or cover liabilities actually incurred, or that insurance will continue to be available to us on economically reasonable

terms, or at all. Any compromise or breach of our security measures, or those of our third-party service providers, could adversely impact our ability to conduct business, violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity, and a loss of confidence in our security measures, which could have an adverse and material effect on our business and financial results.

Deterioration of or instability in the global economy and financial markets may adversely affect our business and financial results.

Our business and operating results could be affected by global economic conditions. When global economic conditions deteriorate or economic uncertainty continues, customers and potential customers may experience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products. Our sensitivity to economic cycles and any related fluctuations in the businesses of our customers or potential customers could have a material adverse impact on our business and financial results.

Demand for our products may be adversely affected by numerous factors, some of which we cannot predict or control. This could adversely affect our business and financial results.

Numerous factors may affect the demand for our products, including:

•Future financial performance of major markets served.

•Consolidation in the marketplace allowing competitors and customers to be more efficient and more price competitive.

•Future competitors entering the marketplace.

•Decreasing product life cycles.

•Changes in customer preferences.

If any of these factors occur, the demand for our products could suffer, and this could adversely impact our business and financial results.

The loss of large customers could adversely affect our business and financial results.

While we have a broad customer base and no individual customer represents 10% or more of total sales, we conduct business with several large customers and distribution companies. Our dependence on these customers makes relationships with them important. We cannot guarantee that these relationships will be retained in the future. Because these large customers account for a significant portion of sales, they may possess a greater capacity to negotiate reduced prices. If we are unable to provide products to our customers at the quality and prices acceptable to them, some of our customers may shift their business to competitors or may substitute another manufacturer's products. If one of our large customers consolidates, is acquired, or loses market share, the result of that event may have an adverse impact on our business. The loss of or reduction of business from one or more of these large customers could have a material adverse impact on our business and financial results.

We depend on key employees and the loss of these individuals could have an adverse effect on our business and financial results.

Our success depends to a large extent upon the continued services of our key executives, managers and other skilled employees. We cannot ensure that we will be able to retain our key executives, managers and employees. The departure of key personnel without adequate replacement could disrupt our business operations. Additionally, we need qualified managers and skilled employees with technical and industry experience to operate our business successfully. If we are unable to attract and retain qualified individuals or our costs to do so increase significantly, our business and financial results could be materially adversely affected.

Failure to execute facility consolidations and maintain acceptable operational service metrics may adversely impact our business and financial results.

In prior fiscal years, we incurred unplanned operating costs related to the consolidation of certain facilities and we experienced a deterioration in key customer service metrics. We continually assess our global footprint and expect to implement additional measures to reduce our cost structure, simplify our business, and standardize our processes, and these actions could result in unplanned operating costs and business disruptions in the future. If these risks materialize, or if we fail to successfully address these inefficiencies, their effects could adversely impact our business and financial results.

We are a global company headquartered in the United States. We are subject to extensive regulations by U.S. and non-U.S. governmental and self-regulatory entities at various levels of the governing bodies. Failure to comply with laws and regulations could adversely affect our business and financial results.

Our operations are subject to the risks of doing business domestically and globally, including the following:

Delays or disruptions in product deliveries and payments in connection with international manufacturing and sales.

Political and economic instability and disruptions.

Imposition of duties and tariffs.

Import, export and economic sanction laws.

Current and changing governmental policies, regulatory, and business environments.

Disadvantages from competing against companies from countries that are not subject to U.S. laws and regulations including the Foreign Corrupt Practices Act.

Local labor market conditions.

Regulations relating to climate change, air emissions, wastewater discharges, handling and disposal of hazardous materials and wastes.

Regulations relating to health, safety and the protection of the environment.

Specific country regulations where our products are manufactured or sold.

Laws and regulations that apply to companies doing business with the government, including audit requirements of government contracts related to procurement integrity, export control, employment practices, and the accuracy of records and recording of costs.

Further, these laws and regulations are constantly evolving and it is impossible to accurately predict the effect they may have upon our business and financial results.

We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents or business partners that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering and data privacy. Any such improper actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties and related lawsuits by shareholders and others, could damage our reputation, and could adversely impact our business and financial results.

We are subject to litigation, including product liability claims, that could adversely impact our business, financial results, and reputation.

We are a party to litigation that arises in the normal course of our business operations, including product warranty, product liability and recall (strict liability and negligence) claims, patent and trademark matters, contract disputes and environmental, employment and other litigation matters. We face an inherent business risk of exposure to product liability and warranty claims in the event that the use of our products is alleged to have resulted in injury or other damage. In addition, we face an inherent risk that our competitors will allege that aspects of our products infringe their intellectual property or that our intellectual property is invalid, such that we could be prevented from manufacturing and selling our products or prevented from stopping others from manufacturing and selling competing products. To date, we have not incurred material costs related to these types of claims. However, while we currently maintain insurance coverage in amounts that we believe are adequate, we cannot be sure that we will be able to maintain this insurance on acceptable terms or that this insurance will provide sufficient coverage against potential liabilities that may arise. Any claims brought against us, with or without merit, may have an adverse effect on our business, financial results and reputation as a result of potential adverse outcomes, the expenses associated with defending such claims, the diversion of our management’s resources and time and the potential adverse effect to our business and financial results.

Divestitures, contingent liabilities from divested businesses and the failure to properly identify, integrate and grow acquired companies could adversely affect our business and financial results.

We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan, or that are not achieving the desired return on investment. For example, over the last three fiscal years, we divested our Asian Die-Cut and European Die-Cut businesses. Divestitures pose risks and challenges that could negatively impact our business. For example, when we decide to sell a business or assets, we may be unable to do so on satisfactory terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale is typically subject to pre-closing conditions which may not be satisfied. In addition, the impact of the divestiture on our revenue and net earnings may be larger than projected, which could distract management, and disputes may arise with buyers. Also, we have retained responsibility for and have agreed to indemnify buyers against certain contingent liabilities related to a number of businesses that we have sold.

The resolution of these contingencies has not had a material adverse impact on our financial results, but we cannot be certain that this favorable pattern will continue.

Our historical growth has included acquisitions, and our future growth strategy may include acquisition opportunities. If our future growth strategy includes a focus on acquisitions, we may not be able to identify acquisition targets or successfully complete acquisitions due to the absence of quality companies in our target markets, economic conditions, or price expectations from sellers. Acquisitions place significant demands on management, operational, and financial resources. Recent and future acquisitions will require integration of operations, ~~cash flow~~sales and ~~liquidity.~~marketing, information technology, and administrative operations, which could decrease the time available to focus on our other growth strategies. We cannot assure that we will be able to successfully integrate acquisitions, that these acquisitions will operate profitably, or that we will be able to achieve the desired sales growth or operational success. Our business and financial results could be adversely affected if we do not successfully integrate the newly acquired businesses, or if our other businesses suffer due to the increased focus on the acquired businesses.

Financial/Ownership Risks

The global nature of our business exposes us to foreign currency fluctuations that could adversely affect ~~sales, results of operations, cash flow,~~our business and ~~liquidity.~~financial results.

Approximately ~~50%~~45% of our sales are derived outside the United States. Sales and purchases in currencies other than the U.S. dollar expose us to fluctuations in foreign currencies relative to the U.S. dollar, and may adversely affect our financial statements. Increased strength of the U.S. dollar will increase the effective price of our products sold in currencies other than U.S. dollars into other countries. Decreased strength of the U.S. dollar could adversely affect the cost of materials, products, and services purchased overseas. Our sales and expenses are translated into U.S. dollars for reporting purposes, and the strengthening or weakening of the U.S. dollar could result in unfavorable translation ~~effects.~~effects, which occurred during the fiscal years 2015 and 2016. In addition, certain of our subsidiaries may invoice customers in a currency other than its functional currency, which could result in unfavorable translation effects on ~~sales, results of operations, cash flow and liquidity.~~

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~~Failure to develop new products or gain acceptance of new products could adversely impact our sales, results of operations, cash flow and liquidity.~~

Development of proprietary products is a driver of core growth and reasonable gross profit margins both currently and in the future, particularly within our ID Solutions segment. Therefore, we must continue to develop new and innovative products, as well as acquire and retain the necessary intellectual property rights in these products. We continue to invest in the development and marketing of new products. These expenditures do not always result in products that will be accepted by our customers. Failure to develop successful new products may also cause customers to buy from a competitor or may cause us to lower our prices in order to compete. If we fail to make innovations, if we launch products with quality problems, or if customers do not accept our new products, then our sales, results of operations, cash flows, and liquidity could be adversely affected.

~~Inability to identify, complete, and integrate acquisitions and grow acquired companies, may adversely impact our sales, results of operations, cash flow and liquidity.~~

Our historical growth has included acquisitions, and our future growth strategy may include acquisition opportunities. For example, in fiscal 2013 the Company acquired PDC, a manufacturer of identification products primarily for the healthcare sector, for $301.2 million. We have not met the sales growth synergies identified at the time of the PDC acquisition, which, in addition to other factors, resulted in the Company recording impairment charges of $148.6 million during fiscal 2014, primarily related to the goodwill and other intangible assets in the PeopleID reporting unit, which consists primarily of the PDC business. Failure to achieve these synergies for PDC or other acquired companies may adversely impact our sales, results of operations, cash flow and liquidity. We may not focus on acquisitions as part of our growth strategy, or if we do, we may not be able to identify acquisition targets or successfully complete acquisitions in the future due to the absence of quality companies in our target markets, economic conditions, or price expectations from sellers. If we do not complete additional acquisitions, our growth may be limited.

Acquisitions place significant demands on management, operational, and financial resources. Recent and future acquisitions will require integration of operations, sales and marketing, information technology, finance, and administrative operations, which could decrease the time available to focus on our other growth strategies. We cannot assure that we will be able to successfully integrate acquisitions, that these acquisitions will operate profitably, or that we will be able to achieve the desired sales growth or operational success. Our sales, results of operations, cash flow, and liquidity could be adversely affected if we do not successfully integrate the newly acquired businesses, or if our other businesses suffer due to the increased focus on the acquired businesses.

Demand for our products may be adversely affected by numerous factors, some of which we cannot predict or control. This could adversely affect our sales, results of operations, cash flow and liquidity.

~~Numerous factors may affect the demand for our products, including:~~

•~~Future financial performance of major markets served~~

•~~Consolidation in the marketplace, allowing competitors and customers to be more efficient and more price competitive~~

•~~Future competitors entering the marketplace~~

~~Decreasing product life cycles~~

~~Changes in customer preferences~~

~~If any of these factors occur, the demand for our products could suffer, and this could adversely impact our sales, results of operations, cash flows and liquidity.~~

~~A large customer loss could significantly affect sales, results of operations, cash flow, and liquidity.~~

While we have a broad customer base and no individual customer represents 5% or more of total sales, we conduct business with several large customers and distribution companies. Our dependence on these customers makes relationships with them important. We cannot guarantee that these relationships will be retained in the future. Because these large customers account for a significant portion of sales, they may possess a greater capacity to negotiate reduced prices. If we are unable to provide products to our customers at the quality and prices acceptable to them, some of our customers may shift their business to competitors or may substitute another manufacturer's products. If one of the large customers consolidates, is acquired, or loses market share, the result of that event may have an adverse impact on our business. The loss of or reduction of business from one or more of these large customers could have a material adverse impact on our sales, results of operations, cash flows, and liquidity.

~~We depend on key employees and the loss of these individuals could have an adverse effect on our operations.~~

Our success depends to a large extent upon the continued services of our key executives, managers and other skilled employees. Over the past two fiscal years, we have experienced the loss of several key executives. We cannot ensure that we will be able to retain our key executives, managers and employees. The departure of our key personnel without adequate replacement could disrupt our business operations. Additionally, we need qualified managers and skilled employees with technical and industry

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experience to operate our business successfully. If we are unable to attract and retain qualified individuals or our costs to do so increase significantly, our operations could be materially adversely affected.

~~Divestitures could negatively impact~~ our business and ~~contingent liabilities from divested businesses could adversely affect our results of operations, cash flow and liquidity.~~

We continually assess the strategic fit of our existing businesses and may divest businesses that we determine do not align with our strategic plan, or that are not achieving the desired return on investment. For example, over the last three fiscal years, we have divested our Etimark, Brady Medical, and Varitronics businesses, and our Asia Die-Cut and Balkhausen Die-Cut businesses. Divestitures pose risks and challenges that could negatively impact our business. For example, when we decide to sell a business or assets, we may be unable to do so on satisfactory terms and within our anticipated time-frame, and even after reaching a definitive agreement to sell a business, the sale is typically subject to satisfaction of pre-closing conditions which may not be satisfied. In addition, the impact of the divestiture on our revenue and net earnings may be larger than projected, which could distract management, and disputes may arise with buyers. Also, we have retained responsibility for and have agreed to indemnify buyers against some contingent liabilities related to a number of businesses that we have recently sold. The resolution of these contingencies has not had a material adverse impact on our results of operations, cash flow and liquidity, but we cannot be certain that this favorable pattern will continue.

~~Our operations are subject to the risks of doing business domestically and globally, including the following:~~

~~Delays or disruptions in product deliveries and payments in connection with international manufacturing and sales~~

~~Political and economic instability and disruptions~~

~~Imposition of duties and tariffs~~

~~Import, export and economic sanction laws~~

~~Current and changing governmental policies, regulatory, and business environments~~

~~Disadvantages from competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act~~

~~Local labor market conditions~~

~~Regulations relating to climate change, air emissions, wastewater discharges, handling and disposal of hazardous materials and wastes~~

~~Regulations relating to health, safety and the protection of the environment~~

~~Specific country regulations where our products are manufactured or sold~~

~~Further~~, ~~these laws and regulations are constantly evolving and it is impossible to accurately predict the effect they may have upon our sales, results of operations, cash flows and liquidity.~~

We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents or business partners that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering and data privacy. Any such improper actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions, could lead to substantial civil or criminal, monetary and non-monetary penalties and related shareholder lawsuits, could damage our reputation, and could adversely impact our~~results of operations, cash flow and liquidity.~~

~~Product liability claims could adversely impact our~~ financial ~~condition, results of operations, cash flows, and reputation.~~

Our business exposes us to potential product liability risk, as well as warranty and recall claims that are inherent in the design, manufacture, sale and use of our products. We sell products in industries such as aerospace, defense, healthcare, chemical, and energy where the impact of product liability risk is high. To date, we have not incurred material costs related to these types of claims. However, in the event our products actually or allegedly fail to perform as expected and we are subject to such claims above the amount of insurance coverage, outside the scope of our coverage, or for which we do not have coverage, our financial condition, results of operations and cash flows, as well as our reputation, could be materially and adversely affected.

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~~Financial/Ownership Risks~~results.

Failure to execute our strategies could result in impairment of goodwill or other intangible assets, which may negatively impact earnings and profitability.

We have goodwill of $~~515.0~~$429.9 million and other intangible assets of ~~$91.0~~$59.8 million as of July 31, ~~2014,~~2016, which represents ~~48.3%~~46.9% of our total assets. ~~During~~In fiscal years 2014 weand 2015, the Company recorded impairment charges of ~~$148.6~~approximately $195 million~~, primarily~~ related to the goodwill and other intangible assets ~~in the PeopleID reporting unit. During fiscal 2013, we recorded impairment charges~~ of ~~$204.4 million~~ ~~primarily related to goodwill in the WPS Americas and IDS APAC~~multiple reporting units. We evaluate goodwill and other intangible assets for impairment on an annual basis, or more frequently if impairment indicators are present, based upon the fair value of each ~~reporting unit. We assess the impairment of other intangible assets on an annual basis, or more frequently if impairment indicators are present, based upon the expected future cash flows of the~~ respective ~~assets.~~asset. These valuations include management's estimates of sales, profitability, cash flow generation, capital structure, cost of debt, interest rates, capital expenditures, and other assumptions. Significant negative industry or economic trends, disruptions to our business, inability to achieve sales projections or cost savings, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations. If the estimated fair value of our ~~reporting units changes~~goodwill or other intangible assets change in future periods, we may be required to record an impairment charge, ~~related to goodwill or other intangible assets,~~ which would reduce the earnings ~~and profit~~ in such ~~period.~~period and potentially future earnings.

Changes in tax legislation or tax rates could adversely affect results of operations and financial statements. Additionally, audits by taxing authorities could result in tax payments for prior periods.

We are subject to income taxes in the U.S. and in many non-U.S. jurisdictions. As such, our earnings are subject to risk due to changing tax laws and tax rates around the world. At any point in time, there are a number of tax proposals at various stages of legislation throughout the globe. While it is impossible for us to predict whether some or all of these proposals will be enacted, it likely would have an impact on our earnings.

Our tax filings are subject to audit by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If these audits result in payments or assessments that differ from our reserves, our future net earnings may be adversely impacted.

We review the probability of the realization of our deferred tax assets on a quarterly basis based on forecasts of taxable income in both the U.S. and foreign jurisdictions. As part of this review, we utilize historical results, projected future operating results, eligible carry-forward periods, tax planning opportunities, and other relevant considerations. Adverse changes in profitability and financial outlook in both the U.S. and/or foreign jurisdictions, or changes in our geographic footprint may require changes in the valuation allowances in order to reduce our deferred tax assets. Such changes could result in a material impact on earnings.

Our annual cash needs could require us to repatriate cash to the U.S. from foreign jurisdictions, which may result in tax charges. ~~For example,~~We had no such tax charges during the fiscal years 2015 or 2016. However, in fiscal 2014, we repatriated cash to the U.S. in connection with the sale of the Die Cut businesses, which resulted in a tax charge of $4.0 million in continuing operations.~~In fiscal 2013, we repatriated cash to the U.S. in connection with the acquisition of PDC, which resulted in a tax charge of $26.6 million.~~

Substantially all of our voting stock is controlled by members of the Brady family, while our public investors hold non-voting stock. The interests of the voting and non-voting shareholders could differ, potentially resulting in decisions that unfavorably affect the value of the non-voting shares.

Substantially all of our voting stock is controlled by Elizabeth P. Pungello Bruno, one of ~~the~~our Directors, and William H. Brady III, both of whom are descendants of the Company's founder. All of our publicly traded shares are non-voting. Therefore, Ms. ~~Pungello~~Bruno and Mr. Brady have control in most matters requiring approval or acquiescence by shareholders, including the composition of our Board of Directors and many corporate actions. Such concentration of ownership may discourage a potential acquirer from making a purchase offer that our public shareholders may find favorable, which in turn could adversely affect the market price of our common stock or prevent our shareholders from realizing a premium over our stock price. Furthermore, this concentration of voting share ownership may adversely affect the trading price for our non-voting common stock because investors may perceive disadvantages in owning stock in companies whose voting stock is controlled by a limited number of shareholders.

Failure to meet certain financial covenants required by our debt agreements may adversely affect our ~~assets, results of operations, cash flows,~~business and ~~liquidity.~~financial results.

As of July 31, ~~2014,~~2016, we had ~~$263.2~~$216.9 million in outstanding indebtedness. In addition, based on the availability under our credit facilities as of July 31, ~~2014,~~2016, we had the ability to ~~incur~~borrow an additional ~~$404.4~~$183.7 million under our revolving credit agreement. Our current revolving credit agreement and long-term debt obligations also impose certain restrictions on us. Refer to Management's

~~Table of Contents~~

Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") within Item 7 for more information regarding our credit agreement and long-term debt obligations. If we breach any of these restrictions or covenants and do not obtain a waiver from the lenders, then subject to applicable cure periods, the outstanding indebtedness (and any other indebtedness with cross-default provisions) could be declared immediately due and payable, which could adversely affect our ~~assets, results of operations, cash flows and liquidity.~~financial results.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company currently operates 5042 manufacturing orand distribution facilities across the globe and are split by reporting segment as follows:

IDS: ~~Thirty-seven~~Thirty facilities are used for our IDS business. ~~Ten of which~~Five each are located within the United ~~States; five each are located in Belgium~~States and ~~Mexico;~~China; four in ~~China;~~Belgium; three in Mexico; two each in the United Kingdom, Brazil, and ~~Brazil;~~India; and one each in Canada, ~~India, Italy,~~ Hong Kong, Denmark, Japan, Malaysia, Singapore, and ~~Singapore.~~South Africa.

WPS: ~~Thirteen~~Twelve facilities are used for our WPS business. ~~Three of which~~Four are located in France; two each are located in Australia ~~Germany,~~ and ~~the United States;~~Germany; and one each in the Netherlands, ~~Poland,~~ Sweden, the United Kingdom, and the United ~~Kingdom.~~States.

The Company’s present operating facilities contain a total of approximately ~~2.8~~2.2 million square feet of space, of which approximately ~~2.1~~1.6 million square feet is leased. The Company believes that its equipment and facilities are modern, well maintained, and adequate for present needs.

Item 3. Legal Proceedings

The Company is, and may in the future be, party to litigation arising in the normal course of business. The Company is not currently a party to any material pending legal proceedings in which management believes the ultimate resolution would have a material effect on the Company’s consolidated financial statements.

Item 4. Mine Safety Disclosures

Not applicable.

~~Table of Contents~~

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


(a)	Market Information

Brady Corporation Class A Nonvoting Common Stock trades on the New York Stock Exchange under the symbol BRC. The following table sets forth the range of high and low daily closing sales prices for the Company’s Class A stock as reported on the New York Stock Exchange for each of the quarters in the fiscal years ended July 31:


	2014				2013				2012				2016				2015				2014
	High		Low		High		Low		High		Low		High		Low		High		Low		High		Low
4th Quarter	$	30.75	$	24.26	$	35.58	$	29.76	$	31.28	$	25.15	$	32.68	$	26.29	$	26.76	$	23.15	$	30.75	$	24.26
3rd Quarter	$	27.89	$	25.15	$	36.33	$	31.51	$	34.37	$	29.41	$	27.82	$	21.13	$	28.91	$	26.03	$	27.89	$	25.15
2nd Quarter	$	31.61	$	27.36	$	35.00	$	30.18	$	34.40	$	27.09	$	26.39	$	20.84	$	27.56	$	23.50	$	31.61	$	27.36
1st Quarter	$	35.54	$	29.19	$	31.22	$	26.34	$	32.24	$	24.73	$	24.29	$	19.52	$	27.07	$	21.19	$	35.54	$	29.19

There is no trading market for the Company’s Class B Voting Common Stock.


(b)	Holders

As of ~~September 24, 2014~~,August 31, 2016, there were ~~1,023~~1,063 Class A Common Stock shareholders of record and approximately ~~10,467~~9,000 beneficial shareholders. There are three Class B Common Stock shareholders.


(c)	Issuer Purchases of Equity Securities

The Company has a share repurchase program of the Company’s Class A Nonvoting Common Stock. The plan may be implemented by purchasing shares in the open market or in privately negotiated transactions, with repurchased shares available for use in connection with the Company’s stock-based plans and for other corporate purposes. ~~During~~The Company did not repurchase any shares during the three months ended July 31, ~~2014, the Company purchased~~ ~~287,717~~ ~~shares of its Class A Nonvoting Common Stock under this plan for~~ ~~$7.2 million~~.2016. As of July 31, ~~2014~~2016, there remained ~~966,242~~2,000,000 shares to purchase in connection with this share repurchase program.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Number of Shares that May Yet Be Purchased Under the Plan
May 1, 2014 - May 31, 2014 287,717
$ 25.18
287,717
966,242
June 1, 2014 - June 30, 2014 —
—
—
966,242
July 1, 2014 - July 31, 2014 —
—
—
966,242
Total 287,717
$ 25.18
287,717
966,242


~~(d)~~ (i)	Dividends

The Company has historically paid quarterly dividends on outstanding common stock. Before any dividend may be paid on the Class B Common Stock, holders of the Class A Common Stock are entitled to receive an annual, noncumulative cash dividend of $0.01665 per share (subject to adjustment in the event of future stock splits, stock dividends or similar events involving shares of Class A Common Stock). Thereafter, any further dividend in that fiscal year must be paid on all shares of Class A Common Stock and Class B Common Stock on an equal basis. The Company believes that based on its historic dividend practice, this requirement will not impede it in following a similar dividend practice in the future.

During the two most recent fiscal years and for the first quarter of fiscal ~~2015~~2017, the Company declared the following dividends per share on its Class A and Class B Common Stock for the years ended July 31:


	2015		2014								2013								2017		2016								2015
	1st Qtr		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr		2nd Qtr		3rd Qtr		4th Qtr
Class A	$	0.20	$	0.195	$	0.195	$	0.195	$	0.195	$	0.19	$	0.19	$	0.19	$	0.19	$	0.2050	$	0.2025	$	0.2025	$	0.2025	$	0.2025	$	0.20	$	0.20	$	0.20	$	0.20
Class B	0.18335		0.17835		0.195		0.195		0.195		0.17335		0.19		0.19		0.19		0.18835		0.18585		0.2025		0.2025		0.2025		0.18335		0.20		0.20		0.20

~~Table of Contents~~

Results of Operations

A comparison of results of ~~Operating~~operating income (loss) ~~income~~ from continuing operations for the fiscal years ended July 31, ~~2014, 2013,~~2016, 2015, and ~~2012~~2014 is as follows:

(Dollars in thousands) 2014 % Sales % Change 2013 % Sales % Change 2012 % Sales
Net Sales $ 1,225,034

5.8 % $ 1,157,792

8.1 % $ 1,071,504

Gross Margin 609,564
49.8 % — % 609,348
52.6 % 3.1 % 590,969
55.2 %
Operating Expenses: ��
     Research and Development 35,048
2.9 % 4.5 % 33,552
2.9 % (2.8 )% 34,528
3.2 %
     Selling, General & Administrative 452,164
36.9 % 5.7 % 427,858
37.0 % 9.0 % 392,694
36.6 %
     Restructuring charges 15,012
1.2 % (42.4 )% 26,046
2.2 % 328.1 % 6,084
0.6 %
     Impairment charges 148,551
12.1 % (27.3 )% 204,448
17.7 % — % —
— %
Total operating expenses 650,775
53.1 % (5.9 )% 691,904
59.8 % 59.7 % 433,306
40.4 %
Operating (loss) income $ (41,211 ) (3.4 )% 50.1 % $ (82,556 ) (7.1 )% (152.4 )% $ 157,663
14.7 %



(Dollars in thousands)	2016		% Sales		2015		% Sales		2014			% Sales
Net sales	$	1,120,625			$	1,171,731			$	1,225,034
Gross margin	558,773		49.9	%	558,432		47.7	%	609,564			49.8	%
Operating expenses:
Research and development	35,799		3.2	%	36,734		3.1	%	35,048			2.9	%
Selling, general & administrative	405,096		36.1	%	422,704		36.1	%	452,164			36.9	%
Restructuring charges	—		—	%	16,821		1.4	%	15,012			1.2	%
Impairment charges	—		—	%	46,867		4.0	%	148,551			12.1	%
Total operating expenses	440,895		39.3	%	523,126		44.6	%	650,775			53.1	%
Operating income (loss)	$	117,878	10.5	%	$	35,306	3.0	%	$	(41,211	)	(3.4	)%

In fiscal 2016, sales decreased 4.4% to $1,120.6 million, compared to $1,171.7 million in fiscal 2015, which consisted of an organic sales decline of 0.7% and a negative currency impact of 3.7% due to the strengthening of the U.S. dollar against certain other major currencies during the year. The decline in organic sales was primarily a result of reduced demand in the Americas and APAC regions. Organic sales declined in both the IDS and WPS segments in fiscal 2016 compared to fiscal 2015. The IDS segment experienced sales declines in the Wire ID and Safety and Facility ID product lines, which were partially offset by sales growth in the Product ID and Healthcare ID product lines. Traditional catalog sales in the WPS segment declined, but were partially offset by sales growth in digital sales.

During fiscal ~~2014,~~2015, net sales ~~increased~~ ~~5.8%~~decreased 4.4% from fiscal ~~2013,~~2014, which consisted of organic growth of ~~0.2%~~,1.0% and a negative currency impact of ~~a negative~~ ~~0.1%, and growth from acquisitions~~5.4% due to the strengthening of ~~5.7%. The acquisition growth was from~~ the ~~acquisition of PDC within~~U.S. dollar against certain other major currencies during the ~~IDS segment in fiscal 2013.~~year. Organic sales within the IDS segment were up, ~~2.9%~~, while organic sales within the WPS segment ~~declined by 4.6%.~~declined.

~~During fiscal 2013, net~~References in this Form 10-K to “organic sales” refer to sales ~~increased 8.1%~~ from ~~fiscal 2012, which consisted of an organic decline of 2.4%, currency~~continuing operations calculated in accordance with U.S. GAAP, excluding the impact of a negative 0.8% and growth from acquisitions of 11.3%. Over 90% of the acquisition growth was from the acquisition of PDC in fiscal 2013, with the remainder attributable to the acquisitions of Grafo in the IDS segment and Runelandhs and Pervaco in the WPS segment in fiscal 2012. Organic sales within the IDS segment were up 0.8%, whileforeign currency translation. The company’s organic sales ~~within~~disclosures exclude the ~~WPS platform declined by 7.0%.~~

~~Gross margin~~effects of foreign currency translation as ~~a percentage~~foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales ~~declined~~is meaningful to ~~49.8%~~investors as it provides them with useful information to aid in ~~fiscal 2014 from~~ ~~52.6%~~identifying underlying sales trends in ~~fiscal 2013. The decline was primarily due to the~~our businesses and facilitating comparisons of our sales decline and increased pricing actions in the WPS business, and an increase in facility consolidation costs in both segments. In the WPS segment, gross margin declined due to increased costs for facility consolidation projects, growth initiatives, and reduced sales as compared to the same period in theperformance with prior ~~year. In the IDS segment, gross margin was negatively impacted by facility consolidation related expenses and product mix.~~periods.

Gross margin increased 0.1% to $558.8 million in fiscal 2016 as compared to $558.4 million in fiscal 2015. As a percentage of sales, ~~declined~~gross margin increased to ~~52.6%~~49.9% in fiscal ~~2013~~2016 from ~~55.2%~~47.7% in fiscal ~~2012. Approximately half~~2015. In the prior fiscal year we incurred on-going costs related to facility consolidation activities primarily in our Americas region which reduced our gross margin percentage to well below historical levels. These facility consolidation activities were completed during fiscal 2015, therefore the increase in gross margin percentage in 2016 was primarily due to our on-going efforts to enhance operational efficiencies in the newly consolidated facilities and return gross margin percentage to historic averages.

Gross margin decreased 8.4% to $558.4 million in fiscal 2015 as compared to $609.6 million in fiscal 2014. As a percentage of ~~the~~sales, gross margin decreased to 47.7% in fiscal 2015 from 49.8% in fiscal 2014. The decline in gross margin was due to increased costs related to facility consolidation activities in the ~~acquisition of PDC,~~Americas due to duplicate labor and facilities expenses as ~~it is a lower gross margin business~~well as operating inefficiencies following the facility moves, such as additional freight costs and excess inventory and scrap charges.

Research and development expenses decreased to $35.8 million in fiscal 2016 from $36.7 million in fiscal 2015. The decrease in R&D spending in fiscal 2016 compared to the ~~remainder~~prior year was primarily due to efficiency gains within the R&D function and the strengthening of the ~~Company. The other half of~~U.S. dollar, which were partially offset by an increase in our investment in new products within the ~~decline was attributed~~IDS segment to ~~the WPS segment in which the decline in sales, increased pricing actions, and the challenging global economy contributed to the reduced gross margin.~~drive top line growth.

Research and development expenses increased to ~~$35.0~~$36.7 million in fiscal ~~2014~~2015 from ~~$33.6~~$35.0 million in fiscal ~~2013.~~2014. The increase in R&D spending was ~~primarily due~~a result of our innovation development initiative to ~~increased investment in new products. In addition, in fiscal 2014, the Company realigned~~realign the R&D processes in order to accelerate new

product innovation, ~~and invested~~increased investments in emerging technologies such as RFID and sensing ~~technology for harsh environments~~technologies, and ~~mobile applications that allow users to work with a variety of electronic devices. R&D expenses decreased to~~ ~~$33.6 million~~increased investments in ~~fiscal 2013 from~~ ~~$34.5 million~~ ~~in 2012 due to the global consolidation of the project management office, which reduced costs while streamlining reporting processes globally.~~other new products.

Selling, general and administrative (“SG&A”) expenses include selling costs directly attributed to the IDS and WPS segments, as well as administrative expenses including finance, information technology, human resources and legal. SG&A expenses ~~increased~~decreased 4.2% to ~~$452.2~~$405.1 million in fiscal ~~2014~~2016 compared to ~~$427.9~~$422.7 million in fiscal ~~2013.~~2015. The ~~increase was~~decrease in SG&A expense from the prior year is primarily due to ~~incremental~~ the strengthening of the U.S. dollar, reduced amortization expense of $3.0 million and our continued efforts to control general and administrative costs, which were partially offset by an increase to incentive-based compensation.

SG&A ~~associated with the PDC business of approximately $22 million. In addition, the Company expanded its sales force in multiple geographies within the IDS segment~~expense decreased to $422.7 million in fiscal ~~2014 and increased spending in both on-line advertising as well as traditional print advertising within the WPS segment.~~

~~SG&A expense increased~~2015 compared to ~~$427.9~~$452.2 million in fiscal ~~2013 compared to~~ ~~$392.7 million~~ ~~in fiscal 2012.~~2014. The ~~increase~~decline was primarily due to the ~~addition~~strengthening of ~~PDC, which also contributed~~the U.S. dollar, and to a lesser extent, reduced amortization expense of $5.8 million, an ~~incremental $6.0~~amendment to our U.S.-based post-retirement medical benefit plan that resulted in a $4.3 million ~~of amortization of intangible assets. The total increase in SG&A~~curtailment gain, and our focused efforts to reduce expenses. This decline was partially offset by ~~a reduction~~continued investments in ~~variable incentive compensation from fiscal 2012 to fiscal 2013.~~sales personnel within the IDS segment and increased spending in the WPS segment for both on-line and traditional print advertising.

~~Table of Contents~~

In fiscal 2014, the Company announced a restructuring plan to consolidate facilities in ~~North America,~~the Americas, Europe and Asia. The Company implemented this restructuring plan to enhance customer service, improve efficiency of our operations and reduce operating ~~expenses, with expected annual pre-tax operational savings of approximately $10 million. The cash expenditures for these restructuring~~expenses. Restructuring activities ~~were funded with cash generated from operations. Facility~~related to facility consolidation activities ~~will extend~~extended into fiscal 2015 asand were complete at the ~~Company slowed certain consolidation activities to ensure~~end of the ~~highest levels of quality and delivery throughout the transition, and will result in approximately $15 million of additional restructuring charges. In~~ fiscal ~~2013, the Company announced a restructuring action to reduce its global workforce by approximately 5-7% in order to address its cost structure.~~year.

In connection with ~~these restructuring actions,~~this plan, the Company incurred restructuring charges of $16.8 million in fiscal 2015. These charges consisted of $5.4 million of employee separation costs, $5.2 million of facility closure related costs, $2.0 million of contract termination costs, and $4.2 million of non-cash asset write-offs. The charges for employee separation costs consisted of severance pay, outplacement services, medical and other benefits. Non-cash asset write-offs consisted mainly of fixed assets written off in conjunction with facility consolidations. Of the $16.8 million recognized in fiscal 2015, $12.1 million was incurred within the IDS segment and $4.7 million was incurred within the WPS segment.

Restructuring charges were $15.0 million in fiscal ~~2014. These charges~~2014 and consisted of $9.3 million of employee separation costs, $4.4 million of facility closure related costs, $1.0 million of contract termination costs, and $0.3 million of non-cash asset ~~write-offs. The charges for employee separation costs consisted of severance pay, outplacement services, medical~~write-offs associated with the restructuring plan announced in February 2013 to reorganize into global product-based business platforms and ~~other benefits. Non-cash asset write-offs consist mainly of indefinite-lived tradenames written off in conjunction with brand consolidations.~~reduce our global cost structure. Of the $15.0 million recognized in fiscal 2014, $9.0 million was incurred within the IDS segment and $6.0 million was incurred within the WPS segment.

Restructuring charges were $26.0 million in fiscal 2013 and consisted of employee separation costs, fixed asset write-offs, and other facility closure costs associated with the restructuring plan announced in February 2013 to reorganize into global product-based business platforms and reduce our global cost structure. Of the $26.0 million recognized in fiscal 2013, $15.8 million was incurred within the IDS segment and $10.2 million was incurred within the WPS segment.

~~Restructuring charges were~~ ~~$6.1 million~~ in fiscal 2012 and consisted of costs incurred to consolidate facilities within both the IDS and WPS segments primarily in the Americas. The remaining charges related to severance costs associated with a prior year restructuring program. Of the ~~$6.1 million~~ ~~recognized in fiscal 2012, $4.3 million was incurred within the IDS segment and $1.8 million was incurred within the WPS segment.~~

The Company performed its annual goodwill impairment assessment on May 1, ~~2014,~~2016, and subsequently concluded that the fair value of the goodwill was substantially in excess of its carrying value at 20% or greater for all of the reporting units. No impairment charges were recorded in fiscal 2016. In conjunction with the goodwill impairment analysis, management also concluded that no other long-lived assets were impaired.

The Company's annual goodwill impairment assessment performed in fiscal 2015 indicated the WPS Americas and WPS APAC reporting units were impaired. In conjunction with the goodwill impairment analysis, management concluded that other long-lived assets were impaired. Impairment charges were $46.9 million in fiscal 2015, which consisted of $37.1 million in goodwill charges associated with the WPS Americas and WPS APAC reporting units and $9.8 million related to the impairment of certain other long-lived assets.

The Company's annual goodwill impairment assessment performed in fiscal 2014 indicated that the PeopleID reporting unit was impaired. In conjunction with the goodwill impairment analysis, management concluded that other ~~finite and indefinite-lived intangible~~long-lived assets ~~within the reporting unit~~ were impaired. ~~Refer to the Item 7 - Business Segment Operating Results as well as Note 3 "Goodwill and Other Intangible Assets" of Item 8 for further discussion regarding the impairment charges.~~ Impairment charges ~~in continuing operations~~ were $148.6 million in fiscal 2014, which consisted of $100.4 million in goodwill and $48.2 million in intangible assets primarily associated with the PeopleID reporting unit.

~~As a result~~The Company generated operating income of the Company's annual goodwill impairment assessment performed in fiscal 2013, the Company concluded that the WPS Americas and IDS APAC reporting units were impaired. In conjunction with the goodwill impairment analysis, management also concluded tradenames and certain fixed assets within the reporting units were impaired. Impairment charges in continuing operations were $204.4$117.9 million in fiscal ~~2013 and consisted of the following:~~

•~~$172.3~~2016. Operating income from continuing operations was $35.3 million in ~~goodwill~~fiscal 2015; excluding impairment charges of $46.9 million and restructuring charges of $16.8 million, the Company generated operating income from continuing operations of $99.0 million in 2015. The increase of $18.9 million in operating income was due to the improvement in gross profit margin primarily in the IDS segment as well as reduced SG&A primarily in the WPS ~~Americas reporting unit~~segment. The increase was partially offset by the negative impact of currency fluctuations.

•~~$18.2~~

Operating income from continuing operations was $35.3 million ~~in goodwill in~~for fiscal 2015; excluding impairment charges of $46.9 million and restructuring charges of $16.8 million, the ~~IDS APAC reporting unit~~

•~~$10.6 million in tradenames in the WPS segment~~

•~~$3.3 million in fixed assets in the IDS APAC reporting unit~~

~~Operating~~Company generated operating income from continuing operations of $99.0 million. The Company incurred an operating loss ~~was~~from continuing operations of $41.2 million in fiscal ~~2014. Excluding the~~2014; excluding impairment charges of ~~$148.6~~$148.6 million and restructuring charges of ~~$15.0~~$15.0 million,, the Company generated operating income from continuing operations of $122.4 ~~million in fiscal 2014. The fiscal 2013 operating loss was $82.6~~ million. ~~Excluding the impairment charges of $204.4 million and restructuring charges of $26.0 million, the Company generated operating income of $147.9 million in fiscal 2013.~~ The decrease of $23.4 million was ~~mainly~~primarily due to the ~~decline in~~ segment profit ofdeclines in both the IDS and WPS ~~business, which is discussed in further detail within the Business Segment Operating Results section.~~segments,

~~Operating loss was~~ ~~$82.6 million~~facility consolidation costs incurred in both segments, and the negative impact of currency fluctuations during fiscal 2013. Excluding impairment charges of $204.4 million and restructuring charges of $26.0 million, the Company generated operating income of $147.9 million in fiscal 2013. The fiscal 2012 operating income was ~~$157.7 million. Excluding restructuring charges of~~ ~~$6.1 million~~, the Company generated income of $163.7 million in fiscal 2012. The decrease was mainly due to the decline in segment profit of the WPS business.This decline was partially offset by a decrease in variable incentive compensation of approximately $10 million in fiscal 20132015 as compared to ~~fiscal 2012.~~the prior year.

~~Table of Contents~~

OPERATING INCOME (LOSS) TO NET ~~INCOME~~EARNINGS (LOSS)

(Dollars in thousands) 2014 % Sales 2013 % Sales 2012 % Sales
Operating (loss) income $ (41,211 ) (3.4 )% $ (82,556 ) (7.1 )% $ 157,663
14.7 %
Other income and (expense):

Investment and other income 2,402
0.2 % 3,523
0.3 % 2,082
0.2 %
Interest expense (14,300 ) (1.2 )% (16,641 ) (1.4 )% (19,090 ) (1.8 )%
(Loss) earnings from continuing operations before tax (53,109 ) (4.3 )% (95,674 ) (8.3 )% 140,655
13.1 %
Income taxes (4,963 ) (0.4 )% 42,583
3.7 % 37,162
3.5 %
(Loss) earnings from continuing operations (48,146 ) (3.9 )% (138,257 ) (11.9 )% 103,493
9.7 %
Earnings (loss) from discontinued operations, net of income taxes 2,178
0.2 % (16,278 ) (1.4 )% (121,404 ) (11.3 )%
Net (loss) earnings $ (45,968 ) (3.8 )% $ (154,535 ) (13.3 )% $ (17,911 ) (1.7 )%



(Dollars in thousands)	2016			% Sales		2015			% Sales		2014			% Sales
Operating income (loss)	$	117,878		10.5	%	$	35,306		3.0	%	$	(41,211	)	(3.4	)%
Other (expense) and income:
Investment and other (expense) income	(709		)	(0.1	)%	845			0.1	%	2,402			0.2	%
Interest expense	(7,824		)	(0.7	)%	(11,156		)	(1.0	)%	(14,300		)	(1.2	)%
Earnings (loss) from continuing operations before tax	109,345			9.8	%	24,995			2.1	%	(53,109		)	(4.3	)%
Income taxes	29,235			2.6	%	20,093			1.7	%	(4,963		)	(0.4	)%
Earnings (loss) from continuing operations	80,110			7.1	%	4,902			0.4	%	(48,146		)	(3.9	)%
(Loss) earnings from discontinued operations, net of income taxes	—			—	%	(1,915		)	(0.2	)%	2,178			0.2	%
Net earnings (loss)	$	80,110		7.1	%	$	2,987		0.3	%	$	(45,968	)	(3.8	)%

Investment and Other Income

~~These amounts primarily consist~~Investment and other expense was $0.7 million in fiscal 2016 compared to income of ~~interest~~$0.8 million in fiscal 2015 and income ~~and gains and losses on foreign currency and securities held in executive deferred compensation plans. Income~~ of $2.4 million in fiscal 2014. The decline since 2014 ~~$3.5 million~~was primarily due to foreign currency losses, and a decline in ~~fiscal 2013 and~~ ~~$2.1 million~~market value of securities held in ~~fiscal 2012 has remained relatively consistent with no material changes year over year.~~executive deferred compensation plans.

Interest Expense

Interest expense decreased to ~~$14.3~~$7.8 million in fiscal ~~2014~~2016 compared to ~~$16.6~~$11.2 million in fiscal ~~2013~~2015 and ~~$19.1~~$14.3 million in fiscal ~~2012.~~2014. The decline since ~~2012~~2014 was due to the Company's declining principal balance under its outstanding debt agreements ~~along with changes in debt structure resulting in~~and a reduction in the weighted average interest rate.

Income Taxes

The ~~Company's~~Company’s effective income tax rate was 26.7% in fiscal 2016. The effective income tax rate was reduced from ~~continuing operations~~the statutory tax rate of 35.0% due to certain adjustments to tax accruals and reserves, utilization of foreign tax credit carryforwards, research and development tax credits and the section 199 manufacturer’s deduction.

The Company’s effective income tax rate was 80.4% in fiscal 2015. The effective income tax rate was significantly impacted by impairment charges of $46.9 million recognized during the period, as $39.8 million of these charges were nondeductible for income tax purposes. The effective income tax rate was further impacted by $5.0 million of foreign tax credit carryforwards from the fiscal 2014 income tax return and increases in uncertain tax positions recognized in fiscal 2015.

The Company’s effective income tax rate was 9.3% in fiscal ~~2014, compared to the~~2014. The effective ~~tax rate from continuing operations of (44.5)% in fiscal 2013. The~~ income tax rate ~~in fiscal 2014~~ was significantly impacted by impairment charges of $148.6 million recognized during the ~~goodwill impairment and restructuring~~period, as $61.1 million of these charges ~~recorded in fiscal 2014. The~~were non-deductible for income tax rate in fiscal 2013 was impacted by the goodwill impairment charge and a tax charge associated with the funding of the PDC acquisition. Excluding these items, the effective tax rate from continuing operations would have been approximately 28% in fiscal 2014 compared to 24.5% in fiscal 2013. The increase was due to several factors including increased valuation allowances and fluctuations in geographic profit mix.

purposes. The effective tax rate ~~from continuing operations for fiscal 2013~~ was ~~(44.5)% as compared to 26.4%~~further impacted by increases in uncertain tax positions recognized in fiscal 2012. The lower rate in fiscal 2013 was significantly impacted by the goodwill impairment charge recorded on the WPS Americas and IDS Asia reporting units in fiscal 2013, as well as a tax charge of $29.0 million primarily associated with the funding of the PDC acquisition. Excluding these items, our fiscal 2013 effective tax rate from continuing operations would have been 24.5%, slightly lower than the fiscal 2012 rate of 26.4% due mainly to fluctuation in geographic profit mix.

2014.

Earnings (Loss) from Discontinued Operations

Discontinued operations ~~consist of~~include the Asia Die-Cut and ~~Balkhausen~~European Die-cut businesses ("Die-Cut"), of which a portion was ~~classified as held for sale beginning~~divested in the ~~third~~fourth quarter of fiscal 2013. In addition, the following previously divested businesses were reported within discontinued operations: Brady Medical and Varitronics (divested in fiscal 2013) and Etimark (divested in fiscal 2012). These divested businesses were part of the IDS business segment. The first phase of this Die-Cut divestiture closed on May 1, 2014 and the ~~second phase~~remainder was divested in the first quarter of ~~the divestiture closed on August 1, 2014, subsequent to the~~ fiscal ~~year ended July 31, 2014.~~

~~Earnings from discontinued operations net of income taxes were $2.2 million in fiscal 2014, compared to a~~2015. The loss from discontinued operations net of income taxes was $1.9 million in fiscal 2015, compared to earnings from discontinued operations net of ~~$16.3~~income taxes of $2.2 million in fiscal 2014. The loss in fiscal 2015 consisted of a loss on operations of $1.5 million primarily related to professional fees associated with the divestiture and ~~$121.4~~a $0.4 million ~~for fiscal 2013 and 2012, respectively.~~loss on the sale of Die-Cut, recorded during the three months ended October 31, 2014. In fiscal 2014, the Die-Cut business had net earnings from operations of $3.4 million, offset by a net loss on the sale of Die-Cut of $1.2 million. The loss in fiscal 2013 primarily related to a $15.7 million write-down of the Die-Cut disposal group to estimated fair value less costs to sell. The loss in fiscal 2012 primarily related to the $115.7 million goodwill impairment charge recorded during the second quarter of fiscal 2012, which was related to the Die-Cut disposal group.

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There was no depreciation or amortization expense recognized within discontinued operations for fiscal 2015 or fiscal 2014 as the Die-Cut business was ~~first~~ reported as held for sale beginning in the ~~prior year,~~third quarter of fiscal 2013, at which point the fixed assets and intangible assets of these businesses were no longer depreciated or amortized in accordance with applicable U.S. GAAP. ~~Depreciation and amortization recognized within discontinued operations for fiscal 2013 were $4.0 million and $4.8 million, respectively.~~

Business Segment Operating Results

The Company is organized and managed on a global basis within two ~~business platforms: IDS~~reportable segments: ID Solutions and WPS, which are the reportable segments. Each business platform has a President that reports directly to the Company's chief operating decision maker, its Chief Executive Officer. Each platform has its own distinct operations, which are managed locally by its own management team, maintains its own financial reports and is evaluated based on global segment profit. The Company has determined that these business platforms comprise its operating and reportable segments based on the information used by the Chief Executive Officer to allocate resources and assess performance.

Workplace Safety. The segment results have been adjusted to reflect continuing operations in all periods presented. The sales and profit of discontinued operations are excluded from the following information.

Following is a summary of segment information for the fiscal years ended July 31, ~~2014~~, ~~2013~~,2016, 2015, and ~~2012~~:2014:


		Years ended July 31,									Years ended July 31,
(Dollars in thousands)		2014			2013			2012			2016			2015			2014
SALES TO EXTERNAL CUSTOMERS
ID Solutions		$	825,123		$	739,116		$	636,590		$	776,877		$	806,484		$	825,123
WPS		399,911			418,676			434,914			343,748			365,247			399,911
Total		$	1,225,034		$	1,157,792		$	1,071,504		$	1,120,625		$	1,171,731		$	1,225,034
SALES GROWTH INFORMATION
ID Solutions
Organic		2.9		%	0.8		%	3.2		%	(0.7		)%	1.7		%	2.9		%
Currency		(0.2		)%	(1.0		)%	(1.6		)%	(3.0		)%	(4.0		)%	(0.2		)%
Acquisitions		8.9		%	16.3		%	0.2		%	—%			—%			8.9		%
Total		11.6		%	16.1		%	1.8		%	(3.7		)%	(2.3		)%	11.6		%
Workplace Safety
Organic		(4.6		)%	(7.0		)%	(0.2		)%	(0.8		)%	(0.4		)%	(4.6		)%
Currency	��	0.1		%	(0.7		)%	(1.2		)%	(5.1		)%	(8.3		)%	0.1		%
Acquisitions		—%			4.0		%	1.6		%
Total		(4.5		)%	(3.7		)%	0.2		%	(5.9		)%	(8.7		)%	(4.5		)%
Total Company
Organic		0.2		%	(2.4		)%	1.8		%	(0.7		)%	1.0		%	0.2		%
Currency		(0.1		)%	(0.8		)%	(1.5		)%	(3.7		)%	(5.4		)%	(0.1		)%
Acquisitions		5.7		%	11.3		%	0.8		%	—%			—%			5.7		%
Total		5.8		%	8.1		%	1.1		%	(4.4		)%	(4.4		)%	5.8		%
SEGMENT PROFIT
ID Solutions		$	176,129		$	174,390		$	160,658		$	169,776		$	149,840		$	176,129
Workplace Safety		66,238			95,241			117,187			59,847			56,502			66,238
Total		$	242,367		$	269,631		$	277,845		$	229,623		$	206,342		$	242,367
SEGMENT PROFIT AS A PERCENT OF SALES
ID Solutions		21.3		%	23.6		%	25.2		%	21.9		%	18.6		%	21.3		%
Workplace Safety		16.6		%	22.7		%	26.9		%	17.4		%	15.5		%	16.6		%
Total		19.8		%	23.3		%	25.9		%	20.5		%	17.6		%	19.8		%

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NET EARNINGS (LOSS) RECONCILIATION


	Years ended:									Years ended:
(Dollars in thousands)	July 31, 2014			July 31, 2013			July 31, 2012			July 31, 2016		July 31, 2015			July 31, 2014
Total profit from reportable segments	$	242,367		$	269,631		$	277,845		$	229,623	$	206,342		$	242,367
Unallocated costs:
Administrative costs	120,015			121,693			114,098			111,745		107,348			120,015
Restructuring charges	15,012			26,046			6,084			—		16,821			15,012
Impairment charges	148,551			204,448			—			—		46,867			148,551
Investment and other income	(2,402		)	(3,523		)	(2,082		)
Investment and other expense (income)										709		(845		)	(2,402		)
Interest expense	14,300			16,641			19,090			7,824		11,156			14,300
(Loss) earnings from continuing operations before income taxes	$	(53,109	)	$	(95,674	)	$	140,655
Earnings (loss) from continuing operations before income taxes										$	109,345	$	24,995		$	(53,109	)

ID Solutions

Fiscal ~~2014~~2016 vs. ~~2013~~2015

Approximately 70% of net sales in the ID Solutions segment were generated in the Americas region, 20% in EMEA, and 10% in APAC. IDS sales decreased 3.7% to $776.9 million in fiscal 2016, compared to $806.5 million in fiscal 2015. Organic sales decreased 0.7% and currency fluctuations decreased sales by 3.0% due to the strengthening of the U.S. dollar against certain other major currencies during the year ended July 31, 2016, as compared to the same period in the prior year.

Organic sales in the Americas declined in the low-single digits in fiscal 2016 as compared to fiscal 2015 primarily due to a slowdown in order patterns with certain of our customers in the United States and Canada which is reflective of a general slowdown in the industrial sector. In addition, we realized double-digit declines in OEM sales in Brazil due to weak economic conditions and increased competitive pressure. The Americas region experienced sales declines in the Wire ID and Safety and Facility ID product lines, which were partially offset by sales growth in the Product ID and Healthcare ID product lines.

The IDS business in EMEA realized low-single digit organic sales growth in fiscal 2016 as compared to fiscal 2015. This increase was primarily driven by our core IDS businesses in Western and Central Europe where we have increased sales despite a lack of significant economic growth. The Product ID and Safety and Facility ID product lines in EMEA realized sales growth in 2016, which was partially offset by a sales decline in the Wire ID product line.

Organic sales in APAC declined in the mid-single digits in fiscal 2016 as compared to fiscal 2015. The region had mid-single digit declines in the first three quarters of the year and effectively flat organic sales in the fourth quarter. The overall decline in organic sales was primarily due to reduced demand in the electronics industry in China as well as other regions within Asia, which we are addressing through focused additions to our sales organization within the region.

Segment profit increased to $169.8 million in fiscal 2016 from $149.8 million in fiscal 2015, an increase of $20.0 million or 13.4%. As a percent of sales, segment profit increased to 21.9% in fiscal 2016, compared to 18.6% in the prior year. The increase in segment profit was primarily driven by operational efficiencies in our manufacturing processes in the Americas and Europe.

Fiscal 2015 vs. 2014

Approximately 70% of net sales in the IDS segment were generated in the Americas region, 20% in EMEA, and 10% in APAC. IDS sales ~~increased 11.6%~~decreased 2.3% to $806.5 million in fiscal 2015, compared to $825.1 million in fiscal ~~2014, compared to $739.1 million in fiscal~~ ~~2013. The acquisition of PDC in December 2012 contributed to 8.9% of the sales growth for fiscal~~ 2014. Organic sales increased ~~by 2.9%~~1.7% and currency fluctuations ~~were minimal, decreasing~~decreased sales by ~~0.2% for~~4.0% due to the strengthening of the U.S. dollar against other major currencies during the year ended July 31, ~~2014,~~2015, as compared to the same period in the prior year.

Overall, organic sales within the IDS business grew in the low single digit percentages consistently each quarter in fiscal 2014. Organic growth in all regions was positive for the year with double digit growth in APAC, followed by mid-single digit growth in Europe and slightly lower growth in the Americas region.

Organic sales in the Americas grew in the low-single digits in fiscal ~~2014~~2015 as compared to fiscal ~~2013,~~2014. This growth was primarily ~~due to~~within the ~~sales force expansion~~U.S. and was driven by our continued focus on expanding the ~~development~~core Brady-brand businesses and an increased focus on key customers, industries and new products. Our areas of ~~proprietary new products~~highest growth in fiscal 2015 were in the ~~core Brady brand business~~global safety and facility identification product offerings, as well as in ~~the United States.~~portable printer consumables and product identification. This growth was partially offset by double-digit organic sales declines in Brazil ~~and PDC. The Brazil business declined~~ in ~~both sales and profit~~fiscal 2015 as compared to fiscal 2014. OEM sales were down in Brazil due to weak economic conditions and increased competitive pressure. In ~~the fourth quarter of~~ fiscal ~~2014,~~2015, the Company ~~implemented a plan to consolidate~~consolidated a facility in Brazil to reduce its ~~operations footprint and lower its~~ cost structure. ~~Sales~~

Organic sales in the PDC business declined approximately 2% organically in fiscal 2014, compared to annualized sales in fiscal 2013. PDC’s healthcare business correlates with U.S. hospital admission rates, which were down approximately 2% during fiscal 2014.

~~The IDS business in~~ EMEA region also grew in the ~~mid-single~~low-single digits in fiscal ~~2014~~2015 as compared to fiscal 2014. This increase was primarily driven by Central Europe where we increased our salesforce. Economic growth softened slightly in Western Europe, which impacted IDS sales at the beginning of the third fiscal quarter and into the fourth quarter; however, this geography had stronger sales in the first half of the year which contributed to organic sales growth for the full fiscal year as compared to the prior year. ~~This growth was driven by our businesses~~

Organic sales in Asia grew in the ~~established Western European economies~~high-single digits in fiscal 2015 as ~~well as Central Europe. Growth was~~compared to fiscal 2014. Similar to the ~~result of expanding and refocusing our sales organization and the sale of new products. The exceptions were France and Italy, which are facing weak economic environments.~~

~~Sales within the IDS business in APAC had double-digit growth for the~~prior year, ~~ended July 31, 2014. We~~we experienced slower growth in the fourth quarter of fiscal ~~2014~~2015 as compared to the preceding three quarters primarily due to the negative impact the Die-Cut divestiture had on certain Asia business units. Sales of product identification products to our OEM customers in China were particularly strong as we continue to expand production capacity and capabilities. The investment in our MRO growth strategies and the expansion of our MRO business in China also positively impacted sales.quarters.

Segment profit ~~increased~~decreased to $149.8 million in fiscal 2015 from $176.1 million in fiscal 2014, ~~from $174.4 million in fiscal 2013, an increase~~a decrease of ~~$1.7~~$26.3 million or ~~1.0%~~14.9%. As a percent of sales, segment profit ~~was 21.3%~~decreased to 18.6% in fiscal ~~2014,~~2015, compared to ~~23.6%~~21.3% in the prior year. The decline in segment profit as a percent of sales was ~~due to lower gross margin~~primarily in ~~fiscal 2014 as~~the IDS Americas businesses and was a result of ~~product mix and~~ increased costs associated with ~~the~~ facility ~~consolidations. The main contributor to the product mix is a full year of PDC sales at lower gross margin than the existing business,~~consolidation activities such as duplicate labor and facilities expenses, as well as ~~an increase~~increased costs from operating inefficiencies in ~~lower-margin printer sales.~~

~~The PeopleID reporting unit consists primarily of the Company's acquisition of PDC from fiscal 2013,~~our recently consolidated facilities in North America such as well as the existing Brady PeopleID business. Organic sales within the PDC business declined in the low single digit percentages from fiscal 2013 to fiscal 2014. Hospital admission rates are the primary driver of PDC's sales under its existing strategy,additional freight costs and ~~there was~~excess inventory and scrap charges. In addition, although a decline of approximately 2% in these rates during fiscal 2014. Management has revisited its planned growth and profit for the PDC business and concluded that the growth may not materialize as expected given slower than anticipated industry growth and fewer sales

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~~synergies than originally planned. As a result, management is implementing a modified strategy within the PDC business that will focus on the full continuum of care in the healthcare industry.~~

Management believes that the strategy modifications noted above will improve organic sales and profit within the PeopleID reporting unit in future years, but there is inherent risk in the revised strategy and the changing healthcare industry. As such, the Company's annual goodwill impairment analysis ("Step One") reflected the risk in the strategy andmuch smaller impact, the decline was also due to our geographic product mix, as Asia was our region of greatest sales growth in fiscal ~~2014 sales~~2015 and ~~profitability, which occurred during a period of time in which hospital admission rates were declining and~~generally has the healthcare industry was reacting to healthcare reform. In addition, the PDC business fell short of internal forecasts, resulting in the conclusion that the PeopleID reporting unit failed Step One as the resulting fair value was less than the carrying value of the reporting unit.

Upon completion of the impairment assessment, the Company recognized a goodwill impairment charge of $100.4 million during fiscal 2014. In conjunction with the goodwill impairment test of the PeopleID reporting unit, finite and indefinite-lived intangibles associated with the reporting unit were revalued and analyzed for impairment. As a result, other intangibles in the amount of $48.2 million primarily associated with the PeopleID reporting unit were impaired during fiscal 2014.

~~Fiscal 2013 vs. 2012~~

Net sales increased by 16.1% from fiscal 2012 to 2013, which consisted of organic growth of 0.8%, currency impact of a negative 1.0% and growth from acquisitions of 8.9%. Acquisition growth within the IDS segment was almost entirely generated by the acquisition of PDC in December 2012, with a small portion contributed by the acquisition of Grafo in March 2012.

The PDC acquisition contributed more than $100 million in sales in fiscal 2013 and provides an entry for the Company into the healthcare identification space. Organic sales in the IDS segment grew by 0.8% primarily due to growth within the Americas of approximately 1%, which was partially offset by modest declines in Europe and APAC. Within the Americas, North America growth was partially offset by a 10% decline in Brazil. Sales over the Internet increased by more than 15%, and we experienced a positive response to our fiscal 2013 product launches. In Europe, the decline in the IDS business platform was mainly driven by the economy, partially offset by our increased presence in emerging geographies, new and differentiated product launches, and our strategy to increase share in specific vertical markets. In APAC, sales growth was modest, as the de-consolidation of certain business units from the Asia Die-Cut disposal group impacted sales growth negatively.

Overall, sales globally were driven by new product launches and growth within vertical markets. New products launched included the BBP85 printer, which is a continuous-sleeving wire identification system for high volume applications in the electrical and aerospace markets, and three new high performance materials to address the changing requirements for identification of printed circuit boards and electronic components. Vertical market growth was focused within the chemical, oil, and gas industries, as well as our targeted strategic account management programs.

Segment profit increased to $174.4 million in fiscal 2013 from $160.7 million in fiscal 2012, an increase of $13.7 million or 8.5%. The primary driver of the profit increase was the acquisition of PDC. This profit was partially offset by a decline in profitability in Brazil and Western Europe. Brazil's decline was due to a combination of sales decline, cost increases and expenses associated with the implementation of a new ERP system. In Western Europe, the largest decline in sales and profit was in Italy, where we experienced a 25.0% sales decline partially due to one-time sales in the prior year. In addition, Italy's profitability was impacted by product quality issues associated with a printer introduced in fiscal 2012.

The Company performed its annual goodwill impairment assessment for fiscal 2013 on May 1, 2013, and subsequently concluded that the IDS APAC reporting unit was impaired. Although sales grew from 2012 to 2013, profit declined and neither were as high as anticipated. Specifically, fourth quarter fiscal 2013 gross margin andlowest segment profit declined compared to the prior year, while results were anticipated to increase over the prior year fourth quarter. In addition, projections were not sufficient to support the balance of goodwill remaining within the reporting unit. As such, the Company recorded a goodwill impairment charge of $18.2 million during fiscal 2013, which represented all of the remaining goodwill for this reporting unit.margins.

Workplace Safety

Fiscal ~~2014~~2016 vs. ~~2013~~2015

Approximately 50% of net sales in the WPS segment were generated in ~~EMEA, 30%~~Europe, 35% in the Americas, and ~~20%~~15% in ~~APAC. Net~~Australia. WPS sales decreased ~~4.5% from $418.7~~5.9% to $343.7 million in fiscal ~~2013~~2016, compared to ~~$399.9~~$365.2 million in fiscal ~~2014. The sales decline consists of a decrease in organic sales of 4.6%, partially offset by 0.1% growth due to positive currency fluctuations.~~

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Organic sales in the WPS segment declined since the second quarter of fiscal 2012 through the third quarter of fiscal 2014, due to a reduction in direct catalog mailings, increased e-commerce competition, and pricing adjustments. As a result, in connection with our organizational change to global business platforms in fiscal 2013, we refined our business strategy to focus on and invest in the following: expanding our e-commerce presence, increasing the offering of workplace safety products, enhancing our industry expertise, and further developing our pricing capabilities in order to optimize sales across multiple channels.

Although we experienced an organic sales decline for the year ended July 31, 2014, the sales decline lessened each quarter and returned to growth in the fourth quarter of fiscal 2014. This improving trend was primarily due to increased catalog mailings, better execution of our Internet offerings, and more effective pricing strategies that optimize both sales and profits. As a result of these changes, we saw WPS sales trends in the Americas improved slightly in fiscal 2014 compared to 2013 as the percentage rate of decline lessened to mid-single digits. WPS sales in APAC, which consists entirely of Australia, and WPS sales in EMEA returned to modest growth in the fourth quarter, primarily due to an increase in new customers, order volumes, and growth initiatives.

Segment profit decreased to $66.2 million in fiscal 2014 from $95.2 million in the prior year, a decline of $29.0 million, or 30.5%. As a percent of sales, segment profit was 16.6% in fiscal 2014, compared to 22.7% in the prior year. Similar to sales, although profit has declined, the rate of decline slowed in the second half of fiscal 2014 as the modified strategy began to take hold. WPS profit was also impacted by the increased costs due to facility consolidations and the incremental investment in implementing its e-commerce strategy.

In performing the fiscal 2014 annual goodwill impairment assessment, the Company completed a sensitivity analysis on the material assumptions used in the discounted cash flow models for each of its reporting units. The fair value was substantially in excess of carrying value for the entire WPS segment, however, the Company is providing a detailed sensitivity analysis of the WPS Europe and WPS APAC reporting units given that the WPS strategy remains a key risk in the current fiscal year. The WPS Americas reporting unit was impaired in the prior year and therefore has an insignificant goodwill balance remaining, as such, a sensitivity analysis was not completed.

The fair value of the WPS Europe and WPS APAC reporting units were substantially in excess of carrying value at the annual goodwill assessment date of May 1, 2014, with goodwill balances of $60.3 million and $32.8 million, respectively. The Company considers a reporting unit's fair value to be substantially in excess of its carrying value at 20% or greater. The Company prepares a discounted cash flow model and market multiples model to conclude upon fair value as part of its annual goodwill impairment test. In order to arrive at the assumptions for the discounted cash flow analysis completed as part of the annual goodwill impairment test, the Company considered multiple factors, including (a) macroeconomic conditions, (b) industry and market factors such as competition and changes in the market for the reporting unit's products, (c) overall financial performance such as cash flows, actual and planned revenue and profitability, and (d) changes in strategy for the reporting unit. The assumption with the most impact on our determination of fair value of both reporting units is profitability. A reduction in the annual profitability assumption by 100 basis points results in a decrease in the amount of fair value in excess of carrying value of 11% and 9% for WPS Europe and WPS APAC, respectively, but would still result in fair value substantially in excess of carrying value for both reporting units.

~~Fiscal 2013 vs. 2012~~

~~Net sales decreased by 3.7% from fiscal 2012 to 2013,~~2015, which consisted of an organic sales decline of ~~7.0%,~~0.8% and a negative currency impact of ~~a negative 0.7%, and growth from acquisitions~~5.1%. Since half of ~~4.0%. The Company acquired Runelandhs and Pervaco~~the WPS business is in Europe, the strengthening of the U.S. dollar against the Euro and British Pound during certain periods of the fiscal year had a larger impact on the WPS segment than it did on the IDS segment.

The WPS business in ~~May 2012.~~Europe realized low-single digit organic sales growth in fiscal 2016 compared to the prior year. The increase was primarily driven by Germany, France, and Belgium due to improvements in website functionality and key account management. These improvements led to a double-digit increase in digital sales in Europe as compared to the prior year.

Organic sales in the ~~WPS segment~~Americas declined ~~7.0% within all geographies from~~in the low-single digits in fiscal ~~2012~~2016 compared to ~~2013,~~the prior year. This decrease was primarily in North America due to reduced demand in the industrial end markets and ~~have declined for the preceding seven quarters. WPS APAC~~a decrease in sales ~~are generated entirely~~through traditional catalog channels, which were partially offset by slight growth in digital sales.

Organic sales in Australia ~~and have~~ declined ~~for~~in the ~~last four quarters mainly due~~mid-single digits in fiscal 2016 compared to ~~the weakness~~fiscal 2015. The decrease in the Australian ~~economy. In~~business was due to its higher concentration in industries that are experiencing economic challenges, which include manufacturing and mining production. We continue to focus on enhancing our expertise in these industries to drive sales growth as well as addressing our cost structure to improve profitability.

Profit for the WPS segment increased to $59.8 million in fiscal 2016 from $56.5 million in fiscal 2015, an increase of $3.3 million, or 5.8%. As a percentage of sales, segment profit increased to 17.4% in fiscal 2016 compared to 15.5% in the prior year. The increase in segment profit margin was mainly driven by a reduction in selling expenses and catalog advertising.

Fiscal 2015 vs. 2014

Approximately 50% of net sales in the WPS segment were generated in EMEA, 35% in the Americas, and ~~Europe,~~15% in APAC. WPS sales decreased 8.7% to $365.2 million in fiscal 2015, compared to $399.9 million in fiscal 2014, which consisted of an organic sales ~~declined by 5%~~decline of 0.4% and 6%a negative currency impact of 8.3%. Because approximately half of the WPS business is located in Western Europe and another 15% of the WPS segment is in Australia , ~~respectively. Beginning~~the strengthening of the U.S. dollar against the Euro and the Australian Dollar had a larger impact on the WPS segment than it did on the IDS segment.

Organic sales in Europe grew in the low-single digits in fiscal ~~2012, we experienced a deterioration of this business~~2015 compared to the prior year. The growth was driven primarily by Germany, France, and the Nordics region due to ~~a reduction~~improvements in ~~direct~~website functionality and key account management. We experienced growth in both traditional catalog ~~mailings, increased e-commerce competition,~~sales and ~~pricing adjustments. The Company continued to modify its strategy to grow this business, which included: investments~~digital sales in ~~e-commerce capabilities, pricing structure changes and expansion of product offerings.~~Europe over the prior year.

~~Segment profit decreased~~Organic sales in the Americas declined in the low-single digits in fiscal ~~2013~~2015 compared to ~~$95.2 million from $117.2 million, a decline of $22.0 million or 18.8%.~~fiscal 2014. This decrease was primarily due to ~~volume~~reduced demand in the industrial end markets and ~~price declines as~~ a ~~result of increased competition and reduced catalog advertising. In addition, the Company redirected some of its investment from the~~decrease in sales through traditional catalog ~~model to e-business, the benefits of which were anticipated to be realized~~channels.

Organic sales in ~~future fiscal years.~~

Since the global economic recession of 2009, organic growth within the WPS Americas reporting unit has been difficult to achieve, especially within mature economies such as the U.S. and Canada where business-to-business transactions over the Internet are more advanced than many of the European and Australian markets. With the acceleration of the InternetAustralia declined in the ~~business-to-~~

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~~business market, competition and pricing pressure have intensified. As a result, organic sales declined by approximately 7.0% and segment profit declined by nearly 20% during~~mid-single digits in fiscal ~~2013 as~~2015 compared to fiscal ~~2012.~~2014. Our business in Australia is diversified in many industries; however, it has a higher concentration in industries that are experiencing economic challenges, including manufacturing and mining production.

~~The Company modified its strategy within~~Profit for the WPS ~~platform~~segment decreased to $56.5 million in fiscal ~~2013, which included investments~~2015 from $66.2 million in ~~enhanced e-commerce capabilities, expanded product offerings, enhanced industry-specific expertise, and adjustments~~fiscal 2014, a decrease of $9.7 million, or 14.7%. As a percentage of sales, segment profit decreased to ~~pricing strategies. Although management believed the strategy modifications would improve organic sales and profitability of the WPS platform~~15.5% in ~~future years, there is risk associated with any strategy. As such, the Company's~~ fiscal ~~2013 annual goodwill impairment analysis ("Step One") reflected the risk~~2015 compared to 16.6% in the ~~strategy and~~prior year. The decrease in segment profit was mainly driven by the decline in ~~fiscal 2013~~ sales, increased spending for both on-line and ~~profitability, which occurred during a period~~traditional print advertising due to the timing of ~~time~~catalog mailings, investments in ~~which~~digital capabilities and the Company was redirecting its investment from the traditional catalog model to e-business. In addition, the rate of decline became more pronounced during the second half of fiscal 2013 and fell short of internal forecasts, resultingincreased costs associated with facility consolidation activities in the ~~conclusion that WPS Americas failed Step One,~~U.S., such as ~~the resulting fair value was less than the carrying value of the reporting unit.~~duplicate labor and facilities expenses.

Upon completion of the impairment assessment, the Company recognized a goodwill impairment charge of $172.3 million during fiscal 2013. In conjunction with the goodwill impairment test of the WPS Americas reporting unit, indefinite-lived tradenames associated with the reporting unit were revalued and analyzed for impairment. As a result, indefinite-lived tradenames in the amount of $10.6 million primarily associated with the WPS Americas reporting unit were impaired during fiscal 2013.

Liquidity & Capital Resources

Cash and cash equivalents were $~~81.8~~141.2 million at July 31, ~~2014~~2016, ~~a decline~~an increase of ~~$9.2~~$26.7 million from July 31, ~~2013.~~2015. The significant changes were as follows:


	Years ended July 31,									Years ended July 31,
(Dollars in thousands)	2014			2013			2012			2016			2015			2014
Net cash flow provided by (used in):
Operating activities	$	93,420		$	143,503		$	144,705		$	138,976		$	93,348		$	93,420
Investing activities	10,207			(325,766		)	(64,604		)	(15,416		)	(14,365		)	10,207
Financing activities	(115,387		)	(33,060		)	(147,824		)	(99,576		)	(32,152		)	(115,387		)
Effect of exchange rate changes on cash	2,536			481			(16,348		)	2,752			(14,173		)	2,536
Net decrease in cash and cash equivalents	$	(9,224	)	$	(214,842	)	$	(84,071	)
Net increase (decrease) in cash and cash equivalents										$	26,736		$	32,658		$	(9,224	)

~~Table of Contents~~

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company’s business operations give rise to market risk exposure due to changes in foreign exchange rates. To manage that risk effectively, the Company enters into hedging transactions according to established guidelines and policies that enable it to mitigate the adverse effects of this financial market risk.

The global nature of the Company’s business requires active participation in the foreign exchange markets. As a result of investments, production facilities and other operations on a global scale, the Company has assets, liabilities and cash flows in currencies other than the U.S. ~~Dollar.~~dollar. The objective of the Company’s foreign currency exchange risk management is to minimize the impact of currency movements on non-functional currency ~~transactions and minimize the foreign currency translation impact on the Company’s operations.~~transactions. To achieve this objective, the Company hedges a portion of known exposures using forward contracts. Main exposures are related to transactions denominated in the British Pound, the Euro, Canadian ~~Dollar,~~dollar, Australian ~~Dollar, Swiss Franc, Malaysian Ringgit,~~dollar, Mexican Peso, and Singapore ~~Dollar.~~dollar. As of July 31, ~~2014~~2016, the ~~Company had no~~notional amount of outstanding forward foreign exchange contracts designated as cash flow ~~hedges.~~hedges was $34.5 million. The Company uses Euro-denominated debt of €75.0 million and British Pound-denominated intercompany debt of £25.0 million designated as hedge instruments to hedge portions of the Company’s net investments in its ~~European~~Euro and British Pound denominated foreign operations. The Company's revolving credit facility allows it to borrow up to ~~$100.0~~$150.0 million in currencies other than U.S. ~~Dollars~~dollars under an alternative currency sub-limit. The Company has periodically borrowed funds in Euro and British Pounds under this sub-limit. Debt issued in currencies other than U.S. ~~Dollars~~dollars acts as a natural hedge to the Company's exposure to the associated currency.

The Company also faces exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates. Although the Company has a U.S. dollar functional currency for reporting purposes, it has manufacturing sites throughout the world and ~~the majority~~a significant portion of its sales are generated in foreign currencies. Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a result, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar. In particular, the Company has more sales in European currencies than it has expenses in those currencies. Therefore, when European currencies strengthen or weaken against the U.S. dollar, operating profits are increased or decreased, respectively.

Currency exchange rates decreased fiscal ~~2014~~2016 sales by ~~0.1%~~3.7% compared to fiscal ~~2013~~2015 as the U.S. dollar appreciated, on average, against other major currencies throughout the year. The most significant impact on sales due to currency fluctuations occurred during the ~~second quarter ended January 31, 2014,~~first half of fiscal 2016, as sales declined by ~~0.6%~~6.6% and 5.4% in the first and second quarters, respectively, as compared to the same ~~quarter of~~periods in the prior year. ~~This decline was primarily driven by the appreciation of the U.S. dollar against the Euro.~~

The Company is subject to the risk of change in foreign currency exchange rates due to its operations in foreign countries. The Company has manufacturing facilities and sells and distributes its products throughout the world. As a result, the Company’s financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company manufactures, distributes and sells its products. The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and the Euro, the Australian dollar, the Canadian dollar, the Mexican Peso, the Singapore dollar, ~~the Euro,~~ the British Pound, the Brazilian Real, and the Chinese Yuan. Changes in foreign currency exchange rates for the Company’s foreign subsidiaries reporting in local currencies are generally reported as a component of stockholders’ investment. The Company’s currency translation adjustment recorded in fiscal ~~2014~~2016, 2015, and ~~2013~~2014 as a separate component of stockholders’ investment was $1.4 million unfavorable, $120.3 million unfavorable, and $7.5 million favorable, ~~and $2.3 million unfavorable,~~ respectively. As of July 31, ~~2014~~2016 and ~~2013~~2015, the Company’s foreign subsidiaries had net current assets (defined as current assets less current liabilities) subject to foreign currency translation risk of ~~$200.1~~$207.7 million and ~~$245.1~~$258.5 million, respectively. The potential decrease in net current assets as of July 31, ~~2014~~2016, from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates would be approximately ~~$20~~$20.8 million. This sensitivity analysis assumes a parallel shift in all major foreign currency exchange rates versus the U.S. dollar. Exchange rates rarely move in the same direction relative to the U.S. dollar due to positive and negative correlations of the various global currencies. This assumption may overstate the impact of changing exchange rates on individual assets and liabilities denominated in a foreign currency.

The Company could be exposed to interest rate risk through its corporate borrowing activities. The objective of the Company’s interest rate risk management activities is to manage the levels of the Company’s fixed and floating interest rate exposure to be consistent with the Company’s preferred mix. The interest rate risk management program allows the Company to enter into approved interest rate derivatives if there is a desire to modify the Company’s exposure to interest rates. As of July 31, ~~2014~~2016, the Company had no interest rate derivatives. The Company had variable rate debt outstanding of $116.9 million at a current weighted average interest rate of 1.4%. A hypothetical change in the interest rate of 10% from the Company's current weighted average interest rate on variable rate debt obligations of 1.4% would not have a material impact on the Company's interest expense.

~~Table of Contents~~

Item 8. Financial Statements and Supplementary Data

BRADY CORPORATION & SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS



	Page
Report of Independent Registered Public Accounting Firm	3430
Financial Statements:
Consolidated Balance Sheets — July 31, ~~2014~~2016 and ~~2013~~2015	3531
Consolidated Statements of Earnings — Years Ended July 31, ~~2014, 2013,~~2016, 2015, and ~~2012~~2014	3632
Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) — Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014	3733
Consolidated Statements of Stockholders’ Investment — Years Ended July 31, ~~2014, 2013,~~2016, 2015, and ~~2012~~2014	3834
Consolidated Statements of Cash Flows — Years Ended July 31, ~~2014, 2013,~~2016, 2015, and ~~2012~~2014	3935
Notes to Consolidated Financial Statements — Years Ended July 31, ~~2014, 2013,~~2016, 2015, and ~~2012~~2014	4036

~~Table of Contents~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Brady Corporation

Milwaukee, Wisconsin

We have audited the accompanying consolidated balance sheets of Brady Corporation and subsidiaries (the "Company") as of July 31, ~~2014~~2016 and ~~2013,~~2015, and the related consolidated statements of earnings, comprehensive ~~loss,~~income (loss), stockholders' investment, and cash flows for each of the three years in the period ended July 31, ~~2014.~~2016. Our audits also included the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Brady Corporation and subsidiaries at July 31, ~~2014~~2016 and ~~2013,~~2015, and the results of their operations and their cash flows for each of the three years in the period ended July 31, ~~2014,~~2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of July 31, ~~2014,~~2016, based on the criteria established in Internal Control-Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September ~~29, 2014,~~15, 2016, expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

September ~~29, 2014~~15, 2016

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

July 31, ~~2014~~2016 and ~~2013~~2015


	2014			2013			2016			2015
	(Dollars in thousands)						(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	81,834		$	91,058		$	141,228		$	114,492
Accounts receivable — net	177,648			169,261			147,333			157,386
Inventories:
Finished products	73,096			64,544			64,313			66,700
Work-in-process	17,689			14,776			16,678			16,958
Raw materials and supplies	22,490			15,387			18,436			20,849
Total inventories	113,275			94,707			99,427			104,507
Assets held for sale	49,542			119,864
Prepaid expenses and other current assets	41,543			37,600			19,436			19,755
Total current assets	463,842			512,490			407,424			396,140
Other assets:
Goodwill	515,004			617,236			429,871			433,199
Other intangible assets	91,014			156,851			59,806			68,888
Deferred income taxes	27,320			8,623			27,238			34,752
Other	22,314			21,325			17,181			18,704
Property, plant and equipment:
Cost:
Land	7,875			7,861			5,809			5,284
Buildings and improvements	101,866			91,471			95,355			94,423
Machinery and equipment	288,409			266,787			256,549			270,086
Construction in progress	12,500			11,842			2,842			2,164
	410,650			377,961			360,555			371,957
Less accumulated depreciation	276,479			255,803			258,111			260,743
Property, plant and equipment — net	134,171			122,158			102,444			111,214
Total	$	1,253,665		$	1,438,683		$	1,043,964		$	1,062,897
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Notes payable	$	61,422		$	50,613		$	4,928		$	10,411
Accounts payable	88,099			82,519			62,245			73,020
Wages and amounts withheld from employees	38,064			42,413			45,998			30,282
Liabilities held for sale	10,640			34,583
Taxes, other than income taxes	7,994			8,243			7,403			7,250
Accrued income taxes	7,893			7,056			6,136			7,576
Other current liabilities	35,319			36,806			40,017			37,939
Current maturities on long-term debt	42,514			61,264			—			42,514
Total current liabilities	291,945			323,497			166,727			208,992
Long-term obligations, less current maturities	159,296			201,150			211,982			200,774
Other liabilities	69,348			83,239			61,657			65,443
Total liabilities	520,589			607,886			440,366			475,209
Stockholders’ investment:
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively; (aggregate liquidation preference of $42,803 and $42,803 at July 31, 2014 and 2013, respectively)	513			513
Class A nonvoting common stock — Issued 51,261,487 and 51,261,487 shares, respectively; (aggregate liquidation preference of $42,803 and $42,803 at July 31, 2016 and 2015, respectively)							513			513
Class B voting common stock — Issued and outstanding 3,538,628 shares	35			35			35			35
Additional paid-in capital	311,811			306,191			317,001			314,403
Earnings retained in the business	452,057			538,512			453,371			414,069
Treasury stock — 3,477,291 and 2,626,276 shares, respectively of Class A nonvoting common stock, at cost	(93,337		)	(69,797		)
Accumulated other comprehensive income	64,156			56,063
Treasury stock — 4,340,513 and 3,480,303 shares at July 31, 2016 and 2015, respectively of Class A nonvoting common stock, at cost							(108,714		)	(93,234		)
Accumulated other comprehensive loss							(54,745		)	(45,034		)
Other	(2,159		)	(720		)	(3,863		)	(3,064		)
Total stockholders’ investment	733,076			830,797			603,598			587,688
Total	$	1,253,665		$	1,438,683		$	1,043,964		$	1,062,897

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014


	2014			2013			2012			2016			2015			2014
	(In thousands, except per share amounts)									(In thousands, except per share amounts)
Net sales	$	1,225,034		$	1,157,792		$	1,071,504		$	1,120,625		$	1,171,731		$	1,225,034
Cost of products sold	615,470			548,444			480,535			561,852			613,299			615,470
Gross margin	609,564			609,348			590,969			558,773			558,432			609,564
Operating expenses:
Research and development	35,048			33,552			34,528			35,799			36,734			35,048
Selling, general and administrative	452,164			427,858			392,694			405,096			422,704			452,164
Restructuring charges	15,012			26,046			6,084			—			16,821			15,012
Impairment charges	148,551			204,448			—			—			46,867			148,551
Total operating expenses	650,775			691,904			433,306			440,895			523,126			650,775
Operating (loss) income	(41,211		)	(82,556		)	157,663
Other income and (expense):
Investment and other income	2,402			3,523			2,082
Operating income (loss)										117,878			35,306			(41,211		)
Other (expense) and income:
Investment and other (expense) income										(709		)	845			2,402
Interest expense	(14,300		)	(16,641		)	(19,090		)	(7,824		)	(11,156		)	(14,300		)
(Loss) earnings from continuing operations before income taxes	(53,109		)	(95,674		)	140,655
Income tax (benefit) expense	(4,963		)	42,583			37,162
(Loss) earnings from continuing operations	$	(48,146	)	$	(138,257	)	$	103,493
Earnings (loss) from discontinued operations, net of income taxes	2,178			(16,278		)	(121,404		)
Net loss	$	(45,968	)	$	(154,535	)	$	(17,911	)
(Loss) earnings from continuing operations per Class A Nonvoting Common Share
Earnings (loss) from continuing operations before income taxes										109,345			24,995			(53,109		)
Income tax expense (benefit)										29,235			20,093			(4,963		)
Earnings (loss) from continuing operations										$	80,110		$	4,902		$	(48,146	)
(Loss) earnings from discontinued operations, net of income taxes										—			(1,915		)	2,178
Net earnings (loss)										$	80,110		$	2,987		$	(45,968	)
Earnings (loss) from continuing operations per Class A Nonvoting Common Share
Basic	$	(0.93	)	$	(2.70	)	$	1.97		$	1.59		$	0.10		$	(0.93	)
Diluted	$	(0.93	)	$	(2.70	)	$	1.95		$	1.58		$	0.10		$	(0.93	)
(Loss) earnings from continuing operations per Class B Voting Common Share:
Earnings (loss) from continuing operations per Class B Voting Common Share:
Basic	$	(0.95	)	$	(2.71	)	$	1.95		$	1.57		$	0.08		$	(0.95	)
Diluted	$	(0.95	)	$	(2.71	)	$	1.94		$	1.56		$	0.08		$	(0.95	)
Earnings (loss) from discontinued operations per Class A Nonvoting Common Share:
(Loss) earnings from discontinued operations per Class A Nonvoting Common Share:
Basic	$	0.04		$	(0.32	)	$	(2.31	)	$	—		$	(0.04	)	$	0.04
Diluted	$	0.04		$	(0.32	)	$	(2.29	)	$	—		$	(0.04	)	$	0.04
Earnings (loss) from discontinued operations per Class B Voting Common Share:
(Loss) earnings from discontinued operations per Class B Voting Common Share:
Basic	$	0.05		$	(0.32	)	$	(2.31	)	$	—		$	(0.04	)	$	0.05
Diluted	$	0.05		$	(0.32	)	$	(2.30	)	$	—		$	(0.04	)	$	0.05
Net loss per Class A Nonvoting Common Share:
Net earnings (loss) per Class A Nonvoting Common Share:
Basic	$	(0.89	)	$	(3.02	)	$	(0.35	)	$	1.59		$	0.06		$	(0.89	)
Diluted	$	(0.89	)	$	(3.02	)	$	(0.34	)	$	1.58		$	0.06		$	(0.89	)
Dividends	$	0.78		$	0.76		$	0.74		$	0.81		$	0.80		$	0.78
Net loss per Class B Voting Common Share:
Net earnings (loss) per Class B Voting Common Share:
Basic	$	(0.90	)	$	(3.03	)	$	(0.36	)	$	1.57		$	0.04		$	(0.90	)
Diluted	$	(0.90	)	$	(3.03	)	$	(0.36	)	$	1.56		$	0.04		$	(0.90	)
Dividends	$	0.76		$	0.74		$	0.72		$	0.79		$	0.78		$	0.76
Weighted average common shares outstanding (in thousands):
Basic	51,866			51,330			52,453			50,541			51,285			51,866
Diluted	51,866			51,330			52,821			50,769			51,383			51,866

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014

2014 2013 2012
(Dollars in thousands)
Net loss $ (45,968 ) $ (154,535 ) $ (17,911 )
Other comprehensive (loss) income:
Foreign currency translation adjustments:
Net gain (loss) recognized in other comprehensive income (loss) 4,543
(2,312 ) (62,827 )
Reclassification adjustment for losses included in net loss 3,004
—
—
7,547
(2,312 ) (62,827 )

Net investment hedge translation adjustments (4,243 ) (6,537 ) 20,508
Long-term intercompany loan translation adjustments:
Net gain (loss) recognized in other comprehensive income (loss) 211
3,108
(2,170 )
Reclassification adjustment for losses included in net loss 865
—
—
1,076
3,108
(2,170 )

Cash flow hedges:
Net gain (loss) recognized in other comprehensive income (loss) 8
(652 ) 2,389
Reclassification adjustment for (gains) losses included in net loss (147 ) (578 ) 494
(139 ) (1,230 ) 2,883
Pension and other post-retirement benefits:
Net gain (loss) recognized in other comprehensive income (loss) 5,211
1,617
(1,015 )
Actuarial gain amortization (240 ) (25 ) (201 )
Prior service credit amortization (203 ) (203 ) (203 )
Reclassification adjustment for losses included in net earnings 131
—
—
4,899
1,389
(1,419 )

Other comprehensive income (loss), before tax 9,140
(5,582 ) (43,025 )
Income tax (expense) benefit related to items of other comprehensive income (loss) (1,047 ) 2,234
(11,462 )
Other comprehensive income (loss), net of tax 8,093
(3,348 ) (54,487 )
Comprehensive loss $ (37,875 ) $ (157,883 ) $ (72,398 )



	2016			2015			2014
	(Dollars in thousands)
Net earnings (loss)	$	80,110		$	2,987		$	(45,968	)
Other comprehensive (loss) income:
Foreign currency translation adjustments:
Net (loss) gain recognized in other comprehensive (loss) income	(1,405		)	(85,622		)	4,543
Reclassification adjustment for (gains) losses included in net earnings (loss)	—			(34,697		)	3,004
	(1,405		)	(120,319		)	7,547

Net investment hedge translation adjustments	4,626			21,477			(4,243		)
Long-term intercompany loan translation adjustments:
Net (loss) gain recognized in other comprehensive (loss) income	(6,906		)	546			211
Reclassification adjustment for (gains) losses included in net (loss) earnings	—			(393		)	865
	(6,906		)	153			1,076

Cash flow hedges:
Net (loss) gain recognized in other comprehensive (loss) income	(1,254		)	1,643			8
Reclassification adjustment for gains (losses) included in net earnings (loss)	196			(1,325		)	(147		)
	(1,058		)	318			(139		)
Pension and other post-retirement benefits:
Net (loss) gain recognized in other comprehensive (loss) income	(293		)	1,057			5,211
Actuarial gain amortization	(612		)	(741		)	(240		)
Prior service credit amortization	(1,035		)	(1,170		)	(203		)
Reclassification adjustment for (gains) losses included in net earnings (loss)	—			(1,741		)	131
	(1,940		)	(2,595		)	4,899

Other comprehensive (loss) income, before tax	(6,683		)	(100,966		)	9,140
Income tax (expense) benefit related to items of other comprehensive (loss) income	(3,028		)	(8,224		)	(1,047		)
Other comprehensive (loss) income, net of tax	(9,711		)	(109,190		)	8,093
Comprehensive income (loss)	$	70,399		$	(106,203	)	$	(37,875	)

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT

Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014

Common
Stock

Additional
Paid-In
Capital

Earnings
Retained
in the
Business

Treasury
Stock

Accumulated
Other
Comprehensive
Income
Other
(In thousands, except per share amounts)
Balances at July 31, 2011 $ 548
$ 307,527
$ 789,100
$ (50,017 ) $ 113,898
$ (4,864 )
Net (loss) earnings —
—
(17,911 ) —
—
—
Net currency translation adjustment and other (Note 4) —
—
—
—
(54,487 ) —
Issuance of 265,491 shares of Class A Common Stock under stock option plan —
(3,516 ) —
7,380
—
—
Other (Note 8) —
(1,637 ) —
(30 ) —
1,560
Tax benefit from exercise of stock options and deferred compensation distributions —
1,167
—
—
—
—
Stock-based compensation expense (Note 8) —
9,467
—
—
—
—
Purchase of 1,869,193 shares of Class A Common Stock —
—
—
(49,933 ) —
—
Cash dividends on Common Stock
Class A — $0.74 per share —
—
(36,340 ) —
—
—
Class B — $0.72 per share —
—
(2,559 ) —
—
—
Balances at July 31, 2012 $ 548
$ 313,008
$ 732,290
$ (92,600 ) $ 59,411
$ (3,304 )
Net (loss) earnings —
—
(154,535 ) —
—
—
Net currency translation adjustment and other (Note 4) —
—
—
—
(3,348 ) —
Issuance of 1,080,089 shares of Class A Common Stock under stock option plan —
(9,721 ) —
30,045
—
—
Other (Note 8) —
(1,266 ) —
(2,121 ) —
2,584
Tax benefit from exercise of stock options and deferred compensation distributions —
2,434
—
—
—
—
Stock-based compensation expense (Note 8) —
1,736
—
—
—
—
Purchase of 188,167 shares of Class A Common Stock —
—
—
(5,121 ) —
—
Cash dividends on Common Stock
Class A — $0.76 per share —
—
(36,613 ) —
—
—
Class B — $0.74 per share —
—
(2,630 ) —
—
—
Balances at July 31, 2013 $ 548
$ 306,191
$ 538,512
$ (69,797 ) $ 56,063
$ (720 )
Net (loss) earnings —
—
(45,968 ) —
—
—
Net currency translation adjustment and other (Note 4) —
—
—
—
8,093
—
Issuance of 490,507 shares of Class A Common Stock under stock option plan —
847
—
11,266
—
—
Other (Note 8) —
(371 ) —
(4,225 ) —
(1,439 )
Tax benefit from exercise of stock options and deferred compensation distributions —
(70 ) —
—
—
—
Stock-based compensation expense (Note 8) —
5,214
—
—
—
—
Purchase of 1,180,531 shares of Class A Common Stock —
—
—
(30,581 ) —
—
Cash dividends on Common Stock
Class A — $0.78 per share —
—
(37,786 ) —
—
—
Class B — $0.76 per share —
—
(2,701 ) —
—
—
Balances at July 31, 2014 $ 548
$ 311,811
$ 452,057
$ (93,337 ) $ 64,156
$ (2,159 )



	Common Stock		Additional Paid-In Capital			Earnings Retained in the Business			Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Other
	(In thousands, except per share amounts)
Balances at July 31, 2013	$	548	$	306,191		$	538,512		$	(69,797	)	$	56,063		$	(720	)
Net earnings (loss)	—		—			(45,968		)	—			—			—
Other comprehensive (loss) income, net of tax	—		—			—			—			8,093			—
Issuance of 490,507 shares of Class A Common Stock under stock option plan	—		847			—			11,266			—			—
Other	—		(371		)	—			(4,225		)	—			(1,439		)
Tax benefit from exercise of stock options and deferred compensation distributions	—		(70		)	—			—			—			—
Stock-based compensation expense (Note 7)	—		5,214			—			—			—			—
Purchase of 1,180,531 shares of Class A Common Stock	—		—			—			(30,581		)	—			—
Cash dividends on Common Stock
Class A — $0.78 per share	—		—			(37,786		)	—			—			—
Class B — $0.76 per share	—		—			(2,701		)	—			—			—
Balances at July 31, 2014	$	548	$	311,811		$	452,057		$	(93,337	)	$	64,156		$	(2,159	)
Net earnings (loss)	—		—			2,987			—			—			—
Other comprehensive (loss) income, net of tax	—		—			—			—			(109,190		)	—
Issuance of 102,780 shares of Class A Common Stock under stock plan	—		(1,315		)	—			2,735			—			—
Other	—		2,312			—			(2,632		)	—			(905		)
Tax (shortfall) benefit from exercise of stock options and deferred compensation distributions	—		(2,876		)	—			—			—			—
Stock-based compensation expense (Note 7)	—		4,471			—			—			—			—
Cash dividends on Common Stock
Class A — $0.80 per share	—		—			(38,204		)	—			—			—
Class B — $0.78 per share	—		—			(2,771		)	—			—			—
Balances at July 31, 2015	$	548	$	314,403		$	414,069		$	(93,234	)	$	(45,034	)	$	(3,064	)
Net earnings (loss)	—		—			80,110			—			—			—
Other comprehensive (loss) income, net of tax	—		—			—			—			(9,711		)	—
Issuance of 304,471 shares of Class A Common Stock under stock plan	—		(3,830		)	—			8,300			—			—
Other	—		(10		)	—			(228		)	—			(799		)
Tax (shortfall) benefit from exercise of stock options, vesting of RSUs, and deferred compensation distributions	—		(1,716		)	—			—			—			—
Stock-based compensation expense (Note 7)	—		8,154			—			—			—			—
Purchase of 1,153,689 shares of Class A Common Stock	—		—			—			(23,552		)	—			—
Cash dividends on Common Stock
Class A — $0.81 per share	—		—			(38,001		)	—			—			—
Class B — $0.79 per share	—		—			(2,807		)	—			—			—
Balances at July 31, 2016	$	548	$	317,001		$	453,371		$	(108,714	)	$	(54,745	)	$	(3,863	)

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014


	2014			2013			2012			2016			2015			2014
	(Dollars in thousands)									(Dollars in thousands)
Operating activities:
Net loss	$	(45,968	)	$	(154,535	)	$	(17,911	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net earnings (loss)										$	80,110		$	2,987		$	(45,968	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization	44,598			48,725			43,987			32,432			39,458			44,598
Non-cash portion of restructuring charges	566			3,699			458			—			4,164			566
Non-cash portion of stock-based compensation expense	5,214			1,736			9,735			8,154			4,471			5,214
Impairment charges	148,551			204,448			115,688			—			46,867			148,551
Loss on write-down of assets held for sale	—			15,658			—
Loss on sales of businesses	1,238			3,138			204
Loss on sales of businesses, net										—			426			1,238
Deferred income taxes	(27,516		)	21,630			(9,679		)	2,085			(7,233		)	(27,516		)
Changes in operating assets and liabilities (net of effects of business acquisitions/divestitures):
Accounts receivable	(3,600		)	1,535			18,089			8,159			1,317			(3,600		)
Inventories	(12,608		)	2,440			(7,674		)	4,833			(763		)	(12,608		)
Prepaid expenses and other assets	(278		)	5,036			(2,744		)	475			9,188			(278		)
Accounts payable and accrued liabilities	(20,508		)	(2,285		)	(29,370		)	3,928			(8,516		)	(20,508		)
Income taxes	3,731			(7,722		)	23,922			(1,200		)	982			3,731
Net cash provided by operating activities	93,420			143,503			144,705			138,976			93,348			93,420
Investing activities:
Purchases of property, plant and equipment	(43,398		)	(35,687		)	(24,147		)	(17,140		)	(26,673		)	(43,398		)
Payments of contingent consideration	—			—			(2,580		)
Settlement of net investment hedges	—			—			(797		)
Acquisition of business, net of cash acquired	—			(301,157		)	(37,649		)
Sales of businesses, net of cash retained	54,242			10,178			856			—			6,111			54,242
Other	(637		)	900			(287		)	1,724			6,197			(637		)
Net cash provided by (used in) investing activities	10,207			(325,766		)	(64,604		)
Net cash (used in) provided by investing activities										(15,416		)	(14,365		)	10,207
Financing activities:
Payment of dividends	(40,487		)	(39,243		)	(38,899		)	(40,808		)	(40,976		)	(40,487		)
Proceeds from issuance of common stock	12,113			20,324			3,864			5,246			1,644			12,113
Purchase of treasury stock	(30,581		)	(5,121		)	(49,933		)	(23,552		)	—			(30,581		)
Proceeds from borrowing on notes payable	63,000			220,000			—
Repayment of borrowing on notes payable	(60,000		)	(181,000		)	—
Proceeds from borrowings on line of credit	10,334			11,613			—
Repayment of borrowing on line of credit	(2,398		)	—			—
Proceeds from borrowing on credit facilities										96,276			83,382			73,334
Repayment of borrowing on credit facilities										(91,759		)	(32,314		)	(62,398		)
Principal payments on debt	(61,264		)	(61,264		)	(62,687		)	(42,514		)	(42,514		)	(61,264		)
Debt issuance costs	—			—			(961		)	(803		)	—			—
Income tax benefit from the exercise of stock options and deferred compensation distributions, and other	(6,104		)	1,631			792
Income tax on equity-based compensation, and other										(1,662		)	(1,374		)	(6,104		)
Net cash used in financing activities	(115,387		)	(33,060		)	(147,824		)	(99,576		)	(32,152		)	(115,387		)
Effect of exchange rate changes on cash	2,536			481			(16,348		)	2,752			(14,173		)	2,536
Net decrease in cash and cash equivalents	(9,224		)	(214,842		)	(84,071		)
Net increase (decrease) in cash and cash equivalents										26,736			32,658			(9,224		)
Cash and cash equivalents, beginning of period	91,058			305,900			389,971			114,492			81,834			91,058
Cash and cash equivalents, end of period	$	81,834		$	91,058		$	305,900		$	141,228		$	114,492		$	81,834
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	14,594		$	17,162		$	19,194
Income taxes, net of refunds	33,043			34,030			35,292
Acquisitions:
Fair value of assets acquired, net of cash	$	—		$	168,724		$	23,792
Liabilities assumed	—			(37,747		)	(8,987		)
Goodwill	—			170,180			22,844
Net cash paid for acquisitions	$	—		$	301,157		$	37,649
Interest										$	8,528		$	11,164		$	14,594
Income taxes paid										28,497			25,024			33,043

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

BRADY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended July 31, ~~2014, 2013~~2016, 2015 and ~~2012~~2014

(In thousands, except share and per share amounts)

1. Summary of Significant Accounting Policies

Nature of Operations — Brady Corporation is ~~an international~~a global manufacturer and supplier of identification solutions and ~~specialty materials~~workplace safety products that identify and protect premises, products and people. The ability to provide customers with a broad range of proprietary, customized, and diverse products for use in various applications, along with a commitment to quality and service, a global footprint, and multiple sales channels, have made Brady a world leader in many of its markets.

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Brady Corporation and its subsidiaries (“Brady” or the “Company”), all of which are wholly-owned. All intercompany accounts and transactions have been eliminated in consolidation.

Discontinued Operations — The results of operations of the Die-Cut businesses have been reported as discontinued operations for ~~all periods presented. The corresponding assets~~the years ended July 31, 2015 and ~~liabilities have been reclassified in accordance with the authoritative literature on~~2014. There were no assets held for sale at July 31, ~~2014~~2016 or July 31, 2015 as the second and ~~2013.~~final phase of the Die-Cut sale closed in the first quarter of fiscal 2015. In accordance with the authoritative literature, the Company has elected to not separately disclose the cash flows related to discontinued operations. See Note 1513 for additional information about the Company's discontinued operations.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Subsequent Events — On August 1, 2014, the Company closed the second and final phase of the sale of the Die-Cut business to LTI Flexible Products, Inc. (d/b/a Boyd Corporation) for cash proceeds of approximately $7 million. The second-phase closing involved the sale of the remainder of the Company’s Asian Die-Cut business, with operations in Langfang, Wuxi and Shenzhen in China and associated global sales support.

On August 1, 2014, the Board of Directors appointed J. Michael Nauman as President and Chief Executive Officer of the Company, effective August 4, 2014. In addition, Mr. Nauman was appointed as a member of the Board of Directors, effective as of August 4, 2014, with a term expiring at the next annual meeting of shareholders in November 2014.

On September 10, 2014, the Board of Directors appointed Thomas J. Felmer to serve as the Company’s Senior Vice President and President - Workplace Safety, effective immediately. With Mr. Felmer’s appointment as President - Workplace Safety, the Board of Directors appointed Aaron J. Pearce to serve as Senior Vice President and Chief Financial Officer of the Company, effective immediately.

~~On September 10, 2014,~~8, 2016, the Company announced an increase in the annual dividend to shareholders of the Company's Class A Common Stock, from ~~$0.78~~$0.81 to ~~$0.80~~$0.82 per share. A quarterly dividend of ~~$0.20~~$0.2050 will be paid on October 31, ~~2014,~~2016, to shareholders of record at the close of business on October 10, ~~2014.~~2016. This dividend represents an increase of ~~2.6%~~1.2% and is the ~~29th~~31st consecutive annual increase in dividends.

Fair Value of Financial Instruments — The Company believes the carrying amount of its financial instruments (cash and cash equivalents, accounts receivable and accounts payable) is a reasonable estimate of the fair value of these instruments due to their short-term nature. See Note 76 for more information regarding the fair value of long-term debt and Note 1211 for fair value measurements.

Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents, which are recorded at cost.

Accounts Receivables — Accounts receivables are stated net of allowances for doubtful accounts of $~~3,069~~5,144 and $~~5,093~~3,585 as of July 31, ~~2014~~2016 and ~~2013~~2015, respectively. ~~The allowance for doubtful accounts decreased for the year ended July 31, 2014 compared to the year ended July 31, 2013.~~ No single customer comprised more than 5%10% of the Company’s consolidated net sales in fiscal ~~2014~~2016, ~~2013~~2015 or ~~2012~~2014, or 5%10% of the Company’s consolidated accounts receivable as of July 31, ~~2014~~2016 or ~~2013~~2015. Specific customer provisions are made during review of significant outstanding amounts, in which customer creditworthiness and current economic trends may indicate that collection is doubtful. In addition, provisions are made for the remainder of accounts receivable based upon the age of the receivable and the Company’s historical collection experience.

~~Table of Contents~~

Inventories — Inventories are stated at the lower of cost or market. Cost has been determined using the last-in, first-out (“LIFO”) method for certain domestic inventories (~~11.7%~~14.0% of total inventories at July 31, ~~2014~~2016, and ~~12.0%~~12.7% of total inventories at July 31, ~~2013~~2015) and the first-in, first-out (“FIFO”) or average cost methods for other inventories. Had all domestic inventories been accounted for on a FIFO basis instead of on a LIFO basis, the carrying value of inventories would have increased by $~~7,637~~6,929 and $~~7,923~~7,346 onas of July 31, ~~2014~~2016 and ~~2013~~2015, respectively.

Goodwill — Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company completes impairment reviews for its reporting units using a fair-value method based on management's judgments and assumptions. The fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between market participants on an arms-length basis. In estimating the fair value, the Company utilizes a discounted cash flow model and market multiples approach. The estimated fair value is compared with the carrying amount of the reporting unit, including goodwill. The annual impairment testing performed on May 1, ~~2014,~~2016, in accordance with ASC 350, "Intangibles - Goodwill and Other" ("Step One") indicated that ~~the following~~all reporting units with remaining goodwill had a fair

value substantially in excess of its carrying ~~value: IDS Americas & Europe, IDS APAC, WPS Americas, WPS Europe and WPS APAC. The results of~~value. No goodwill impairment charges were recorded during the Step One analysis completed over the Company's remaining reporting unit, PeopleID, indicated that it was potentially impaired. Refer to Note 3, "Goodwill and Other Intangible Assets" for further information.year ended July 31, 2016.

Long-Lived and Other Intangible Assets — The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis, over the estimated periods benefited. Intangible assets with indefinite useful lives as well as goodwill are not subject to amortization. These assets are assessed for impairment annually or more frequently as deemed necessary.

The Company evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived and other finite-lived intangible assets may warrant revision or that the remaining balance of an asset may not be recoverable. If impairment is determined to exist, any related impairment loss is calculated by comparing the fair value of the asset to its carrying value. In ~~conjunction with the goodwill impairment test over the PeopleID reporting unit,~~fiscal 2016, long-lived and other intangible assets ~~associated with the reporting unit~~ were analyzed for potential impairment. As a result ~~long-lived assets in~~of the ~~amount of~~ ~~$48,139~~analysis, no impairment charges were ~~impaired during the current period.~~recorded. Refer to Note 3,2, "Goodwill and Other Intangible Assets" for further information.

Property, Plant, and Equipment — Property, plant, and equipment are recorded at cost. The cost of buildings and improvements and machinery and equipment is being depreciated over their estimated useful lives using primarily the straight-line method for financial reporting purposes. The estimated useful lives range from 3 to 33 years as shown below.



Asset Category		Range of Useful Lives
Buildings & Improvements		10 to 33 Years
Computer Systems		5 Years
Machinery & Equipment		3 to 10 Years

Fully depreciated assets are retained in property and accumulated depreciation accounts until disposal. Upon disposal, assets and related accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to operations. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the respective asset. Depreciation expense was $23,375, $~~26,727~~, ~~$22,976~~27,355, and $~~21,672~~26,727 for the years ended July 31, ~~2014~~2016, ~~2013~~2015 and ~~2012~~2014, respectively.

Catalog Costs and Related Amortization — The Company accumulates all direct costs incurred, net of vendor cooperative advertising payments, in the development, production, and circulation of its catalogs on its balance sheet until such time as the related catalog is mailed. The catalog costs are subsequently amortized into selling, general, and administrative expense over the expected sales realization cycle, which is one year or less. Consequently, any difference between the estimated and actual revenue stream for a particular catalog and the related impact on amortization expense is realized within a period of one year or less. The estimate of the expected sales realization cycle for a particular catalog is based on the Company’s historical sales experience with identical or similar catalogs, and an assessment of prevailing economic conditions and various competitive factors. The Company tracks subsequent sales realization, reassesses the marketplace, and compares its findings to the previous estimate, and adjusts the amortization of future catalogs, if necessary. At July 31, ~~2014~~2016 and ~~2013~~2015, ~~$13,959~~$8,290 and ~~$11,255,~~$9,547, respectively, of prepaid catalog costs were included in prepaid expenses and other current assets.

Revenue Recognition — Revenue is recognized when it is both earned and realized or realizable. The Company’s policy is to recognize revenue when title to the product and risk of loss have transferred to the customer, persuasive evidence of an arrangement exists, and collection of the sales proceeds is reasonably assured, all of which generally occur upon shipment of goods to customers. The majority of the Company’s revenue relates to the sale of inventory to customers, and revenue is recognized

~~Table of Contents~~

when title and the risks and rewards of ownership pass to the customer. Given the nature of the Company’s business and the applicable rules guiding revenue recognition, the Company’s revenue recognition practices do not contain estimates that materially affect the results of operations, with the exception of estimated returns and credit memos. The Company provides for an allowance for estimated product returns and credit memos which is recognized as a deduction from sales at the time of the sale. As of July 31, ~~2014~~2016 and ~~2013~~2015, the Company had a reserve for estimated product returns and credit memos of $~~3,161~~3,713 and $~~2,711~~3,619, respectively.

Sales Incentives — The Company accounts for cash consideration (such as sales incentives and cash discounts) given to its customers or resellers as a reduction of revenue rather than an operating expense. Sales incentives for the years ended July 31, ~~2014~~2016, ~~2013~~2015, and ~~2012~~2014 were $~~36,175~~36,084, $~~28,000~~36,591, and $~~18,474~~36,175, respectively. The increase in sales incentives for the year ended July 31, 2014 as compared to the prior two years was due to twelve months of sales incentives related to Precision Dynamics Corporation ("PDC") compared to seven months in the prior year.

Shipping and Handling Fees and Costs — Amounts billed to a customer in a sale transaction related to shipping and handling fees are reported as net sales and the related costs incurred for shipping and handling are reported as cost of goods sold.

Advertising Costs — Advertising costs are expensed as incurred, except catalog and mailing costs as outlined ~~above.~~previously. Advertising expense for the years ended July 31, ~~2014~~2016, ~~2013~~2015, and ~~2012~~2014 was $74,204, $~~82,561~~, ~~$77,905~~86,090, and $~~74,830~~82,561, respectively.

Stock-Based Compensation — The Company has an incentive stock plan under which the Board of Directors may grant nonqualified stock options to purchase shares of Class A Nonvoting Common Stock, restricted stock unit awards ("RSUs"), or restricted and unrestricted shares of Class A Nonvoting Common Stock to employees and non-employee directors.

The options issued under the plan have an exercise price equal to the fair market value of the underlying stock at the date of ~~grant~~grant. Restricted shares and ~~generally vest ratably over a~~ ~~three-year period, with one-third becoming exercisable one year after the grant date and one-third additional in each of the succeeding two years. Options~~RSUs issued under the plan ~~referred to herein as “service-based” options, generally expire~~ ~~10 years~~ from the date of grant. The Company also grants stock options to certain executives and key management employees that vest upon meeting certain financial performance conditions over the vesting schedule described above. These options are referred to herein as “performance-based” options. Performance-based stock options expire ~~10 years~~ ~~from the date of grant. The restricted shares and RSUs~~ have an issuance price equal to the fair market value of the underlying stock at the date of grant. The Company also grants restricted shares and RSUs to certain executives and key management employees that vest upon meeting certain financial performance conditions.

In accordance with ASC 718 "Compensation - Stock Compensation," the Company measures and recognizes the compensation expense for all share-based awards made to employees and directors based on estimated grant-date fair values. The Black-Scholes option valuation model is used to determine the fair value of stock option awards on the date of grant. The Company recognizes the compensation cost of all share-based awards at the time it is deemed probable the award will vest. This cost is recognized on a straight-line basis over the vesting period of the award. If it is determined that it is ~~not likely~~unlikely the award will vest, the expense recognized to date for the award is reversed in the period in which this is evident and the remaining expense is not recorded.

The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards. The Company uses historical data regarding stock option exercise behaviors to estimate the expected term of options granted based on the period of time that options granted are expected to be outstanding. Expected volatilities are based on the historical volatility of the Company’s stock. The expected dividend yield is based on the Company’s historical dividend payments and historical yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for the length of time corresponding to the expected term of the option. The market value is calculated as the average of the high and the low stock price on the date of the grant.

The Company has estimated the fair value of its service-based and performance-based stock option awards granted during the years ended July 31, 2014, 2013, and 2012 using the Black-Scholes option valuation model. The weighted-average assumptions used in the Black-Scholes valuation model are reflected in the following table:

~~Table of Contents~~

2014 2013 2012
Service-Based Performance-Based Service-Based Performance-Based Service-Based Performance-Based
Black-Scholes Option Valuation Assumptions Option Awards Option Awards Option Awards Option Awards Option Awards Option Awards
Expected term (in years) 5.97
—
5.93
—
5.89
6.57
Expected volatility 37.32 % — % 38.67 % — % 39.41 % 39.21 %
Expected dividend yield 2.35 % — % 2.21 % — % 2.07 % 1.99 %
Risk-free interest rate 1.80 % — % 0.91 % — % 1.16 % 2.05 %
Weighted-average market value of underlying stock at grant date $ 30.98
$ —
$ 30.58
$ —
$ 27.05
$ 29.55
Weighted-average exercise price $ 30.98
$ —
$ 30.58
$ —
$ 27.05
$ 29.55
Weighted-average fair value of options granted during the period $ 9.17
$ —
$ 9.05
$ —
$ 8.42
$ 10.01

~~The Company~~ includes as part of cash flows from financing activities the benefits of tax deductions in excess of the tax-effected compensation of the related stock-based awards for options exercised and restricted shares and RSUs vested during the period. See Note 87 “Stockholder’s Investment” for more information regarding the Company’s incentive stock plans.

Research and Development — Amounts expended for research and development are expensed as incurred.

Other Comprehensive Income — Other comprehensive income consists of foreign currency translation adjustments, net unrealized gains and losses from cash flow hedges and net investment hedges, and the unamortized gain on the post-retirement medical plans net of their related tax effects.

Foreign Currency Translation — Foreign currency assets and liabilities are translated into United States dollars at end of period rates of exchange, and income and expense accounts are translated at the weighted average rates of exchange for the period. Resulting translation adjustments are included in other comprehensive income.

Risk Management Activities — ~~The Company is exposed to market risk, such as changes in interest rates and currency exchange rates.~~ The Company does not hold or issue derivative financial instruments for trading purposes.

Income Taxes — The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. The Company recognizes the effect of income tax positions only if sustaining those positions is more likely than not. Changes in recognition or measurement are reflected in the period in which a change in judgment occurs.

Foreign Currency Hedging — The objective of the Company’s foreign currency exchange risk management is to minimize the impact of currency movements on non-functional currency transactions and minimize the foreign currency translation impact on the Company’s foreign operations. While the Company’s risk management objectives and strategies are driven from an economic perspective, the Company attempts, where possible and practical, to ensure that the hedging strategies it engages in qualify for hedge accounting and result in accounting treatment where the earnings effect of the hedging instrument provides substantial offset (in the same period) to the earnings effect of the hedged item. Generally, these risk management transactions will involve the use

of foreign currency derivatives to protect against exposure resulting from transactions in a currency differing from the respective functional currency.

The Company recognizes derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. Changes in the fair value (i.e., gains or losses) of the derivatives are recorded in the accompanying Consolidated Statements of Earnings as "Investment and other ~~income", net,~~income (expense) - net" or as a component of Accumulated Other Comprehensive Income ("AOCI") in the accompanying Consolidated Balance Sheets and in the Consolidated Statements of Comprehensive ~~Loss,~~Income (Loss), as discussed below.

The Company utilizes forward foreign exchange currency contracts to reduce the exchange rate risk of specific foreign currency denominated transactions. These contracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18 months. These instruments may or may not qualify as hedges under the

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accounting guidance for derivative instruments and hedging activities based upon the intended objective of the contract. Hedge effectiveness is determined by how closely the changes in the fair value of the hedging instrument offset the changes in the fair value or cash flows of the hedged item. Hedge accounting is permitted only if the hedging relationship is expected to be highly effective at the inception of the hedge and on an on-going basis. Gains or losses on the derivative related to hedge ineffectiveness are recognized in current earnings. The amount of hedge ineffectiveness was not ~~significant~~material for the fiscal years ended July 31, ~~2014~~, ~~2013~~,2016, 2015, and ~~2012~~.2014.

The Company has designated a portion of its foreign exchange contracts as cash flow hedges. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of AOCI and in the cash flow hedge section of the Consolidated Statements of Comprehensive Loss, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

The Company has designated a portion of its foreign exchange contracts as net investment hedges of the Company’s net investments in foreign operations. The Company also utilizes Euro-denominated debt and British Pound-denominated intercompany loans designated as hedge instruments to hedge portions of the Company’s net investments in Euro and British- Pound denominated foreign operations. For net investment hedges that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded as cumulative translation within AOCI and are included in the net investment hedge section of the Consolidated Statements of Comprehensive ~~Loss.~~Income (Loss). Any ineffective portions are to be recognized in earnings. Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.

The Company also enters into foreign exchange contracts to create economic hedges to manage foreign exchange risk exposure. The Company has not designated these derivative contracts as hedge transactions, and accordingly, the mark-to-market impact of these derivatives is recorded each period in current earnings.

See Note 1412 "Derivatives and Hedging Activities" for more information regarding the Company’s derivative instruments and hedging activities.

New Accounting Standards — In March ~~2013,~~2016, the FASB issued ASU ~~2013-05, "Parent's~~2016-09, "Stock Compensation: Improvements to Employee Share-Based Payment Accounting, ~~for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,~~" which ~~applies to~~will simplify several aspects of accounting for share-based payment transactions. The update will require, among other items, that all excess tax deficiencies or benefits be recorded as income tax expense or benefit in the ~~release~~statement of ~~the cumulative translation adjustment into net~~ earnings, ~~when a parent either sells a part or all of its investment~~and not in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The guidance requires that a parent deconsolidate a subsidiary or derecognize a group of assets that is a business if the parent ceases to have a controlling financial interest in that group of assets, and resolves the diversity in practice for the treatment of business combinations achieved in stages involving a foreign entity. Theadditional paid-in capital (APIC). This guidance is effective for annual ~~and interim reporting~~ periods beginning after December 15, ~~2013, with early~~2016, and interim periods within those annual periods. Early adoption ~~permitted.~~of the ASU is permitted and the prospective transition method should be applied. The Company ~~adopted~~is currently evaluating the impact of this update ~~in connection with the accounting for the sale of the Die-Cut business. It did not have a material impact~~ on ~~the Company's~~its consolidated financial statements.

In ~~July 2013,~~February 2016, the FASB issued ASU ~~2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,~~2016-02, "Leases," which ~~requires entities~~replaces the current lease accounting standard. The update will require, among other items, lessees to ~~present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever~~recognize the ~~NOL or tax credit carryforward would be available to reduce~~assets and liabilities that arise from most leases on the additional taxable income or tax due if the tax position is disallowed. This accounting standard update requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date.balance sheet. This guidance is effective for ~~fiscal years beginning after December 15, 2013. The Company is not anticipating adoption of this update to have a material impact on the Company's consolidated financial statements.~~

In April 2014, the FASB issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity", which includes amendments that change the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, expenses and cash flows of discontinued operations. The guidance is effective for fiscal and interimannual periods beginning after December 15, ~~2014.~~2018, and interim periods within those annual periods. The ASU must be adopted using a modified retrospective approach and early adoption is permitted. The Company is currently evaluating the impact of this update ~~is not expected to have a material impact~~ on ~~the~~its consolidated financial ~~statements of the Company.~~

statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers, "," which eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a ~~principle-based~~principles-based approach for determining revenue recognition. The ~~accounting standard update~~new guidance requires revenue recognition when control of the goods or

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services transfers to the customer, replacing the existing guidance which requires revenue recognition when the risks and rewards transfer to the customer. Under the new guidance, companies should recognize revenues in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services.

In March 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)", which amends the principal-versus-agent implementation guidance in ASU 2014-09. ASU 2016-08 clarifies the principal-versus-agent guidance in ASU 2014-09 and requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on that designation.

In May 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients", which amends the transition, collectability, and non-cash consideration guidance in ASU 2014-09. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, substantially all of the revenue must have been recognized under legacy GAAP. The ~~guidance~~amendments also clarify how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria.

ASU 2014-09 (and related updates) is effective for the Company beginning in fiscal ~~and interim periods beginning after December 15, 2016.~~2019. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the standard. The Company is currently evaluating the impact of this update on its consolidated financial statements.

~~2. Acquisitions~~

The Company did not complete any business acquisitions during the fiscal year ended July 31, 2014, had one business acquisition during the fiscal year ended July 31, 2013, and completed three business acquisitions during the fiscal year ended July 31, 2012. All of these transactions were accounted for using business combination accounting; therefore, the results of the acquired operations are included in the accompanying consolidated financial statements only since their acquisition dates.

~~Fiscal 2013~~

On December 28, 2012, the Company acquired all of the outstanding shares of Precision Dynamics Corporation ("PDC"), a manufacturer of identification products primarily for the healthcare sector headquartered in Valencia, California. PDC is reported within the Company's ID Solutions segment. Financing for this acquisition consisted of ~~$220,000~~ ~~from the Company's revolving loan agreement and the balance from cash on hand. As of July 31, 2014, the Company has repaid the entire amount of the borrowing, of which $39,000~~ ~~was repaid in fiscal 2014.~~

The Company acquired PDC to establish itself in the healthcare sector, consistent with the Company's mission to identify and protect premises, products and people. PDC's large customer base, strong channels to market, and broad product offering provide a foundation for future growth.

~~The following table details the final allocation of the PDC purchase price:~~

Fair values:
Cash and cash equivalents $ 12,904
Accounts receivable — net 21,178
Total inventories 16,788
Prepaid expenses and other current assets 4,233
Goodwill 168,150
Other intangible assets 109,300
Other assets 483
Property, plant and equipment 18,015
Accounts payable (10,060 )
Wages and amounts withheld from employees (4,234 )
Taxes, other than income taxes (600 )
Accrued income taxes (57 )
Other current liabilities (5,181 )
Other long-term liabilities (16,858 )
314,061
Less: cash acquired (12,904 )
Fair value of total consideration $ 301,157

The final valuation was completed upon the conclusion of various state and local tax filing determinations in the second quarter of fiscal 2014. The other intangible assets consist of customer relationships of $102,500, which are being amortized over a life of 10 years, and a definite-lived trademark of $6,800, which is being amortized over a life of 3 years. Of the total $168,150 in acquired goodwill, $57,374 is tax deductible and $51,672 of the total $109,300 in other intangible assets is tax deductible.

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~~The following table reflects the unaudited pro-forma operating results of the Company for fiscal years~~ ~~2013~~ and 2012 which give effect to the acquisition of PDC as if it had occurred at the beginning of fiscal 2012, after giving effect to certain adjustments, including amortization of intangible assets, interest expense on acquisition debt, and income tax effects. The pro-forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations which may occur in the future or that would have occurred had the acquisitions been effected on the date indicated, nor are they necessarily indicative of the Company's future results of operations.

2013 2012
Net sales, as reported $ 1,157,792
$ 1,071,504
Net sales, pro forma 1,226,217
1,241,372
(Loss) earnings from continuing operations, as reported (138,257 ) 103,493
(Loss) earnings from continuing operations, pro forma (133,957 ) 104,014
Basic (loss) earnings from continuing operations per Class A Common Share, as reported (2.70 ) 1.97
Basic (loss) earnings from continuing operations per Class A Common Share, pro forma (2.61 ) 1.98
Diluted (loss) earnings from continuing operations per Class A Common Share, as reported (2.70 ) 1.95
Diluted (loss) earnings from continuing operations per Class A Common Share, pro forma (2.61 ) 1.96

Pro forma results for fiscal 2013, were adjusted to exclude $3,600 of acquisition-related expenses and $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, and were adjusted to include $529 in interest expense on acquisition debt and $429 in income tax benefit.

Pro forma results for fiscal 2012, were adjusted to include $3,600 of acquisition-related expenses, $1,530 of nonrecurring expense related to the fair value adjustment to acquisition-date inventory, $1,402 in interest expense on acquisition debt, and $2,526 in income tax expense.

~~Pro forma results for fiscal years 2013 and 2012 include $5,215 and $12,517 of pre-tax amortization expense related to intangible assets, respectively.~~

~~Fiscal 2012~~

~~In March 2012, the Company acquired Grafo Wiremarkers Africa (Proprietary) Limited (“Grafo”), based in Johannesburg, South Africa for~~ ~~$3,039. Grafo offers a comprehensive range of wire identification products and is the sole distributor in Africa of locally developed Dartag~~^® ~~ABS cablemarkers, and stainless steel ties and tags. Grafo has annual sales of approximately~~ ~~$3,000~~ ~~and is included in the Company’s IDS segment. The purchase price allocation resulted in~~ ~~$1,227~~ ~~assigned to goodwill and~~ ~~$961~~ ~~assigned to customer relationships. The amount assigned to the customer relationships is being amortized over~~ ~~seven years~~. The acquisition provided a base in South Africa for the Company to further expand its business with the established distributors and customers throughout South Africa and the Southern African Development Community (SADC) countries.

~~In May 2012, the Company acquired Runelandhs Försäljnings AB (“Runelandhs”), based in Kalmar, Sweden for~~ ~~$22,499, net of cash received. Runelandhs is a direct marketer of industrial and office equipment with annual sales of approximately~~ ~~$19,000~~. Its products include lifting, transporting, and warehouse equipment; workbenches and material handling supplies; products for environmental protection; and entrance, reception, and office furnishings. Runelandhs is included in the Company’s WPS segment. The final purchase price allocation resulted in ~~$13,177~~ ~~assigned to goodwill,~~ ~~$5,340~~ ~~assigned to the tradename,~~ ~~$5,474~~ ~~assigned to customer relationships, and~~ ~~$95~~ ~~assigned to non-compete agreements. The amount assigned to the trademark has an indefinite life. The amounts assigned to the customer relationships and non-compete agreements are being amortized over~~ ~~seven~~ ~~and~~ ~~five~~ ~~years, respectively. The acquisition expanded the Company's direct marketing presence in Scandinavia.~~

~~In May 2012, the Company acquired Pervaco AS (“Pervaco”), based in Kjeller, Norway for~~ ~~$12,111, net of cash received. Pervaco is a direct marketer of facility identification products with annual sales of approximately~~ ~~$6,000. Pervaco is included in the Company’s WPS segment. The purchase price allocation resulted in~~ ~~$8,440~~ ~~assigned to goodwill,~~ ~~$1,538~~ ~~assigned to the tradename,~~ ~~$2,468~~ ~~assigned to customer relationships, and~~ ~~$91~~ ~~assigned to non-compete agreements. The amount assigned to the tradename has an indefinite life. The amounts assigned to the customer relationships and non-compete agreements are being amortized over~~ ~~five~~ ~~and~~ ~~three~~ ~~years, respectively. This acquisition also expanded the Company's direct marketing presence in Scandinavia.~~

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~~The following table summarizes the combined estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:~~

Current assets net of cash $ 5,082
Property, plant & equipment 2,743
Goodwill 22,844
Customer relationships 8,903
Tradenames 6,878
Non-compete agreements 186

Total assets acquired net of cash $ 46,636
Liabilities assumed 7,555
Debt assumed 1,432

Net assets acquired $ 37,649

The results of the operations of the acquired business have been included since the date of acquisition in the accompanying consolidated financial statements. Pro forma information related to the acquisitions during the twelve months ended July 31, 2012, is not included because the impact on the Company’s consolidated results of operations is considered to be immaterial.

3.2. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill by reportable segment for the years ended July 31, ~~2014~~2016 and ~~2013,~~2015, were as follows:

IDS WPS Die-Cut Total
Balance as of July 31, 2012 $ 367,893
$ 276,941
$ 31,957
$ 676,791
Current year acquisitions 170,180
—
—
170,180
Current year divestitures (2,882 ) —
—
(2,882 )
Reclassification to assets held for sale (4,129 ) —
(33,218 ) (37,347 )
Impairment charge (18,225 ) (172,280 ) —
(190,505 )
Translation adjustments 4,192
(4,454 ) 1,261
999
Balance as of July 31, 2013 $ 517,029
$ 100,207
$ —
$ 617,236
Impairment charge (100,412 ) —
—
(100,412 )
Purchase accounting adjustments (2,168 ) —
—
(2,168 )
Translation adjustments (2,160 ) 2,508
—
348
Balance as of July 31, 2014 $ 412,289
$ 102,715
$ —
$ 515,004



	IDS			WPS			Total
Balance as of July 31, 2014	$	412,289		$	102,715		$	515,004
Impairment charge	—			(37,112		)	(37,112		)
Translation adjustments	(29,503		)	(15,190		)	(44,693		)
Balance as of July 31, 2015	$	382,786		$	50,413		$	433,199
Translation adjustments	1,743			(5,071		)	(3,328		)
Balance as of July 31, 2016	$	384,529		$	45,342		$	429,871

~~Goodwill decreased by $102,232~~ ~~during fiscal 2014. The decline in the balance consisted of an impairment charge of $100,412 recognized on the Company's PeopleID reporting unit, and purchase accounting adjustments of~~ ~~$2,168~~ for the deferred tax impact primarily related to the release of escrow from the fiscal 2013 acquisition of Precision Dynamics Corporation ("PDC"). These decreases were partially offset by the positive effects of foreign translation of $348.

Goodwill at July 31, ~~2014~~2016 and 2015 included ~~$118,637~~$118,637 and ~~$172,280~~$209,392 of accumulated impairment losses within the IDS and WPS segments, respectively, for a total of ~~$290,917. Goodwill at~~$328,029. There were no impairment charges recorded during fiscal 2016. The decrease of $3,328 in the carrying amount of goodwill as of July 31, ~~2013 included $18,225 and~~ ~~$172,280~~2016 compared to July 31, 2015 was due to the effect of ~~accumulated impairment losses within~~currency fluctuations during the ~~IDS and WPS segments, respectively, for a total of $190,505.~~fiscal year.

The annual impairment testing performed on May 1, ~~2014,~~2016, in accordance with ASC 350, “Intangibles - Goodwill and Other” (“Step One”) indicated that ~~each~~all of the ~~following~~ reporting units with remaining goodwill (IDS Americas & Europe, PeopleID, and WPS Europe) passed Step One of the goodwill impairment test as each had a fair value substantially in excess of its carrying ~~value: IDS Americas & Europe, IDS~~value.

During fiscal 2015, goodwill with carrying amounts of $26,246 and $10,866 in the WPS APAC and WPS Americas ~~WPS Europe, and WPS APAC. The results~~reporting units, respectively, was written off entirely, resulting in impairment charges of ~~the Step One analysis completed over the Company's People ID reporting unit indicated that it was potentially impaired.~~$37,112.

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~~PeopleID Goodwill Impairment~~

The PeopleID reporting unit consists primarily of the Company's acquisition of PDC from fiscal 2013, as well as the existing Brady PeopleID business. Organic sales within the PDC business declined in the low single digit percentages from fiscal 2013 to fiscal 2014. Hospital admission rates are the primary driver of PDC's sales under its existing strategy, and there was a decline of approximately 2% in these rates during fiscal 2014. Management has revisited its planned growth and profit for the PDC business and concluded that the growth may not materialize as expected given slower than anticipated industry growth and fewer sales synergies than originally planned.

Management believes that strategy modifications will improve organic sales and profit within the PeopleID business in future years, but there is inherent risk in the revised strategy and the changing healthcare industry. As such, the Company's annual goodwill impairment analysis ("Step One") reflected the risk in the strategy and the decline in fiscal 2014 sales and profitability, which occurred during a period of time in which hospital admission rates were declining. In addition, the PDC business fell short of internal forecasts, resulting in the conclusion that the PeopleID reporting unit failed Step One as the resulting fair value was less than the carrying value of the reporting unit.

The Company proceeded to measure the amount of the potential impairment ("Step Two") with the assistance of a third party valuation firm utilizing a discounted cash flow model and market multiples approach. In Step Two of the goodwill impairment test, the Company determined the implied fair value of the goodwill and compared it to the carrying value. The Company allocated the fair value of the PeopleID reporting unit to its assets and liabilities as if the reporting unit had been acquired in a business combination. The excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities was the implied fair value of goodwill. Upon completion of the assessment, the Company recognized a goodwill impairment charge of $100,412 during fiscal 2014.

Other Intangible Assets

Other intangible assets include patents, tradenames, customer relationships, non-compete agreements and other intangible assets with finite lives being amortized in accordance with the accounting guidance for other intangible assets. The net book value of these assets was as follows:


	July 31, 2014								July 31, 2013								July 31, 2016								July 31, 2015
	Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Amortized other intangible assets:
Patents	5	$	11,656	$	(10,160	)	$	1,496	5	$	11,053	$	(9,597	)	$	1,456	5	$	12,252	$	(11,063	)	$	1,189	5	$	12,073	$	(10,641	)	$	1,432
Tradenames and other	5	15,366		(10,706		)	4,660		5	15,289		(8,398		)	6,891		5	14,359		(13,709		)	650		5	14,375		(12,471		)	1,904
Customer relationships	7	168,525		(114,363		)	54,162		8	261,076		(144,620		)	116,456		7	135,795		(100,830		)	34,965		7	136,693		(94,537		)	42,156
Non-compete agreements and other	4	10,089		(9,622		)	467		4	14,942		(14,215		)	727		4	9,153		(9,142		)	11		4	9,076		(9,032		)	44
Unamortized other intangible assets:
Tradenames	N/A	30,229		—			30,229		N/A	31,321		—			31,321		N/A	22,991		—			22,991		N/A	23,352		—			23,352
Total		$	235,865	$	(144,851	)	$	91,014		$	333,681	$	(176,830	)	$	156,851		$	194,550	$	(134,744	)	$	59,806		$	195,569	$	(126,681	)	$	68,888

The ~~value~~decrease in the gross carrying amount of ~~goodwill and~~ other intangible assets ~~in the consolidated balance sheets at~~as of July 31, ~~2014 and 2013, differs from the value assigned~~2016 compared to ~~them in the original allocation of purchase~~July 31, 2015 was primarily due to the effect of currency fluctuations ~~in foreign exchange rates.~~ during the year.

In ~~conjunction with the goodwill impairment test of the PeopleID reporting unit, finite~~fiscal 2015, tradenames and ~~indefinite-lived other intangible assets~~customer relationships primarily associated with the WPS APAC and WPS Americas reporting ~~unit~~units were written down to fair value. As a result, the Company recognized an impairment ~~charge~~charges of ~~$48,139~~$6,651 during fiscal ~~2014.~~2015.

Amortization expense on intangible assets during fiscal ~~2014, 2013,~~2016, 2015, and ~~2012~~2014 was $~~17,871~~9,056, $~~17,148~~12,103 and $~~10,576~~17,871, respectively. The amortization over each of the next five fiscal years is projected to be $~~12,474~~7,068, $~~10,267~~6,379, $~~7,747~~6,101, $~~6,850~~5,581 and $~~6,305~~5,534 for the fiscal years ending July 31, ~~2015, 2016,~~ 2017, 2018, 2019, 2020 and ~~2019,~~2021, respectively.

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4.3. Other Comprehensive (Loss) Income

Other comprehensive (loss) income consists of foreign currency translation adjustments, ~~net~~ unrealized gains and losses from cash flow hedges and net investment hedges, and the unamortized gain on ~~the~~ post-retirement ~~medical~~ plans, net of their related tax effects.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive ~~income~~loss, net of tax, for the periods ~~presented. The unrealized gain (loss) on cash flow hedges and the unrecognized gain on the postretirement medical plan are presented net of tax:~~presented:

Unrealized gain (loss) on cash flow hedges Gain on postretirement medical plan Foreign currency translation adjustments Accumulated other comprehensive income
Ending balance, July 31, 2012 $ 876
$ 978
$ 57,557
$ 59,411
Other comprehensive (loss) income before reclassification (425 ) 1,103
(3,446 ) (2,768 )
Amounts reclassified from accumulated other comprehensive income (352 ) (228 ) —
(580 )
Ending balance, July 31, 2013 $ 99
$ 1,853
$ 54,111
$ 56,063
Other comprehensive (loss) income before reclassification (21 ) 3,313
1,334
4,626
Amounts reclassified from accumulated other comprehensive income (90 ) (312 ) 3,869
3,467
Ending balance, July 31, 2014 $ (12 ) $ 4,854
$ 59,314
$ 64,156



	Unrealized gain (loss) on cash flow hedges			Gain on postretirement plans			Foreign currency translation adjustments			Accumulated other comprehensive (loss) income
Ending balance, July 31, 2014	$	(12	)	$	4,854		$	59,314		$	64,156
Other comprehensive (loss) income before reclassification	829			2,236			(73,098		)	(70,033		)
Amounts reclassified from accumulated other comprehensive (loss) income	(808		)	(3,652		)	(34,697		)	(39,157		)
Ending balance, July 31, 2015	$	9		$	3,438		$	(48,481	)	$	(45,034	)
Other comprehensive (loss) income before reclassification	(986		)	445			(7,643		)	(8,184		)
Amounts reclassified from accumulated other comprehensive (loss) income	120			(1,647		)	—			(1,527		)
Ending balance, July 31, 2016	$	(857	)	$	2,236		$	(56,124	)	$	(54,745	)

The increase in accumulated other comprehensive ~~income ("AOCI")~~loss as of July 31, ~~2014~~2016 compared to July 31, ~~2013~~2015, was primarily due to the accumulated foreign currency translation loss in Korea and Thailand, which was reclassified into earnings upon the completion of the first phase of the Die-Cut divestiture during the year ended July 31, 2014. The increase in AOCI is also attributable to a $4,691 actuarial gain on the U.S. post-retirement medical plan valuation for the year ended July 31, 2014. The depreciationappreciation of the U.S. dollar against certain other currencies ~~also contributed to~~during the ~~increase in AOCI from the prior year.~~twelve-month period. The foreign currency translation adjustments ~~line~~column in the table above includes ~~the impact of~~ foreign currency translation, foreign currency translation on intercompany notes and the impact of settlements of net investment hedges, net of tax. Of the total ~~$3,467~~$1,527 in amounts reclassified from AOCI, the ~~$3,869~~

$120 loss ~~on foreign currency translation adjustments was reclassified to the loss on the sale of the Die-Cut divestiture, the $90 gain~~ on cash flow hedges was reclassified into cost of products sold, and the ~~$312~~$1,647 net gain on ~~postretirement~~post-retirement plans was ~~split with $443 of gains~~ reclassified into SG&A ~~and a $131 loss reclassified to the loss~~ on the ~~sale~~Consolidated Statement of ~~the Die-Cut divestiture.~~Earnings in fiscal 2016.

The following table illustrates the income tax (expense) benefit on the components of other comprehensive income:


	2014			2013			2012			2016			2015			2014
Income tax (expense) benefit related to items of other comprehensive (loss) income:
Net investment hedge translation adjustments	$	302		$	2,877		$	(7,784	)	$	(1,804	)	$	(8,450	)	$	302
Long-term intercompany loan settlements	579			(650		)	(2,508		)	—			—			579
Cash flow hedges	28			454			(855		)	192			(308		)	28
Pension and other post-retirement benefits	(1,898		)	(555		)	583			738			949			(1,898		)
Other income tax adjustments	(58		)	108			(898		)	(2,154		)	(415		)	(58		)
Income tax (expense) benefit related to items of other comprehensive (loss) income	$	(1,047	)	$	2,234		$	(11,462	)
Income tax expense related to items of other comprehensive (loss) income										$	(3,028	)	$	(8,224	)	$	(1,047	)

~~15. Discontinued Operations~~

13. Discontinued operations consist of the Asia Die-Cut and Balkhausen Die-cut businesses ("Die-Cut"), which were classified as held for sale beginning in the third quarter of fiscal 2013. In addition, the following previously divested businesses were reported within discontinued operations: Brady Medical and Varitronics (divested in fiscal 2013) and Etimark (divested in fiscal 2012). These divested businesses were part of the IDS business segment.Operations

The Company entered into an agreement with LTI Flexible Products, Inc. (d/b/a Boyd Corporation) on February 24, 2014, for the sale of ~~its~~the Die-Cut ~~businesses.~~business. The first phase of ~~the~~this divestiture closed on May 1, 2014 and included the ~~Company received approximately $54.2 million of cash proceeds for its~~Die-Cut businesses in Korea, Thailand and Malaysia, and ~~its~~the Balkhausen business in Europe. The ~~second phase included the~~ remainder of the Die-Cut ~~businesses~~business was located in ~~China. This portion of the divestiture closed~~China and it was divested on August 1, 2014. The operating results have been reported as discontinued operations for the fiscal years ending July 31, 2015 and 2014.

The following table summarizes the operating results of discontinued operations for the fiscal years ending July 31, ~~2014, 2013,~~2015 and ~~2012:~~2014:

2014 2013 2012
Net sales $ 179,050
$ 214,137
$ 259,668
Earnings (loss) from discontinued operations (1) 6,715
4,083
(117,905 )
(Loss) on write-down of disposal group (2) —
(15,658 ) —
Income tax (expense) (3) (3,299 ) (4,703 ) (3,499 )
Loss on sale of discontinued operations (4) (1,602 ) —
—
Income tax benefit on sale of discontinued operations (5) 364
—
—
Earnings (loss) from discontinued operations, net of tax $ 2,178
$ (16,278 ) $ (121,404 )



	2015			2014
Net sales (1)	$	—		$	179,050
(Loss) earnings from discontinued operations (2)	(1,201		)	6,715
Income tax expense	(288		)	(3,299		)
Loss on sale of discontinued operations (3)	(487		)	(1,602		)
Income tax benefit on sale of discontinued operations (4)	61			364
(Loss) earnings from discontinued operations, net of tax	$	(1,915	)	$	2,178


(1)	The ~~loss~~second and final phase of the Die-Cut divestiture closed on August 1, 2014. Thus, there were no sales from ~~operations of~~ discontinued ~~businesses~~operations in fiscal ~~2012 was primarily attributable to the~~ ~~$115.7 million~~ ~~goodwill impairment charge recorded during the three months ended January 31, 2012, which was related to the Die-Cut business.~~ 2015.


(2)	The ~~Company recorded a $15.7 million~~ loss from discontinued operations in fiscal 2015 primarily related to ~~write-down~~professional fees and restructuring charges associated with the ~~Die-Cut business to its estimated fair value less costs to sell in the three months ended April 30, 2013.~~divestiture.


(3)	~~Fiscal 2013 income tax expense~~The first phase of the Die-Cut divestiture was ~~significantly impacted by~~completed in the fourth quarter of fiscal ~~2013 losses in China and Sweden, which had no tax benefit, and the increase in valuation allowance related to Shenzhen, China.~~

~~Table of Contents~~

~~(4)~~

~~Represents the~~2014. A loss ~~incurred~~ on the sale ~~of the Die-Cut business,~~was recorded in the three months ended July 31, 2014 and includes $3.9 million in liabilities retained as part of the divestiture agreement. The second and final closing of the Die-Cut divestiture was completed in the first quarter of fiscal 2015 and an additional loss on the sale was recorded in the three months ended October 31, 2014.

~~(5)~~(4)

The income tax benefit on the sale of discontinued operations in fiscal 2014 was significantly impacted by the release of a reserve for uncertain tax positions of $4.0 million, which was triggered as a result of the Thailand stock sale during the three months ended July 31, 2014. This was offset by $3.6 million in tax expense related to the gain on the sale of the Balkhausen assets. The Thailand stock sale and the Balkhausen asset sale were included in the first phase of the Die-Cut divestiture.

~~The first phase of the Die-Cut sale closed in the fourth quarter of fiscal 2014 and the second phase closed in the first quarter of fiscal 2015. The~~There were no assets ~~and~~or liabilities ~~of the second phase were classified as~~ held for sale as of July 31, ~~2014 and were as follows:~~

July 31, 2014
Accounts receivable—net $ 20,174
Total inventories 5,883
Prepaid expenses and other current assets 52
Total current assets 26,109

Other assets:
Goodwill 8,923
Other intangible assets 280
Other 89
Property, plant and equipment—net 14,141
Total assets $ 49,542

Current liabilities:
Accounts payable $ 9,199
Wages and amounts withheld from employees 1,140
Other current liabilities 301
Total current liabilities 10,640

Net assets of disposal group at fair value 38,902

2015. In accordance with authoritative literature, accumulated other comprehensive income ~~will be~~of $34,697 was reclassified to the statement of earnings upon ~~liquidation or substantial liquidation~~the closing of ~~the disposal group. As of July 31, 2014, the accumulated other comprehensive income attributable to~~ the second phase of the Die-Cut divestiture ~~was approximately $35,000, which reduces~~during the ~~net book value of the disposal group.~~three months ended October 31, 2014.

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~~16.~~14. Unaudited Quarterly Financial Information


	Quarters														Quarters
	First		Second			Third			Fourth			Total			First			Second		Third		Fourth			Total
2014
2016
Net sales	$	307,530	$	291,194		$	309,577		$	316,733		$	1,225,034		$	283,073		$	268,630	$	286,816	$	282,106		$	1,120,625
Gross margin	157,847		142,536			155,120			154,061			609,564			139,349			132,892		145,443		141,089			558,773
Operating income (loss) *	29,689		18,346			26,767			(116,013		)	(41,211		)
Earnings (loss) from continuing operations	18,135		10,517			20,183			(96,981		)	(48,146		)
Earnings (loss) from discontinued operations, net of income taxes **	5,795		5,907			3,904			(13,428		)	2,178
Net earnings (loss) from continuing operations per
Operating income															30,102			23,589		30,784		33,403			117,878
Earnings from continuing operations															18,703			15,290		20,981		25,136			80,110
Net earnings from continuing operations per
Class A Common Share:
Basic***	$	0.35	$	0.20		$	0.39		$	(1.89	)	$	(0.93	)
Diluted***	$	0.35	$	0.20		$	0.39		$	(1.89	)	$	(0.93	)
Net earnings (loss) from discontinued operations per
Class A Common Share:
Basic***	$	0.11	$	0.11		$	0.08		$	(0.26	)	$	0.04
Diluted***	$	0.11	$	0.11		$	0.08		$	(0.26	)	$	0.04
2013
Basic															$	0.37		$	0.30	$	0.42	$	0.50		$	1.59
Diluted															$	0.37		$	0.30	$	0.42	$	0.49		$	1.58
2015
Net sales	$	272,015	$	272,702		$	302,483		$	310,592		$	1,157,792		$	310,240		$	282,628	$	290,227	$	288,636		$	1,171,731
Gross margin	150,185		141,891			159,401			157,871			609,348			150,161			138,203		140,999		129,069			558,432
Operating income *	43,236		21,797			30,935			(178,524		)	(82,556		)	26,973			16,811		24,285		(32,763		)	35,306
Earnings from continuing operations	26,291		(10,671		)	21,680			(175,557		)	(138,257		)	15,499			11,584		17,213		(39,394		)	4,902
Earnings (loss) from discontinued operations, net of income taxes **	896		1,987			(17,447		)	(1,714		)	(16,278		)	(1,915		)	—		—		—			(1,915		)
Net earnings from continuing operations per
Class A Common Share:
Basic***	$	0.51	$	(0.21	)	$	0.42		$	(3.40	)	$	(2.70	)	$	0.30		$	0.23	$	0.34	$	(0.77	)	$	0.10
Diluted***	$	0.51	$	(0.21	)	$	0.42		$	(3.40	)	$	(2.70	)	$	0.30		$	0.23	$	0.33	$	(0.77	)	$	0.10
Net earnings (loss) from discontinued operations per
Class A Common Share:
Basic***	$	0.02	$	0.04		$	(0.34	)	$	(0.03	)	$	(0.32	)	$	(0.03	)	$	—	$	—	$	—		$	(0.04	)
Diluted***	$	0.02	$	0.04		$	(0.34	)	$	(0.03	)	$	(0.32	)	$	(0.04	)	$	—	$	—	$	—		$	(0.04	)

The quarterly financial data has been impacted by the reclassification of the Die-Cut business into discontinued operations. Refer to Note 15 within Item 8 for further information on discontinued operations.

* In fiscal ~~2014,~~2015, the Company recorded before tax impairment charges of ~~$148,551~~$46,867 in the fourth quarter ended July 31, ~~2014~~2015 and before tax restructuring charges of ~~$6,840, $4,324, $3,039~~$4,278, $4,879, $4,834 and ~~$809~~$2,830 in the first, second, third, and fourth quarters of fiscal ~~2014,~~2015, respectively, for a total of ~~$15,012. In fiscal 2013, the Company recorded before tax impairment charges of $204,448 in the fourth quarter ended July 31, 2013 and before tax restructuring charges of~~ ~~$1,933~~, ~~$8,540~~ ~~and~~ ~~$15,573~~ ~~in the second, third and fourth quarters of fiscal 2013, respectively, for a total of $26,046.~~$16,821.

In fiscal ~~2014,~~2015, the ~~Company recorded restructuring charges~~loss from discontinued operations included a net loss on operations of ~~$6,989~~$1,489 primarily related to professional fees associated with the divestiture and a $426 net loss on the sale of ~~the Die Cut business of $1,602 in discontinued operations~~Die-Cut, recorded in the ~~fourth~~first quarter ended ~~July~~October 31, 2014. ~~In fiscal 2013, the Company recorded a $15,658 loss to write-down the Die-Cut business to its estimated fair value less costs to sell in the three months ended April 30, 2013.~~

*** The sum of the quarters does not equal the year-to-date total for fiscal ~~2014 and fiscal 2013~~2015 due to the quarterly changes in

weighted-average shares outstanding.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

~~Table of Contents~~

Item 9A. Controls and Procedures

Disclosure Controls and Procedures:

Brady Corporation maintains a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its President and Chief Executive Officer and its Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based on that evaluation, the Company’s President and Chief Executive Officer and ~~Executive~~Senior Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting:

The management of Brady Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

With the participation of the President and Chief Executive Officer and ~~the~~Senior Vice President and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of July 31, ~~2014,~~2016, based on the framework and criteria established in Internal Control — Integrated Framework ~~(1992)~~(2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management concluded that, as of July 31, ~~2014,~~2016, the Company’s internal control over financial reporting is effective based on those criteria. The Company’s internal control over financial reporting, as of July 31, 2014, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Because of the inherent limitations of internal control over financial reporting, misstatements may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s internal control over financial reporting, as of July 31, 2016, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Changes in Internal Control Over Financial Reporting:

There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Table of Contents~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Brady Corporation

Milwaukee, Wisconsin

We have audited the internal control over financial reporting of Brady Corporation and subsidiaries (the "Company") as of July 31, ~~2014,~~2016, based on criteria established in Internal Control - Integrated Framework ~~(1992)~~ (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, ~~2014,~~2016, based on the criteria established in Internal Control - Integrated Framework ~~(1992)~~ (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended July 31, ~~2014,~~2016, of the Company and our report dated September ~~29, 2014,~~15, 2016, expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

September ~~29, 2014~~15, 2016

~~Table of Contents~~

Item 9B. Other Information

None.

PART III

Item 10. Directors, ~~and~~ Executive Officers ~~of the Registrant~~and Corporate Governance



Name	Age	Title
J. Michael Nauman	5254	President, CEO and Director
Aaron J. Pearce	4345	Senior V.P., ~~CFO~~Chief Financial Officer and Chief Accounting Officer
Thomas J. Felmer	5254	Senior V.P., President - Workplace Safety
~~Stephen Millar (1)~~Russell R. Shaller	53	~~President - Die Cut, President - Brady Asia Pacific and~~Senior V.P., ~~Brady Corporation~~
~~Matthew O. Williamson~~	58	President - Identification Solutions ~~and V.P., Brady Corporation~~
Helena R. Nelligan	4850	Senior V.P. - Human Resources
Louis T. Bolognini	5860	Senior V.P., Secretary and General Counsel
Bentley N. Curran	5254	V.P. - Digital Business and Chief Information Officer
~~Kathleen M. Johnson~~	60	~~V.P. and Chief Accounting Officer~~
Paul T. Meyer	4547	Treasurer and Vice President - Tax
Patrick W. Allender	6769	Director
Gary S. Balkema	5961	Director
Elizabeth Pungello Bruno	49	Director
Nancy L. Gioia	5456	Director
Conrad G. Goodkind	7072	Director
Frank W. Harris	72	~~Director~~
~~Elizabeth P. Pungello~~	4774	Director
Bradley C. Richardson	58	Director
Harold L. Sirkin	56	Director

~~(1) On August 1, 2014, the Company announced that Mr. Millar would be leaving his employment with the Company effective September 30, 2014.~~

J. Michael Nauman -Mr. Nauman has served on the Company’s Board of Directors and as the Company’s President and CEO since August 2014.Prior to joining the Company, from 1994 to 2014 he held a number of senior management positions at Molex Incorporated. Mr. Nauman was Molex's Executive Vice President and President of the Global Integrated Products Division from 2009 to 2014, where he led global business units in the automotive, data communications, industrial, medical, military/aerospace and mobile sectors. From 2004 to 2009, he served as Molex’s Senior Vice President and President, Global Integrated Product Division, President, Integrated Products Division and President, High Performance Products Division. ~~The Company currently transacts business with Molex, and has historically done so, in the ordinary course of business and on an arm’s length basis.~~ Prior to joining Molex in 1994, Mr. Nauman was Controller and then President of Ohio Associated Enterprises, Inc., and a tax accountant and auditor for Arthur Andersen. He is a board member of the ~~Arkansas Science & Technology Authority,~~ Arkansas Science, Technology, Engineering and Math Coalition, and Museum of Discovery. Mr. Nauman’s broad operational and financial experience, as well as his leadership and strategic perspective, provide the Board with insight and expertise to drive the Company’s growth and performance. Mr. Nauman ~~was identified as an officer and director candidate through a process conducted by a Search~~

~~Table of Contents~~

~~Committee of the Board of Directors, which utilized the resources of an executive search firm. Mr. Nauman~~ holds a bachelor’s of science degree in management from Case Western Reserve University, and is a certified public accountant and charter global management accountant.

Aaron J. Pearce - Mr. Pearce joined the Company in 2004 as Director of Internal Audit. From 2006 to 2008, he served as Finance Director for the Company’s Asia Pacific region, and from 2008 to 2010, served as Global Tax Director. In January 2010, Mr. Pearce was appointed Vice President, Treasurer, and Director of Investor Relations, and in April 2013, was named Vice President - Finance, with responsibility for finance support to the Company’s Workplace Safety and ID Solutions businesses,

financial planning and analysis, and investor relations. ~~In September 2014,~~ Mr. Pearce was appointed Senior Vice President and Chief Financial ~~Officer.~~Officer in September 2014, and Chief Accounting Officer in July 2015. Prior to joining the Company, Mr. Pearce was an auditor with Deloitte & Touche LLP from 1994 to 2004. He holds a ~~bachelors~~bachelor’s degree in business administration from the University of Wisconsin-Milwaukee and is a certified public accountant.

Thomas J. Felmer - Mr. Felmer joined the Company in 1989 and ~~has~~ held several sales and marketing positions until being named Vice President and General Manager of Brady's U.S. Signmark Division in 1994. In 1999, Mr. Felmer moved to Europe where he led the European Signmark business for two years, then gained additional responsibility for the European direct marketing business platforms, which he also led for two years. In 2003, Mr. Felmer returned to the United States where he was responsible for Brady's global sales and marketing processes, Brady Software businesses, and integration leader of the EMED acquisition. In June 2004, he was appointed President - Direct Marketing Americas, and was named Chief Financial Officer in January 2008. In October 2013, Mr. Felmer was appointed Interim President and CEO, and served in these positions until August 2014. In September 2014, Mr. Felmer was named President - Workplace Safety. Mr. Felmer received a bachelor's degree in business administration from the University of Wisconsin - Green Bay.

~~Stephen Millar~~Russell R. Shaller - Mr. ~~Millar~~Shaller joined the Company in ~~1999~~June 2015 as ~~Managing Director of Brady Australia, a position he held until 2008 when he joined Brady Americas' leadership team as~~Senior Vice President and ~~General Manager responsible for its portfolio of people identification, medical and education businesses. In 2010, he returned to Asia in the role of MRO Director for the region. He was appointed~~ President - ~~Brady Asia Pacific in March 2011 and was appointed President - Die Cut effective May 1, 2013.~~ID Solutions. Prior to joining Brady, Mr. Millar served in a variety of leadership positions in Australia and New Zealand with GNB Technologies, a global manufacturer of automotive and industrial batteries. He holds a bachelor's of commerce and administration degree from Victoria University of Wellington, New Zealand and is a member of the institute of Chartered Accountants of New Zealand.

~~Matthew O. Williamson -~~ ~~Mr. Williamson joined~~ the Company, ~~in 1979. From 1979 to 1994, he served in a variety of sales and marketing leadership roles. From 1995 to 2003,~~ Mr. ~~Williamson~~Shaller served as President, Teledyne Microwave Solutions, from 2008 to 2015, with responsibility for advanced microwave products sold into the ~~Vice President~~aerospace and communications industry. Before joining Teledyne in 2008, Mr. Shaller held a number of positions of increasing responsibility at W.L. Gore & Associates, including Division Leader, Electronic Products Division from 2003 to 2008 and General Manager of the Company's specialty tape and identification solution businesses. From 1996 to 1998, Mr. Williamson served as the Vice President and General Manager of the Identification Solutions and Specialty Tapes Division. From 1998 to 2001, he served as Vice President and General Manager of the Identification Solutions Division. FromGore Photonics from 2001 to ~~2003, he served as Vice President~~2003. Prior to joining W.L. Gore in 1993, Mr. Shaller worked in engineering and General Manager of the Global High Performance Identification Business. In April 2003, he was appointed President of the Brady Americas business, and in January 2008, Mr. Williamson assumed responsibility for the Direct Marketing Americas business. Effective May 1, 2013, Mr. Williamson was appointed President - Identification Solutions, and has responsibility for the Identification Solutions business platform globally.program management positions at Westinghouse Corporation. He holds a ~~bachelor's~~bachelor’s degree in ~~marketing~~electrical engineering from the University of ~~Wisconsin - Milwaukee.~~Michigan, a master’s degree in electrical engineering from Johns Hopkins University and a master’s degree in business administration from the University of Delaware.

Helena R. Nelligan -Ms. Nelligan joined the Company as Senior Vice President - HumanResources in November 2013. Prior to joining the Company, Ms. Nelligan held a variety of human resources leadership roles at Eaton Corporation from 2005 to 2013, including Vice President of Human Resources - Electrical Products Group, Vice President - Human Resources, Electrical Sector Americas and Director Human Resources - Electrical Components Division. From 1997 to 2005, Ms. Nelligan served in human resources leadership roles with Merisant Worldwide, Inc. and British Petroleum. She holds a bachelor’s degree in criminal justice and a master’s degree in labor relations and human resources from Michigan State University.

Louis T. Bolognini - Mr. Bolognini joined the Company as Senior Vice President, General Counsel and Secretary in January 2013. Prior to joining the Company, he served as Senior Vice President, General Counsel and Secretary of Imperial Sugar Company from June 2008 through September 2012 and was Vice President and General Counsel of BioLab, Inc., a pool and spa manufacturing and marketing company from 1999 to 2008. Mr. Bolognini served as Assistant General Counsel to BioLab's parent company, Great Lakes Chemical Corporation, from 1990 to 1999. Mr. Bolognini served as an officer of BioLab, Inc. within a two-year period prior to the March 18, 2009 Chapter 11 bankruptcy petition filed by BioLab's parent company, Chemtura Corporation, on behalf of itself and 26 U.S. affiliates, including BioLab. He holds a bachelor's degree in political science from Miami University and a Juris Doctor degree from the University of Toledo.

~~Table of Contents~~

Bentley N. Curran - Mr. Curran joined the Company in 1999 and ~~has~~ held several technology leadership positions until being named Vice President of Information Technology in 2005. In October 2007, he was appointed Chief Information Officer of Brady globally. In February 2012, he was appointed to his current position, Vice President of Digital Business and Chief Information Officer. Prior to joining Brady, Mr. Curran served in a variety of technology leadership roles for Compucom and the Speed Queen Company. He holds a bachelor's degree in business administration from Marian University and ~~holds~~ an associate of science degree in electronics and engineering ~~systems.~~systems from Moraine Park Technical College.

~~Kathleen M. Johnson -~~ Ms. Johnson joined the Company in 1989 as a division controller and became group finance director in 1996. In 2000, she was appointed Vice President. In 2008, she was appointed Chief Accounting Officer. Prior to joining Brady, she spent six years with Kraft Food Service. She started her career as a Certified Public Accountant with Deloitte & Touche. She holds a bachelor's degree in accounting from the University of Wisconsin - Whitewater.

Paul T. Meyer - Mr. Meyer joined the Company in 2009 as Global Tax Director. In May 2013, he was appointed Treasurer, and was named Vice President - Tax in November 2013. Prior to joining the Company, Mr. Meyer worked in the corporate tax departments of GE Healthcare and JohnsonDiversey. He began his career as a tax consultant with Ernst & Young. He holds a bachelor's degree in accounting and a master's degree in taxation from the University of Wisconsin-Milwaukee.

Patrick W. Allender - Mr. Allender was elected to the Board of Directors in 2007. He serves as the Chair of the Finance Committee and as a member of the Audit and Corporate Governance Committees. He served as Executive Vice President and CFO of Danaher Corporation from 1998 to 2005 and Executive Vice President from 2005 to 2007. Additionally, he served as a public accountant at Arthur Andersen from 1968 to 1985. He has served as a director of Colfax Corporation since 2008 and Diebold, Inc. since ~~May~~ 2011. Mr. Allender's strong background in finance and accounting, as well as his past experience as the CFO of a public company, provides the Board with financial expertise and insight.

Gary S. Balkema - Mr. Balkema was elected to the Board of Directors in 2010. He currently serves as the Chair of the Management Development and Compensation Committee and is a member of the Audit and Technology Committees. From 2000 to 2011, he served as the President of Bayer Healthcare LLC and Worldwide Consumer Care Division. HeMr. Balkema was also responsible for overseeing Bayer LLC USA's compliance program. He has over 20 years of general management experience. Mr. Balkema serves as a director of PLx Pharma, Inc. Mr. Balkema brings strong experience in consumer marketing skills and mergers, ~~and~~ acquisitions and integrations. His broad operating and functional experience are valuable to the Company given the diverse nature of the Company's portfolio.

Elizabeth Pungello Bruno, Ph.D - Dr. Bruno was elected to the Board of Directors in 2003. She serves as a member of the Management Development and Compensation, Corporate Governance and Technology Committees. Dr. Bruno is the President of the Brady Education Foundation in Chapel Hill, North Carolina and a Research Associate Professor in the Developmental Psychology Program at the University of North Carolina at Chapel Hill, and has appointments at the Frank Porter Graham Development Institute and the Center for Developmental Science. Dr. Bruno also serves on the editorial board of the Journal of Marriage and Family and the Early Childhood Research Quarterly, as a reviewer for several other journals, and on a number of other non-profit boards. She is the granddaughter of William H. Brady, Jr., the founder of Brady Corporation. As a result of her substantial ownership stake in the Company, as well as her family's history with the Company, she is well positioned to understand, articulate and advocate for the rights and interests of the Company's shareholders.

Nancy L. Gioia - Ms. Gioia was elected to the Board of Directors in ~~2013, and~~2013. She serves onas the Chair of the Technology Committee and is a member of the Management Development and Compensation Committee. Ms. Gioia also presently serves as a Director of Exelon Corporation where she is a member of the Finance and Risk Committee and the Generation Oversight Committee. In addition, Ms. Gioia is a former director of Inforum, a non-profit women’s professional development organization. Ms. Gioia joined Ford Motor Company in 1982 and ~~will retire~~served in ~~October 2014. She currently serves as Director, Global Connectivity, Electrical and User Experience , and has held~~ a variety of engineering and technology roles ~~with Ford Motor Company, including~~through her retirement in October 2014. Her senior executive leadership positions include Director, Global Connectivity, Electrical and User Experience; Director, Global Electrification; Director, Sustainable Mobility Technologies and Hybrid Vehicle Programs; Director, North America Current Vehicle Model Quality; Engineering Director, Visteon/Ford Due Diligence; Engineering Director, Small ~~FWD/RWD~~Front Wheel Drive/Rear Wheel Drive Car Platforms-North America; and Vehicle Programs Director, Lifestyle Vehicles. ~~She previously~~While at Ford Motor Company, she served ~~as a Director~~on the Boards of Auto Alliance International, a joint venture of Ford Motor Company and Mazda Corporation; ~~Director of~~ the Electric Drive Transportation Association; ~~and Director of~~ the California Plug-in EV Collaborative; and ~~currently serves as a Director of Inforum and~~on the State of Michigan, ~~Governor's~~Governor’s Talent Investment Board. Ms. Gioia's extensive experience in strategy, technology and engineering solutions, as well as her general business experience, provides the Board with important expertise in product development and operations.

Conrad G. Goodkind - Mr. Goodkind was elected to the Board of Directors in 2007. He currently serves as the ~~Lead Independent Director,~~Chair of the Board of Directors, Chair of the Corporate Governance Committee and as a member of the Finance and Audit Committees. He previously served as Secretary of the Company from 1999 to 2007. Mr. Goodkind was a partner in the law firm of Quarles & Brady, LLP, where his practice concentrated in corporate and securities law from 1979 to 2009. Prior to 1979, he served as Wisconsin's Deputy Commissioner of Securities. Mr. Goodkind previously served as a director of Cade Industries, Inc. and Able Distributing, Inc. His extensive experience in advising companies on a broad range of transactional matters, including mergers and acquisitions and securities offerings, and historical knowledge of the Company provide the Board with expertise and insight into governance, business and compliance issues that the Company encounters.

Frank W. Harris, Ph.D - Dr. Harris was elected to the Board of Directors in 1991. He serves as ~~the Chair of the Technology Committee and as~~ a member of the Technology, Management Development and Compensation ~~Committee.~~and Corporate Governance Committees. He served as the Distinguished Professor of Polymer Science and Biomedical Engineering at the University of Akron from 1983 to 2008 and Professor of Chemistry at Wright State University from 1970 to 1983. He is the founder of several ~~technology based~~technology-based companies including Akron Polymer Systems, where he serves as President and CEO. Dr. Harris is the inventor of several commercialized products, including an optical film that realized over one billion dollars in sales. His extensive experience in technology and engineering solutions provides the

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Board with important expertise in new product development.

~~Elizabeth P. Pungello, Ph.D -~~ Dr. Pungello was elected to the Board of Directors in 2003. She serves as a member of the Management Development and Compensation, Corporate Governance and Technology Committees. Dr. Pungello is the President of the Brady Education Foundation in Chapel Hill, North Carolina and a Research Associate Professor in the Developmental Psychology Program at the University of North Carolina at Chapel Hill, and has appointments at the Frank Porter Graham Development Institute and the Center for Developmental Science. Dr. Pungello also serves on the editorial board of the Journal of Marriage and Family and the Early Childhood Research Quarterly, as a reviewer for several other journals, and on a number of other non-profit boards. She is the granddaughter of William H. Brady, Jr., the founder of Brady Corporation. As a result of her substantial ownership stake in the Company, as well as her family's history with the Company, she is well positioned to understand, articulate and advocate for the rights and interests of the Company's shareholders.

Bradley C. Richardson - Mr. Richardson was elected to the Board of Directors in 2007. He serves as the Chair of the Audit Committee and is a member of the ~~Management Development and Compensation,~~ Corporate Governance and Finance Committees. He is the Executive Vice President and CFO of PolyOne Corporation. He previously served as the Executive Vice President and CFO of Diebold, Inc. from 2009 to 2013, and as Executive Vice President Corporate Strategy and CFO of Modine Manufacturing from 2003 to 2009. Prior to Modine, he spent 21 years with BP Amoco serving in various financial and operational roles with assignments in North America, South America and Europe. Mr. Richardson ~~has~~previously served on the boards of Modine Manufacturing and Tronox, Inc. He brings to the Company extensive knowledge and experience in the areas of operations, strategy, accounting, tax accounting and finance, which are areas of critical importance to the Company as a global company.

Harold L. Sirkin - Mr. Sirkin was elected to the Board of Directors in February 2015. He serves as a member of the Technology and Management Development and Compensation Committees. Mr. Sirkin is Senior Partner and Managing Director of the Boston Consulting Group, where he has worked since 1981. Prior to the Boston Consulting Group, Mr. Sirkin was an auditor for Deloitte, Haskins & Sells, and is a certified public ~~company.~~accountant. His extensive experience in advising companies on a broad range of matters, including strategy, operations and new product development, as well as general business experience, provides the Board with expertise and insight to drive operations improvement and growth.

All Directors serve until their respective successors are elected at the next annual meeting of shareholders. Officers serve at the discretion of the Board of Directors. None of the Company's Directors or executive officers has any family relationship with any other Director or executive officer.

Board Leadership Structure - The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and ~~Chairman~~Chair of the Board, as the Board believes it is in the best ~~interests~~interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board. ~~The Board currently has not appointed a Chairman of the Board, and the Board has not had a practice of appointing a Chairman for a period in excess of 20 years.~~ In fiscal 2010, the Board formalized the position of Lead Independent Director, which is elected on an annual basis from among the independent Directors of the Board based upon the recommendation of the Corporate Governance Committee. In fiscal 2011,September 2015, upon the recommendation of the Corporate Governance Committee, the Board ~~enhanced~~appointed a non-executive Chair in order to harmonize the Board’s leadership structure to prevailing governance practices. Prior to the appointment of the non-executive Chair, in the period beginning in fiscal 2010, the Board had formalized the position of Lead Independent Director. The duties of the ~~Lead Independent Director, which~~non-executive Chair include, among others: chairing meetings of the Board and executive sessions of the non-management Directors; meeting periodically with the Chief Executive Officer and consulting as necessary with management on current significant issues facing the Company; facilitating effective communication among the Chief Executive Officer and all members of the Board; and overseeing the Board's shareholder communication policies and procedures. Mr. Goodkind previously served as the Lead Independent Director until August 2015 and began serving as Chair of the Board in ~~fiscal 2014.~~September 2015.

The Board believes that its current leadership structure has enhanced the Board's oversight of, and independence from, Company management; the ability of the Board to carry out its roles and responsibilities on behalf of ~~our~~the Company’s shareholders; and ~~our~~the Company’s overall corporate governance.

Risk Oversight - The Board oversees the Company's risk management processes directly and through its committees. In general, the Board oversees the management of risks inherent in the operation of the Company's businesses, the implementation of its strategic plan, its acquisition and capital allocation program and its organizational structure. Each of the Board's committees also oversees the management of Company risks that fall within the committee's areas of responsibility. The Company's management is responsible for reporting significant risks to executives at the quarterly disclosure committee meeting. The significance of the risk is assessed by executive management and escalation to the respective board committee and Board of Directors is determined. The Company reviews its risk assessment with the Audit Committee annually.

Audit Committee Financial Expert - The Company's Board of Directors has determined that at least one Audit Committee financial expert is serving on its Audit Committee. Messrs. Richardson, Chair of the Audit Committee, and Allender and Balkema, members of the Audit Committee, are financial experts and are independent ~~as that term is used in Item 7(d)(3)(iv) of Schedule 14A~~ under the rules of the SEC and the New York Stock Exchange ~~Act.~~(“NYSE”).

Director Independence - A majority of the Directors must meet the criteria for independence established by the Board in accordance with the rules of the ~~New York Stock Exchange (“NYSE”).~~NYSE. In determining the independence of a Director, the Board must find that a Director has no relationship that may interfere with the exercise of his or her independence from management

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and the Company. In undertaking this determination with respect to the Company’s Directors other than Mr. Nauman, the Board considered the commercial relationships of the Company, if any, with ~~Mr. Richardson’s employer, PolyOne Corporation, and with Ms. Gioia’s employer, Ford Motor Company.~~those entities that have employed the Company’s Directors. The commercial relationships, which ~~involve~~involved the purchase and sale of products on customary terms, dodid not exceed the maximum amounts proscribed by the director independence rules of the ~~NYSE over~~NYSE. Furthermore, the ~~past three fiscal years. The~~ compensation paid to ~~Mr. Richardson and Ms. Gioia~~the Company’s Directors by their employers iswas not linked in any way to the commercial relationships their employers ~~have~~had with the ~~Company.~~Company in fiscal 2016. After consideration of these factors, the Board concluded that the commercial relationships were not material and did not prevent ~~Mr. Richardson and Ms. Gioia~~the Company’s Directors from being considered independent. Based on application of the NYSE independence criteria, all ~~current~~ Directors, ~~and Directors during fiscal 2014,~~ with the exception of Mr. Nauman, President and CEO, ~~and the Company’s former President and CEO, Mr. Jaehnert,~~ are deemed independent. All members of the Audit, Management Development and Compensation, and Corporate Governance Committees are deemed independent.

Meetings of Non-management Directors - The non-management Directors of the Board regularly meet alone without any members of management present. The ~~Lead Independent Director,~~Chair of the Board, currently Mr. Goodkind, is the presiding Director at these sessions. In fiscal ~~2014,~~2016, there were 6five executive sessions. Interested parties can raise concerns to be addressed at these meetings by calling the confidential Brady hotline at 1-800-368-3613.

Audit Committee Members - The Audit Committee, which is a separately-designated standing committee of the Board of Directors, is composed of Messrs. Richardson ~~(Chairman)~~(Chair), Allender, Balkema, and Goodkind. Each member of the Audit Committee has been determined by the Board to be independent under the rules of the SEC and NYSE.

Code of Ethics - For a number of years, the Company has had a code of ethics for its employees. This code of ethics applies to all of the Company's employees, officers and Directors. The code of ethics can be viewed at the Company's corporate website, www.bradycorp.com, or may be obtained in print by any person, without charge, by contacting Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics by placing such information on its Internet website.

Corporate Governance Guidelines - Brady's Corporate Governance Principles, as well as the charters of the Audit, ~~Committee,~~ Corporate Governance ~~Committee,~~ and Management Development and Compensation ~~Committee,~~Committees, are available on the Company's Corporate website, www.bradycorp.com. Shareholders may request printed copies of these documents from Brady Corporation, Investor Relations, P.O. Box 571, Milwaukee, WI 53201.

Director Qualifications - Brady's Corporate Governance Committee reviews the individual skills and characteristics of the Directors, as well as the composition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, expertise, and industry backgrounds in the context of the needs of the Board and the Company. Although the Company has no policy regarding diversity, the Corporate Governance Committee seeks a broad range of perspectives and considers both the personal characteristics and experience of Directors and prospective nominees to the Board so that, as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company's businesses.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s Directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended July 31, ~~2014,~~2016, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10 percent beneficial owners were complied ~~with other than with respect to the following:~~

A Form 4 for Mr. Felmer that was not filed on or before December 10, 2012, or a Form 5 at fiscal year end, as required to report the sale of 2,869 shares of Class A Nonvoting Common Stock on December 6, 2012. This transaction was reported on a Form 4 for Mr. Felmer that was filed on August 21, 2014.with.

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Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview

Our Compensation Discussion and Analysis focuses upon the Company's total compensation philosophy, the role of the Management Development & Compensation Committee (for purposes of the Compensation Discussion and Analysis section, the “Committee”), total compensation components inclusive of base salary, short-term incentives, long-term incentives, benefits, perquisites, severance amounts and change-in-control agreements for our executive officers, market and peer group data and the approach used by the Committee when determining each element of the total compensation package.

For fiscal ~~2014,~~2016, the following executive officers' compensation is disclosed and discussed in this section (the “named executive officers” or “NEOs”):

~~Thomas~~ J. ~~Felmer, Senior Vice President, President-Workplace Safety, and Former Chief Financial Officer (1);~~

~~Frank M. Jaehnert, Former~~Michael Nauman, President, Chief Executive Officer and ~~Director (2);~~Director;

Aaron J. Pearce, Senior Vice President, Chief Financial Officer and Chief Accounting Officer;

Louis T. Bolognini, Senior Vice President, General Counsel and Secretary;

~~Stephen Millar, Vice President, Brady Corporation, President, Brady Asia Pacific, and President-Die Cut (3), and;~~

~~Matthew O. Williamson, President-Identification Solutions and Vice President, Brady Corporation~~

~~(1) Effective October 7, 2013, Mr.~~Thomas J. Felmer, was appointed by the Company as Interim President and Chief Executive Officer during the search for Mr. Jaehnert’s permanent replacement and held these positions until the appointment of J. Michael Nauman as the President and Chief Executive Officer, on August 4, 2014. Mr. Felmer also retained his position of Senior Vice President and ~~CFO~~President - Workplace Safety; and

Russell R. Shaller, Senior Vice President and President - Identification Solutions.

Executive Summary

Fiscal 2016 Business Highlights

The ability to provide customers with a broad range of proprietary, customized and diverse products for use in various applications across multiple customers and geographies, along with a commitment to quality and service, have made Brady a leader in many of its markets. The long-term sales growth and profitability of our segments will depend not only on improved demand in end markets and the overall economic environment, but also on our ability to continuously improve operational excellence, focus on the customer, develop and market innovative new products, and to advance our digital capabilities. In our IDS business, our strategy for growth includes an increased focus on key customers, industries and products and improving the efficiency and effectiveness of the ~~Company~~research and ~~served as Acting President-Workplace Safety during fiscal 2014.~~development ("R&D") function. In ~~September 2014, Mr. Felmer was named President-Workplace Safety.~~our WPS business, our strategy for growth includes a focus on workplace safety critical industries, innovative new product offerings, and increased investment in digital capabilities.

~~(2) Effective October 7, 2013,~~On a GAAP basis, our fiscal 2016 net earnings were $80.1 million;

Brady continues to demonstrate adequate cash generation to meet ongoing business needs as we generated $139.0 million of cash flow from operating activities during the year ended July 31, 2016; and

Our sales for the full year were $1.12 billion, down 4.4% from fiscal 2015. Organic sales were down 0.7% and foreign currency translation decreased sales by 3.7%.

Fiscal 2016 Compensation Matters

For fiscal 2016, the Board of Directors approved a 3.7% increase in base salary for Mr. ~~Jaehnert retired~~Nauman. In addition, Mr. Nauman recommended and ~~resigned from his position~~the Committee approved increases in base salary for Messrs. Pearce and Bolognini. All increases were made to recognize the performance and current scope of responsibilities of each executive, and with regard to Messrs. Nauman and Pearce, to better align their base salary compensation with those holding comparable positions at peer companies. Messrs. Felmer and Shaller did not receive a base salary increase as ~~President~~Mr. Felmer's base salary is positioned above the median of the peer group and ~~Chief Executive Officer and Director of~~Mr. Shaller had recently joined the Company.

~~(3) On August 1, 2014,~~We had significant improvements in the Company entered into a Separation Agreement with Mr. Millar in connection with his departure from the Company as a result of the elimination of his positions following the divestiture of the Company’s Die Cut business. Mr. Millar's employment with the Company will end on September 30, 2014.

~~Retirement of Frank Jaehnert:~~ On October 7, 2013, Mr. Jaehnert retired as the Company’s President and Chief Executive Officer, effective October 7, 2013. Mr. Jaehnert remained employed by the Company through December 31, 2013, during which time he was available in a consultative position to assist with respect to transition issues. The Company entered into a written agreement with Mr. Jaehnert in connection with his retirement that provided for payment of his salary and benefits through December 31, 2013, and a severance payment of $800,000 to be paid in equal installments throughout the calendar year following his separation from employment on December 31, 2013. The agreement also contains 12-month non-competition and non-solicitation provisions, as well as standard confidentiality, waiver and non-disparagement provisions. The Company entered into the agreement with Mr. Jaehnert in order to obtain his assistance on transition issues and for an agreement not to compete with the Company or solicit its employees, customers and vendors for a period of 12 months after his retirement.

~~Appointment of J. Michael Nauman:On August 1, 2014, the Board of Directors appointed J. Michael Nauman as President, Chief Executive Officer and Director~~profitability of the Company, ~~effective August 4, 2014. None~~exceeding our fiscal 2016 pre-established goals overall. In addition, we exceeded expectations related to the completion of ~~Mr. Nauman's compensation was paid or payable in~~the fiscal ~~2014.~~year objectives deemed critical to the execution of the Company's strategy. Therefore, our NEOs earned cash incentive awards for fiscal 2016. The cash incentive awards to NEOs were below target largely because our organic revenue growth results for fiscal 2016 fell short of our pre-established targets. The NEOs also received annual equity incentive awards consistent with award sizes of those individuals holding comparable positions at our peer companies.

~~The Company entered into an employment offer letter dated August 1, 2014 with Mr. Nauman (the “Offer Letter”)~~

~~providing~~As a group, 71% of the compensation that ~~Mr. Nauman will receive an annual base salary of $675,000, subject~~we paid to ~~periodic review and adjustment. The Offer Letter also provides that he will participate~~our NEOs was in the ~~Company’s annual cash~~form of incentive ~~plan in fiscal 2015, with a targeted annual incentive opportunity of 100% of base salary~~awards, and a maximum annual incentive opportunity of 200% of base salary. The Offer Letter further provides the Mr. Nauman will receive awards under the Company’s 2012 Omnibus Incentive Stock Plan in September 2014, subject to the discretion79% of the ~~Management Development~~total incentive awards were paid in the form of equity. Fiscal 2016 grants were made in the form of time-based stock options and ~~Compensation Committee, with a grant date value of $1.8 million, divided equally between~~ time-based ~~options and~~ restricted stock units. ~~Under the terms~~Two-thirds of the ~~Offer Letter,~~award granted to Mr. Nauman ~~will be required~~and one-half of the award granted to ~~hold, directly or indirectly, shares~~all other NEOs was in the form of ~~Brady common~~ stock ~~equal~~options, which are inherently performance-based and have value only to ~~five times his base salary within five years~~the extent that the price of ~~his appointment.~~our

stock increases. The ~~Offer Letter provides that~~remaining one-third of the award granted to Mr. Nauman ~~will be able~~and remaining one-half of the award granted to ~~participate in~~ all employee benefit plans and programs generally available to the Company’s executive officers, including perquisites covering a car allowance, financial planning and executive physical program, and will be reimbursed for certain of his relocation expenses. The Offer Letter also contains 24-

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month non-competition and non-solicitation provisions, as well as standard confidentiality, waiver and non-disparagement provisions. Should Mr. Nauman’s employment be terminated by the Company without cause or should he resign for good reason (as such events are definedother NEOs was in the ~~Offer Letter), the Company will pay Mr. Nauman a severance benefit equal to two times the sum~~form of ~~his base salary and target bonus.~~

Upon commencement of his employment on August 4, 2014, and pursuant to the terms of the Offer Letter, the Company entered into a Restricted Stock Unit Agreement with Mr. Nauman (the “RSU Agreement”) under which Mr. Nauman received 53,668 restricted stock units that vest with anthe passage of time and are intended to facilitate retention.

Overall, the grant date fair value of equity awards granted to our NEOs was lower than in fiscal 2015. The decrease in aggregate award value was the result of ~~$1.5 million, as calculated based on the 30-day average NYSE closing price~~sign-on and retention awards of ~~the Company’s Class A Non-Voting Common Stock. The~~time-based restricted stock units ~~will vest~~awarded to Messrs. Nauman and Pearce respectively, during fiscal 2015, which were not similarly awarded in ~~equal annual increments on~~fiscal 2016. Overall, target total compensation for our named executive officers was at the ~~third, fourth and fifth anniversaries~~median of the grant date, with vesting accelerated in the event of death, disability, termination following a change of control, or termination by the Company without cause (as such events are defined in the RSU Agreement).our peer group companies for fiscal 2016.

Recent Compensation Decisions

Effective August ~~4, 2014,~~28, 2015, the Company ~~also~~ entered into a Change of Control Agreement with Mr. ~~Nauman~~Shaller (the ~~“Change~~"Change of Control ~~Agreement”~~Agreement"). Under the terms of the Change of Control Agreement, in the event of a qualifying termination within 24 months following a change of control (as such events are defined in the Change of Control Agreement), Mr. ~~Nauman~~Shaller will receive two times his ~~annual~~ base salary and two times ~~his target~~the average bonus ~~and the amount of his target bonus prorated based on when the termination occurs.~~

~~Executive Summary~~

~~Our Business~~

Since our founding nearly 100 years ago, we have grown the Company by developing innovative high-performing products, participating in growing markets, delivering on-time solutions and leveraging our core competencies across our businesses. Our strategy is to be the market leader in each of the global businesses we are focused on.

Our passion around market leadership is tempered only by the fact that when we win, we win the right way. Our values have been, and will be, the cornerstone of everything that we do at Brady. Focus on the Customer, Invest in our People, Embrace Teamwork, Excel at Everything We Do, Be Bold and Decisive, Protect Our Future and Win the Right Way describe the behaviors that we expect and reward at Brady.

In order to achieve our goals, we recognize it is critical to assemble and maintain a leadership team with the integrity, skills and dedication needed to execute our growth plan. We design and use our compensation plans to help us achieve these objectives and align our rewards with the intended behaviors and outcomes.

~~Our Fiscal 2014 Performance and Link to Pay Decisions~~

~~Fiscal 2014 Resulted in No or Below Target Bonuses and Unearned Performance-Based Stock Options, Restricted Stock and Restricted Stock Units for NEOs~~

Fiscal 2014 was a year of challenge for Brady. We continued to be challenged by the competitive environment in our Workplace Safety ("WPS") business as new market entrants and the ongoing shift of buying patterns to the web have had a negative impact on our business. We returned both of Brady’s segments to profitable organic sales growthpayment received in the ~~fourth quarter of fiscal 2014 and we are confident that the actions we have taken and the improvements we are now seeing will enable future sales, profitability, and cash flow growth.~~

~~In fiscal 2014, we made significant portfolio and management decisions~~three years immediately prior to better position the Company for growth in the future. These changes were a meaningful shift in the industries we serve as we are reducing our reliance on the more volatile and less profitable consumer electronics industry, to an expansion of our core Identification Solutions ("IDS”) business to focus on markets with long-term growth trends. In our WPS business, our strategy to return to growth included a focus on workplace safety critical industries in addition to increased investment in e-commerce expertise.

~~On a GAAP basis, we incurred a fiscal 2014 net loss from continuing operations of $48.1 million.~~

~~Brady continues to demonstrate adequate cash generation to meet ongoing business needs as we generated $93.4 million of cash flow from operating activities during the year ended July 31, 2014.~~

Our sales from continuing operations for the full year were $1.23 billion, up 5.8% from fiscal 2013. Organic sales were up 0.2%, acquisitions increased sales by 5.7%, and foreign currency translation decreased sales by 0.1%.

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~~Our gross debt-to-EBIDTA remains at approximately 1.7. Having a strong balance sheet puts us in a solid financial position to fund future growth opportunities or return value to our shareholders.~~

For fiscal 2014, with the exception of Messrs. Felmer and Bolognini, we did not increase the base salary or target bonus opportunities of our named executive officers. Mr. Felmer received a 2.5% increase in base salary over fiscal 2013 levels to better align his base pay with the peer group market median for Chief Financial Officers. Mr. Bolognini received a 3.1% increase in base salary over fiscal 2013 levels in recognition of the level of work performed in his first year as General Counsel.

Except for Messrs. Millar and Williamson, no named executive officer received a performance-based bonus award for fiscal 2014. In connection with Mr. Millar’s contributions to the divestiture of the Company’s Asia Die Cut business, Mr. Jaehnert recommended and the Committee approved a one-time discretionary bonus to Mr. Millar of $25,000. The bonus, which was paid on November 1, 2013, was reflective of Mr. Millar’s commitment and contributions to improving performance of the Die Cut business despite the challenging business environment after the public announcement of the divestiture, which resulted in significant employee retention and motivational challenges. Organic sales growth, income from operations and net income financial metrics, as well as individual performance funded by the achievement of net income goals, served as the performance objectives under our fiscal 2014 bonus plan. Mr. Jaehnert was not eligible for a bonus due to his separation from the Company on December 31, 2013. Since we did not achieve the threshold level of performance relative to our Workplace Safety segment or total Company objectives, Messrs. Felmer and Bolognini did not receive a bonus for fiscal 2014. Mr. Millar received a bonus equal to AUD $43,953 which was reflective of the partial achievement of the Die Cut segment income from operations goal. Mr. Williamson received a bonus equal to $31,422 which was reflective of the partial achievement of the Identification Solutions segment organic sales growth goal.

Mr. Jaehnert did not receive a long-term incentive grant in fiscal 2014. As a group and excluding Mr. Jaehnert, the 2014 grant date fair market value of all equity compensation granted to our named executive officers was 120.7% of salary. Fiscal 2014 grants were made in the form of time-based stock options and time-based restricted stock units. Stock options, which are inherently performance-based and have value only to the extent that the price of our stock increases, have been and continue to be a significant part of our named executive officers' compensation package. Restricted stock units that vest with the passage of time were granted to our named executive officers for the first time beginning in fiscal 2014 and were intended to facilitate retention while shifting the Company's use of different equity types to more closely reflect general market norms. Excluding Mr. Jaehnert, the grant date value of awards granted to all other named executive officers was 31.9% higher than in fiscal 2013, realigning target total compensation levels with the market median after a year of lower than market equity award sizes (2013). Overall, target total compensation for our named executive officers was at the median of our peer group companies for fiscal 2014.

The final vesting opportunity to achieve the earnings per share goal established by the Committee for the 2008 and 2012 awards of performance-based restricted stock was fiscal 2014. Based on the performance of the Company in fiscal 2014, the vesting criteria for these awards was not met for the named executive officers who are currently employed by the Company and who had received these awards (Messrs. Felmer, Williamson, and Millar). As a result, the awards were forfeited on September 9, 2014, the date the Audit Committee accepted the results of the fiscal year audit.

The performance-based stock options granted in fiscal 2012 contain a performance vesting requirement based on the achievement of annual diluted earnings per share growth, including a second opportunity to vest over a two or three year period if the compound annual growth rate exceeds the annual growth target. The final vesting opportunity was fiscal 2014. Based on the performance of the Company in fiscal 2014, the vesting criteria for this award were not met for the named executive officers who had received this award (Messrs. Felmer, Jaehnert, Williamson, and Millar). As a result, the awards were forfeited on September 9, 2014, the date the Audit Committee accepted the results of the fiscal year audit.

Based upon input from an external compensation consultant and the Committee's desire to provide an incentive for retention and improved Company performance, effective August 2, 2010, a grant of 100,000 shares of performance-based restricted stock was issued to Mr. Jaehnert. This grant of performance-based restricted stock included both a performance vesting requirement based upon earnings per share growth and a service vesting requirement. The earnings per share growth goal was satisfied during fiscal 2011 and as of July 31, 2013, 33,333 shares of this award were vested. In accordance with the award agreement given in connection with this grant, an additional 35,001 shares vested upon Mr. Jaehnert's retirement and the remaining 31,666 shares forfeited on December 31, 2013, the date of the change of control.

Effective September 11, 2015, the Company entered into a Change of Control Agreement with Mr. ~~Jaehnert’s separation from~~Pearce (the "Change of Control Agreement"). Under the ~~Company.~~

On October 7, 2013, Mr. Felmer was awarded 5,000 shares of service-based restricted stock in recognition of his increased duties upon his appointment as Interim President and Chief Executive Officer. The shares would vest upon the earlierterms of the ~~end~~Change of Mr. Felmer’s service as Interim President and CEO or the Board appointment of a permanent President and CEO, with the vesting having occurred upon the appointment of Mr. Nauman as President and Chief Executive Officer on August 4, 2014. On August 4, 2014, the Committee, for retention purposes, awarded Mr. Felmer an additional 5,000 time-based restricted stock units which will

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~~vest upon the first anniversary of the grant date, with vesting accelerated~~Control Agreement, in the event of ~~death, disability,~~a qualifying termination within 24 months following a change of control ~~or upon termination~~(as such events are defined in the Change of ~~employment~~Control Agreement), Mr. Pearce will receive two times his base salary and two times the average bonus payment received in the three years immediately prior to the date of the change of control.

On May 23, 2016, the Brady Corporation 2017 Omnibus Incentive Plan (the “2017 Plan”) was approved. The 2017 Plan became effective August 1, 2016. The 2017 Plan is intended (i) to provide incentives for directors and employees of the Company and its affiliates to improve corporate performance on a long-term basis, (ii) to attract and retain directors and employees and (iii) to align the long-term interests of participants with those of the Company and its shareholders. The 2017 Plan is an equity and cash-based incentive plan and includes provisions by which the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and cash incentive awards. A total of up to 5,000,000 shares of the Company’s Class A Non-Voting Common Stock have been authorized for issuance pursuant to the 2017 Plan, subject to adjustment as provided in the 2017 Plan.

Effective with the start of fiscal 2017, the Committee began granting performance-based restricted stock units. For certain executive officers, the awards represent additional compensation; for other officers, the award simply changed the overall mix of equity incentive awards granted. The performance-based restricted stock units granted have a three-year performance period with the number of shares issued at vesting determined by the ~~Company without cause.~~Company’s achievement of organic revenue and operating income growth goals over the three-year performance period. Payout opportunities will range from 0% to 200% of the target award.

Executive Compensation Practices

As part of the Company's pay for performance philosophy, the Company's compensation program includes several features that maintain alignment with shareholders:



Emphasis on Variable Compensation		~~More than 45%~~Nearly 50% of the named executive officers' possible compensation is tied to Company performance, which ~~the Company believes drives~~is intended to drive shareholder value.

Ownership Requirements		~~During fiscal 2014, the chief executive officer was required to own at least 100,000 shares of stock in the Company and~~ Mr. Nauman is required to own shares in the Company at a value equal to five times his base salary. ~~All other named executive officers~~Messrs. Pearce, Felmer and Shaller are required to ~~hold~~own shares in the Company at ~~least 30,000~~a value equal to three times their base salaries. Mr. Bolognini is required to own shares ~~of stock. Officers must meet their~~in the Company at a value equal to two times his base salary. Our NEOs are expected to obtain the required ownership ~~requirements~~levels within five ~~years.~~years and may not sell shares, other than to cover tax withholding requirements associated with the vesting or exercise of the equity award, until such time as they meet the requirements.

Clawback Provisions		Following a review and analysis of relevant governance and incentive compensation practices and policies across our compensation peer group and other public companies, the Committee instituted a recoupment policy, effective August 2013, under which incentive compensation payments and/or awards may be recouped by the Company if such payments and/or awards were based on erroneous results. If the Committee determines that an executive officer or other key executive of the Company who participates in any of the Company's incentive plans has engaged in intentional misconduct that results in a material inaccuracy in the Company's financial statements or fraudulent or other willful and deliberate conduct that is detrimental to the Company or there is a material, negative revision of a performance measure for which incentive compensation was paid or awarded, the Committee may take a variety of actions including, among others, seeking repayment of incentive compensation (cash and/or equity) that is greater than what would have been awarded if the payments/awards had been based on accurate results and the forfeiture of incentive compensation. As this policy suggests, the Committee believes that any incentive compensation should be based only on accurate and reliable financial and operational information, and, thus, any inappropriately paid incentive compensation should be returned to the Company for the benefit of shareholders. The Committee expects that the implementation of this policy will serve to enhance the Company's compensation risk mitigation efforts. While the implemented policy affords the Committee discretion regarding the application and enforcement of the policy, the Company and the Committee will conform the policy to any requirements that may be promulgated by the national stock exchanges in the future, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Performance Thresholds and Caps		~~Historically, 100%~~ We provide cash incentive awards based on achievement of annual ~~cash~~performance goals with payouts that range from 0% to 200% of target opportunities. We grant equity compensation that promotes long-term financial and ~~equity incentive awards were performance-based. Beginning in~~operating performance by delivering incremental value to executive officers to the extent our stock price increases over time. In fiscal ~~2014, 50% of the annual equity incentive award was granted in time-based~~2017, we began granting performance-based restricted stock units to ~~facilitate retention while shifting~~executive officers with the ~~Company's use~~number of ~~different equity types to more closely reflect general market norms. In addition,~~shares issued at vesting determined by the ~~annual cash incentive plan has~~achievement of certain performance goals over a ~~maximum payment cap.~~three-year period.

Securities Trading Policy		~~We prohibit~~Our Insider Trading Policy prohibits executive officers from trading during certain periods at the end of each quarter until after we disclose our financial and operating results. We may impose additional restricted trading periods at any time if we believe trading by executives would not be appropriate because of developments that are, or could be, material and which have not been publicly disclosed. The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans, holding Company securities in a margin account by officers, directors or employees, and the hedging of Company securities.

Annual Risk Reviews		The Company conducts an annual compensation-related risk review and presents findings and suggested risk mitigation actions to both the Audit and Management Development and Compensation Committees.

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The Company’s compensation programs also maintain alignment with shareholders by not including certain features:



No Excessive Change of Control ~~Severance~~Payments		In fiscal 2014, for the former chief executive officer, the maximum cash benefit was equal to 3x salary and 3x the average bonus payment received in the three years immediately prior to the date the change of control occurs. Mr. Nauman's maximum cash benefit is equal to 2xtwo times salary and 2xtwo times target bonus plus a prorated target bonus in the year in which the termination occurs. For all other ~~named executive officers,~~NEOs, the maximum cash benefit is equal to 2xtwo times salary and 2xtwo times the average bonus payment received in the three years immediately prior to the date the change of control occurs. In the event of a change of control, unexercised stock options become fully exercisable or, if canceled, each named executive officer shall be given cash or stock equal to the in-the-money value of the canceled stock options. In the event of a change of control, restricted stock units become unrestricted and fully vested.

No Employment Agreements		~~In fiscal 2014, the~~The Company ~~did~~does not maintain any employment agreements with its executives. Both Mr. Nauman's Offer Letter ~~provides~~and Mr. Shaller's Offer Letter provide that heeach is deemed an at-will employee, but will receive a severance benefit in the event his employment is terminated by the Company without cause or for good reason as described in the respective Offer ~~Letter and summarized above.~~Letter.

No Reloads, Repricing, or Options Issued at a Discount		Stock options issued are not repriced, replaced, or regranted through cancellation or by lowering the option price of a previously granted option.

Compensation Philosophy and Objectives

We seek to align the interests of our executives with those of our investors by evaluating performance on the basis of key financial measurements that we believe closely correlate to long-term shareholder value. To this end, we have structured our compensation program ~~around~~to accomplish the ~~following principles:~~following:

Allow the Company to compete for, retain and motivate talented executives;

Deliver compensation plans that are both internally equitable when comparing similar roles and levels within the Company and externally competitive when comparing to the external marketplace and the Company’s designated peer group;

Maintain an appropriate balance between base salary and short- and long-term incentive opportunities;

Provide ~~a competitive total~~integrated compensation ~~package targeted at~~programs aligned to the ~~median~~Company’s annual and long-term financial goals and realized performance;

Recognize and reward individual initiative and achievement with the amount of ~~our~~ compensation ~~peers;~~

~~Incentivize long-term shareholder value creation by encouraging behaviors which facilitate long-term success without undue risk taking;~~each executive receives reflective of the executive’s level of proficiency within his or her role/job family and their level of sustained performance; and

~~Realize top-tier company performance through~~Institute a ~~merit-based, pay-for-performance culture that is~~“pay for performance” philosophy where level of rewards are aligned ~~with our~~to Company ~~values.~~performance.

Determining Compensation

Management Development and Compensation Committee’s Role

The Committee is responsible for monitoring and approving the compensation of the Company's named executive officers. The Committee approves compensation and benefit policies and strategies, approves corporate goals and objectives relative to the chief executive officer and other executive officer compensation, oversees the development process and reviews development plans of key executives, reviews compensation-related risk, administers our equity incentive plans including compliance with executive share ownership requirements, approves all severance policies or pay-outs, and consults with management regarding employee compensation generally. With respect to executive officers, at the beginning of each year, the Committee sets base salaries, approves the cash bonuses paid for the prior fiscal year, approves equity incentive awards for the new fiscal year and establishes the objective performance targets to be achieved for the new year.

When a new executive officer is hired, the Committee is involved in reviewing and approving base salary, annual incentive opportunity, sign-on incentives, annual equity awards, and other aspects of the executive's compensation.

Consultants’ Role

The Committee has historically utilized the services of an executive compensation consulting firm and legal counsel to assist with the review and evaluation of compensation levels and policies on a periodic basis, as well as to provide advice with respect to new or modified compensation arrangements. In fiscal ~~2014,~~2016, the Committee utilized the services of Meridian Compensation Partners as compensation consultants and Quarles & Brady LLP, as legal counsel, both of which were determined to be independent by the Corporate Governance Committee.

Management’s Role

To aid in determining compensation for fiscal ~~2014 ,~~2016, management obtained data regarding comparable executive officer compensation through a standard data subscription with Equliar, Inc. For fiscal ~~2014,~~2016, Mr. ~~Jaehnert, our former chief executive officer,~~Nauman used this data to make recommendations to the Committee concerning compensation for each named executive officer other than himself. In setting compensation for our named executive officers, the Committee takes into consideration these recommendations, along with the results of the Company during the previous fiscal year, the level of responsibility, demonstrated leadership capability, the compensation levels of executives in comparable roles from within our peer group and the results of

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annual performance reviews which, for our chief executive officer, included a self-assessment and feedback from his direct reports and ~~a self-appraisal.~~each member of the Board of Directors. In addition, during fiscal ~~2014,~~2016, the Committee took into consideration the recommendations of its independent compensation consultant, particularly with respect to compensation elements ~~related to~~for the chief executive ~~officer transition. Our former chief executive officer~~officer. Mr. Nauman did not attend the portion of any committee meeting during which the Committee discussed matters related specifically to his compensation.

Tally Sheets

The Committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of each named executive officer's compensation, including base salary, annual target and actual cash incentive compensation, annual equity incentive compensation, the value of outstanding equity, stock option exercises during the year, stock option gains during the year, the value of Brady's contribution to retirement plans, the value of Company-provided health and welfare benefits and social security taxes paid on the executive's behalf. Reviewing this information allows the Committee to determine what an executive officer's total compensation is and how a potential change to an element of our compensation program would affect the officer's overall compensation.

Components of Compensation

Our total compensation program includes five components: base salary, annual cash incentives, long-term equity incentives, employee benefits and perquisites. Each component serves a particular purpose and, therefore, each is considered independent of the other components, although all five components combine to provide a holistic total compensation approach. We use these components of compensation to attract, retain, motivate, develop and reward our executives.

The base salary, annual cash and long-term equity incentive components are determined through a pay-for-performance approach, targeted at market median for the achievement of performance goals with an opportunity for upper quartile pay when ~~top-tier~~upper quartile performance is achieved. Our compensation structure is balanced by the payment of below market median compensation to our ~~named executive officers~~NEOs when actual fiscal results do not meet or exceed expected ~~fiscal results, such as in fiscal years 2013 and 2014.~~financial results. The following table describes the purpose of each performance-based component and how that component is related to our pay-for-performance approach:

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Compensation Component	Purpose of Compensation Component
~~Compensation~~ ~~Component~~	~~Purpose of Compensation~~ ~~Component~~	Compensation Component in Relation to Performance
Base salary	A fixed level of income security used to attract and retain employees by compensating them for the primary functions and responsibilities of the position.	The base salary increase an employee receives depends upon the employee's individual performance, the employee's displayed skills and competencies and market competitiveness.

Annual cash incentive award	To attract, retain, motivate and reward employees for achieving or exceeding annual performance goals at Company and platform levels.	Financial performance determines the actual amount of the executive's annual cash incentive award. Award amounts are “self-funded” because they are included in the financial performance results when determining actual financial performance.

Annual equity incentive award: Time-based stock options, time-based RSUs and ~~time-based restricted stock units~~performance-based RSUs	To attract, retain, motivate and reward top talent for the successful creation of long-term stockholder value.	An assessment of executive leadership, experience and expected future contribution, combined with market competitive grant information, are used to determine the amount of equity granted to each executive. Stock options are inherently performance-based in that the stock price must increase over time to provide compensation value to the executive. ~~Restricted stock units are units that are settled in shares of common stock upon vesting. We believe restricted stock units~~Time-based RSUs serve as a strong reward and retention device, while promoting the alignment of executive decisions with Company goals and shareholder interests. Performance-based RSUs serve to align executives with shareholders and reward executives only for results achieved over a 3-year performance period.

Establishing Our Total Compensation Component Levels

The Committee uses peer group data to test the reasonableness and competitiveness of several components of compensation, including base salaries, annual cash incentives, and long-term equity incentives of positions similar to those of our named executive officers. The Committee's assessment of the revenue of the companies in the fiscal 2013 peer group resulted in revisions to the peer group for fiscal 2014 to more closely align the Company with a peer group of companies with similar annual revenues.NEOs. The following 1925 companies were included in the fiscal ~~2014~~2016 total compensation analysis conducted using publicly available data sourced through Equilar, Inc: Actuant Corporation; Acuity Brands Inc.; A.O. Smith Corporation; Barnes Group Inc; Clarcor Inc.; Curtiss-Wright Corporation; Enpro Industries, Inc.; Esco Tehcnologies Inc.; Graco Inc; H.B. Fuller Company; Hexcel Corporation; IDEX Corporation; II-IV Inc.; Mine Safety Appliances Company; Modine Manufacturing Company; Nordson Corporation; Plexus Corp; Watts Water Technologies Inc.; and Zebra Technologies Corporation.



Actuant Corporation	ESCO Technologies Inc.	Myers Industries Inc.
Acuity Brands, Inc.	Federal Signal Corp.	Nordson Corporation
A.O. Smith Corporation	Graco Inc.	Plexus Corp.
Apogee Enterprises, Inc.	HB Fuller Company	Polypore International Inc.
Barnes Group Inc.	Hexcel Corporation	Powell Industries, Inc.
Clarcor Inc.	IDEX Corporation	Watts Water Technologies, Inc.
Curtiss-Wright Corporation	II-VI Incorporated	Zebra Technologies Corporation
EnPro Industries, Inc.	Modine Manufacturing Company
Entegris, Inc.	Mine Safety Appliances Company

Based on our analysis of the fiscal ~~2014~~2016 peer group used for determining fiscal ~~2014~~2016 compensation, performed in ~~July 2013,~~May 2015, the base salaries of our named executive officers were generally at the median of our ~~peers.~~peers, with the exception of Mr. Felmer whose base salary was above the median. Fiscal ~~2014~~2016 target total compensation of our ~~named executive officers,~~NEOs, inclusive of base salary, cash incentives and equity awards, was ~~also at~~below the median of our peer companies, ~~although certain~~with the exception of Mr. Felmer whose target total compensation was above the ~~named executive officers were above and others were below such mark.~~median. Mr. Felmer previously served as the Company's Chief Financial Officer, which typically has a higher market value than Mr. Felmer's current role. Mr. Felmer's base salary has not increased since he accepted the role as President - Workplace Safety.

Fiscal ~~2014~~2016 Named Executive Officer Compensation

Base Salaries

~~Other than with respect to Messrs. Felmer and Bolognini, Mr. Jaehnert did not recommend and~~For fiscal 2016, the ~~Committee did not approve increases in base salary for the named executive officers because they were paid base salaries consistent with the median~~Board of ~~base salaries for similar positions at our peer group companies. The Committee~~Directors approved a ~~2.5%~~3.7% increase in base salary for Mr. ~~Felmer~~Nauman. In addition, Mr. Nauman recommended and the Committee approved increases in base salary for ~~fiscal 2014~~Messrs. Pearce and Bolognini. All increases were made to recognize the performance and current scope of responsibilities of each executive, and with regard to Messrs. Nauman and Pearce, to better align ~~his~~their base salary ~~to the market median of our~~with those holding comparable positions at peer companies. ~~Although Mr. Bolognini's~~Messrs. Felmer and Shaller did not receive a base salary isincrease as Mr. Felmer's base salary was positioned above the median of ~~our~~the peer ~~companies,~~group and Mr. Jaehnert recommended and the Committee agreed to provide a 3.1% increase in base salary for Mr. Bolognini for fiscal 2014 in recognition of his leadership of the legal function during his first year withShaller had recently joined the Company.

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Named Executive Officer	Fiscal 2013		Fiscal 2014		Percentage Increase		Fiscal 2015		Fiscal 2016		Percentage Increase
J. Michael Nauman							$	675,000	$	693,750	3.7	%
Aaron J. Pearce							288,429		315,000		6.7	%
Louis T. Bolognini							329,902		333,725		1.5	%
Thomas J. Felmer	$	377,500	$	384,625	2.5	%	386,937		386,937		—	%
Frank M. Jaehnert	800,000		800,000		—	%
Louis T. Bolognini	320,000		327,500		3.1	%
Stephen Millar (1)	304,313		325,160		—	%
Matthew O. Williamson	383,675		383,675		—	%
Russell R. Shaller							340,000		340,000		—	%

~~(1)~~

The amounts in this table for Mr. Millar, who lived and worked in Australia, were paid to him in Australian Dollars. The amounts shown in U.S. dollars in the table above were converted from Australian Dollars at the average exchange rate for fiscal 2014: 1USD = 0.9195AUD; 2013: 1USD = 0.9825AUD. The difference between fiscal 2013 and fiscal 2014 base salaries is entirely related to exchange rate fluctuation.

The salary detail in the table above reflects the annualized 12-month salary for each executive. The salaries in the Summary Compensation Table reflect fiscal year compensation earned including three (3) months at fiscal ~~2013~~2015 rates and nine (9) months at fiscal ~~2014~~2016 rates.

Annual Cash Incentive Awards

The Company is ~~organized and~~ managed on a global basis with three business platforms, ID Solutions, Workplace Safety and People Identification, which aggregate into two reportable segments: ~~Identification~~ID Solutions ~~(“IDS”)~~ and Workplace ~~Safety (“WPS”). The Company’s Asia Die Cut business, also considered a segment for the incentive award plan, is classified as discontinued operations for financial reporting purposes.~~Safety. All named executive officers participate in an annual cash incentive plan, which is based on fiscal year financial results of the Company or a ~~segment or the Company.~~segment. Set forth below is a description of the fiscal ~~2014~~2016 financial ~~measures:~~measures for the annual cash incentive plan:



Performance Metric	Definition	Weighting	NEO
Total Company organic revenue	Total Company organic revenue is measured as total company sales from continuing operations, at actual exchange rates, excluding all acquired and divested sales. Total company organic revenue is also known as “core sales” and “base sales." Total Company organic revenue is reported quarterly and annually in the Company's 10-Q and 10-K SEC filings.	30%	Messrs. Nauman, Pearce and Bolognini
Pre-tax income	Pre-tax income is defined as total Company revenues from continuing operations at actual exchange rates minus total Company expenses for the cost of doing business before deducting income tax expense. Pre-tax income excludes certain non-routine expenses such as restructuring charges and income or loss from acquisitions or divestitures completed in fiscal 2016.	50%	Messrs. Nauman, Pearce and Bolognini
Segment organic revenue	Segment organic revenue is measured as segment customer sales from continuing operations, at budgeted exchange rates, excluding all acquired and divested sales.	30%	Messrs. Felmer and Shaller
Segment income from operations	Segment income from operations is measured as segment sales less the segment's cost of goods sold, selling expenses and expenses of continuing operations, at budgeted exchange rates, for the current year.	50%	Messrs. Felmer and Shaller
Fiscal year objectives	In fiscal 2016, the Company had seven fiscal year objectives that were established at the beginning of the fiscal year and viewed as critical to the execution of the Company's strategy. The amount funded depends on the number of fiscal year objectives achieved in fiscal 2016 at the total Company level.	20%	All NEOs

~~Organic sales growth: Organic sales growth~~The achievement of the total Company organic revenue and profit thresholds for those named executive officers whose incentive is ~~measured as~~determined by those goals, and of the ~~increase in sales of continuing operations, excluding all acquired~~segment organic revenue and ~~divested sales and adjusted~~profit thresholds for foreign currency changes for the current year, divided by organic sales from continuing operations from the prior year. Organic sales are also known as “core sales” and “base sales." Organic sales growth is reported quarterly and annually in the Company's 10-Q and 10-K SEC filings.those named executive officers

~~Segment organic sales growth: Segment organic sales growth~~whose incentive is ~~measured as the increase~~determined by those goals, in ~~segment sales excluding all acquired and divested sales and adjusted for foreign currency changes for the current year, divided by segment organic sales from the prior year.~~

Income from continuing operations: Income from continuing operations is measured as sales of continuing operations less the cost of goods sold, selling expenses and research and development expenses of continuing operations, at budgeted exchange rates, for the current year.

Segment income from operations: Segment income from operations is measured as segment sales less the segment's cost of goods sold, selling expenses and research and development expenses, at budgeted exchange rates, for the current year.

Net income from continuing operations: Net income from continuing operations is defined as revenues from continuing operations at actual exchange rates minus expenses for the cost of doing business. Net income from continuing operations excludes certain non-routine expenses such as restructuring charges, certain tax charges, certain other non-routine charges, and income or loss from acquisitions and divestitures completed in fiscal 2014.

Total Company net income: Total Company net income is defined as total Company revenues at actual exchange rates minus total company expenses for the cost of doing business. Total Company net income excludes certain non-routine expenses such as restructuring charges, certain tax charges, certain other non-routine charges, and income or loss from acquisitions and gain or loss on the sale of businesses completed in fiscal 2014.

Team Goals: Funded by the achievement of net income growth, each named executive officer is evaluated by the Committee on the attainment of key performance indicators agreed by the Committee at the start ofcombination with the fiscal year ~~to be critical to~~objectives as defined above, determines how much the ~~execution~~annual bonus pool is funded. However, if the threshold fiscal year profit related growth goal is missed within an annual cash incentive plan, no annual bonus pool is funded for that plan, regardless of the ~~Company's strategy.~~final revenue and fiscal year objective goals achieved.

~~Table~~The NEOs individual contribution, in line with their annual performance rating, is used as a multiplier to determine what percentage of ~~Contents~~available bonus is earned and payable to him and can range from 0% to 150%.

Messrs. ~~Jaehnert, Felmer~~Nauman, Pearce and Bolognini

The cash incentive payable to Messrs. ~~Jaehnert, Felmer~~Nauman, Pearce and Bolognini for fiscal ~~2014~~2016 was based on total Company organic ~~sales growth,~~revenue, pre-tax income ~~from continuing operations, net income from continuing operations,~~ and ~~team goals.~~achievement of the fiscal year objectives. We use organic ~~sales growth~~revenue because we believe that the long-term value of our enterprise depends on our ability to grow revenue without regard for acquisitions. We use pre-tax income ~~from continuing operations because we believe it aligns to the management of sales and expenses, and we use net income from continuing operations~~ to focus on effectively managing our costs while growing our ~~revenue. Funded by the achievement of our net income goals, team goals~~revenue and we use fiscal year objectives as these are ~~used to assess the delivery upon key performance indicators determined to be~~ critical to the execution of the Company's strategy.

For fiscal ~~2014, no~~2016, the total Company organic revenue threshold was not achieved. However, a bonus was ~~payable to~~funded for these named executive officers asfor the ~~organic sales,~~achievement of our pre-tax income ~~from continuing operations~~ and ~~net income from continuing operations thresholds were not achieved. No bonus was payable to Mr. Jaehnert given his separation from the Company effective December 31, 2013.~~fiscal year objective goals. The multiplier for individual performance also applies. The threshold, target, maximum and actual payout amounts for Messrs. ~~Jaehnert, Felmer,~~Nauman, Pearce and Bolognini were as follows:

Performance Measure (weighting)
Threshold Target Maximum Fiscal 2014 Actual Result
Organic Sales Growth (30%) 1.4 % 4.2 % 7.8% or more
0.2 %
Income from continuing operations (30%)(millions) $266.6 $290.0 $309.7 or more
$238.9
Net Income from continuing operations (20%)(millions) $97.5 $112.0 $125.0 or more
($48.1)
Team Goals (20%) Varies by Individual
Fiscal 2014 Bonus Award
Actual
(% of Salary)

Actual
($)

T. Felmer 0 % 70 % 140 % 0 % $0
L. Bolognini 0 % 60 % 120 % 0 % $0



Performance Measure (weighting)	Threshold		Target		Maximum		Fiscal 2016 Actual Results
Organic Revenue (30%)(millions)	$1,130.7		$1,182.0		$1,221.7 or more		$1,120.6
Pre-Tax Income (50%)(millions)	$88.3		$111.0		$145.0 or more		$109.3
Fiscal Year Objectives (20%)	0	%	100	%	125	%	118%
Individual Performance Multiplier	0	%	100	%	150	%	Varies (1)
Fiscal 2016 Bonus Award							Actual Payout (% of Target)		Actual Payout (% of Salary)		Actual Payout ($)
J.M. Nauman	0	%	100	%	200	%	76.3	%	76.3	%	$528,984
A.J. Pearce	0	%	60	%	120	%	76.3	%	45.8	%	$144,113
L.T. Bolognini	0	%	60	%	120	%	61.0	%	36.6	%	$122,143

(1) The named executive officer's individual contribution is used as a multiplier to determine what percentage of available bonus is earned and payable to him or her and can range from 0% to 150%. The individual performance multiplier used in the calculation of the final bonus payable to Messrs. Nauman, Pearce and Bolognini was 125%, 125% and 100%, respectively.

Messrs. ~~Millar~~Felmer and ~~Williamson~~Shaller

The cash incentive payable to Mr. ~~Millar~~Felmer for fiscal ~~2014~~2016 was based on achievement of ~~Die Cut~~WPS segment organic ~~sales growth, Die Cut~~revenue, WPS segment income from operations, ~~total Company net income~~ and ~~team goals.~~achievement of fiscal year objectives. The cash incentive payable to Mr. ~~Williamson~~Shaller for fiscal ~~2014~~2016 was based on achievement of IDS segment organic ~~sales growth,~~revenue, IDS segment income from operations, ~~net income from continuing operations~~ and ~~team goals.~~achievement of fiscal year objectives. We use segment organic ~~sales~~revenue and segment income from operations goals because we believe they align Messrs. ~~Millar~~Felmer and ~~Williamson~~Shaller to the management of sales and expenses directly within their control as the ~~President-Brady Asia Pacific and President-Die Cut,~~President-Workplace Safety, and President-Identification Solutions, respectively. ~~Like~~

For fiscal 2016, the ~~other named executive officers, the company-wide performance measures~~segment organic revenue thresholds for WPS and IDS were not achieved. However, a bonus was funded for Messrs. ~~Millar~~Felmer and Williamson focused on driving greater overall profitability. Funded by the achievement of our net income goals, team goals are evaluated against key performance indicators determined to be critical to the execution of the Company's strategy. Mr. Millar earned a bonusShaller for the achievement of segment income from operations ~~but did not meet the threshold established~~and fiscal year objectives. The multiplier for a bonus payment related to segment organic sales growth. Mr. Williamson earned a bonus for the achievement of segment organic sales growth, but did not meet the threshold established for a bonus payment related to segment income from operations. In addition, the Company did not achieve the threshold levels of total Company net income or net income from continuing operations for the year; therefore, no bonus is payable for these components.individual performance also applies.

For ~~2014,~~2016, the threshold, target, maximum and actual payout amounts for Mr. ~~Millar~~Felmer were as follows:

Performance Measure (weighting)
Threshold Target Maximum Fiscal 2014 Actual Result
Die Cut Segment Organic Sales Growth (30%) 1.5 % 5.0 % 8.5% or more
(2.4 )%
Die Cut Segment IFO (30%)(millions) $17.7 $19.6 $22.0 or more
$19.4
Total Company Net Income (20%)(millions) $110.0 $126.0 $141.0 or more
($46.0)
Team Goals (20%) Various goals per Individual
Fiscal 2014 Bonus Award
Actual
(% of Salary)

Actual
(AUD $)

S. Millar 0 % 70 % 140 % 15 % 43,953

In connection with Mr. Millar’s contributions to the divestiture of the Company’s Die Cut business, management recommended and the committee approved a one-time bonus to Mr. Millar of $25,000, which was paid on November 1, 2013. The bonus was reflective of Mr. Millar’s commitment and contributions to improving performance of the Die Cut business despite the challenging business environment after the public announcement of the divestiture which resulted in significant

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employee retention and motivational challenges. In addition, the Committee approved within Mr. Millar's Separation Agreement signed August 1, 2014, a one-time bonus of AUD $100,000 in recognition of his efforts in connection with the completion of the divestiture of the Company’s Die Cut business. These bonuses are not reflected in the above table.



Performance Measure (weighting)	Threshold		Target		Maximum		Fiscal 2016 Actual Results
WPS Segment Organic Revenue (30%)(millions)	$345.8		$363.0		$367.6 or more		$342.8
WPS Segment IFO (50%)(millions)	$53.2		$65.0		$70.0 or more		$59.6
Fiscal Year Objectives (20%)	0	%	100	%	125	%	118%
Individual Performance Multiplier	0	%	100	%	150	%	100%
Fiscal 2016 Bonus Award							Actual Payout (% of Target)		Actual Payout (% of Salary)		Actual Payout ($)
T.J. Felmer	0	%	80	%	160	%	36.0	%	28.8	%	$111,438

For ~~2014,~~2016, the threshold, target, maximum and actual payout amounts for Mr. ~~Williamson~~Shaller were as follows:

Performance Measure (weighting)
Threshold Target Maximum Fiscal 2014 Actual Result
IDS Segment Organic Sales Growth (30%) 2.4 % 4.2 % 7.8% or more
2.9 %
IDS Segment IFO (30%)(millions) $184.0 $192.5 $204.8 or more
$173.9
Net Income from continuing operations (20%)(millions) $97.5 $112.0 $125.0 or more
($48.1)
Team Goals (20%) Various goals per Individual
Fiscal 2014 Bonus Award
Actual
(% of Salary)

Actual
($)

M. Williamson 0 % 70 % 140 % 8 % $31,422



Performance Measure (weighting)	Threshold		Target		Maximum		Fiscal 2016 Actual Results
IDS Segment Organic Revenue (30%)(millions)	$554.7		$580.0		$597.0 or more		$548.7
IDS Segment IFO (50%)(millions)	$108.5		$126.0		$140.0 or more		$126.8
Fiscal Year Objectives (20%)	0	%	100	%	125	%	118%
Individual Performance Multiplier	0	%	100	%	150	%	125%
Fiscal 2016 Bonus Award							Actual Payout (% of Target)		Actual Payout (% of Salary)		Actual Payout ($)
R.R. Shaller	0	%	55	%	110	%	91.9	%	50.5	%	$171,806

The target annual cash incentive award that would be payable to each executive officer is calculated as a percentage of the officer's eligible compensation defined as base salary in effect during the fiscal year, pro-rated to reflect base salary adjustments throughout the fiscal year.

For fiscal ~~2014,~~2016, the Committee reviewed the impact of unusual and unforeseen events on the payout of bonuses and determined that none would be considered in the calculation of bonus payouts. In general, the Committee regularly reviews and makes decisions on the impact of unusual events on a case-by-case basis and continually evaluates compensation policies and practices in light of ongoing developments and best practices in the area of incentive compensation.

Long-Term Equity Incentive Awards

The Company ~~has historically utilized~~utilizes a variety of incentive vehicles including ~~performance-based stock options,~~ time-based stock options, performance-based ~~restricted shares, time-based restricted shares~~RSUs (beginning in 2017) and time-based ~~restricted stock units~~RSUs to attract, retain and motivate key employees who directly impact the long-term performance of the Company. The size and type of equity awards for executives other than the chief executive officer are determined annually by the Committee with input from the chief executive officer. With regard to the award size given to the chief executive officer, the Committee uses its discretion in combination with market competitive information obtained ~~periodically~~ from Equilar, ~~Inc~~Inc. and ~~for fiscal 2014 in connection with the chief executive officer transition, the recommendation of~~advice from its independent compensation consultant.

For fiscal ~~2014,~~2016, the Committee reviewed ~~the Black-Scholes valuations of~~ historical ~~grants,~~award sizes, median levels of equity awarded to similar positions at our peer companies and the estimated value of all proposed ~~grants and~~grants. The Committee then authorized fiscal ~~2014~~2016 awards consisting of a combination of time-based stock options and time-based ~~restricted stock units.~~

~~Performance-based Stock Options:~~ Although stock options are inherently performance-based in that options have no value unless the stock price increases, the Committee believes that using additional performance criteria for vesting of stock options can serve as an additional motivator for executives to further drive Company performance. Performance-based stock options granted in fiscal 2012 have vesting criteria based upon year-over-year diluted EPS growth and an additional opportunity to vest over a two- or three-year period if the compound annual growth rate exceeds the annual target. Performance-based stock options granted prior to fiscal 2012 have vesting criteria based only upon year-over-year diluted EPS growth as measured against the S&P 600. No performance-based stock options were granted in fiscal 2013 or 2014.RSUs

Time-based Stock Options: ~~Time-based~~The annual grant of time-based stock ~~option grants~~options in fiscal ~~2014 were~~2016 was reviewed and approved by the Committee on September ~~10, 2013,~~9, 2015, with an effective grant date of September ~~20, 2013.~~25, 2015. The ~~grant~~exercise price ~~was~~is the fair market value of the stock on the grant date, which was calculated as the average of the high and low stock price on that date. The time-based stock options generally vest one-third each year for the first three years and have a ten-year life.

Time-based ~~Restricted Stock/Units:~~RSUs: The ~~Company's first grants~~annual grant of time-based ~~restricted stock units were awarded to our named executive officers at the start of fiscal 2014. Time-based restricted stock unit grants~~RSUs for fiscal ~~2014 were~~2016 was reviewed and approved by the Committee on September ~~10, 2013,~~9, 2015, with an effective grant date of September ~~20, 2013.~~25, 2015. The grant ~~price~~date fair value was the ~~final closing price~~fair market value of the

stock on the date of ~~grant. The~~grant, which was calculated as the average of the high and low stock price on that date. These time-based ~~restricted stock units~~RSUs vest one-third each year for the first three years.

~~Service-Based Restricted Stock:~~ Effective October 7, 2013, Mr. Felmer was awarded 5,000 shares of service-based restricted stock in recognition of his increased duties upon his appointment as Interim President and Chief Executive Officer. The ~~shares would vest upon the earlier~~following is a summary of the ~~end~~annual grant of ~~Mr. Felmer’s service as Interim President~~time-based stock options and ~~CEO or the Board appointment of a~~

~~Table of Contents~~

~~permanent President and CEO, with the vesting having occurred upon the appointment of Mr. Nauman as President and Chief Executive Officer on August 4, 2014.~~

~~Performance-based Restricted Stock/Units:~~ ~~Periodically, the Company has issued restricted stock or restricted stock units~~time-based RSUs made to key executives as an element of their overall compensation. In January 2008, the Committee approved the issuance of performance-based restricted stock awards to six of Brady's senior executives including currentour named executive officers Messrs. Jaehnert, Felmer, and Williamson. A total of 210,000 restricted shares were issued and included both a performance vesting requirement (earnings per share) and a service vesting requirement (five years). In addition to the original vesting criteria, the restricted stock awards were amended effective July 20, 2011, to include an additional vesting opportunity based upon earnings per share growth for the fiscal years ending July 31, 2013 or July 31, 2014, and a service vesting requirement through July 31, 2014. The final opportunity to achieve the vesting criteria was fiscal 2014, and based on ~~the performance of the Company in fiscal 2014, the vesting criteria for this was award was not met which caused these awards to be forfeited.~~

On September 21, 2012, Mr. Millar was awarded 10,000 restricted stock units with both a performance vesting requirement and a service vesting requirement (two years). This award was approved to align Mr. Millar's incentive opportunity with the earnings per share goal established for the other NEOs in 2008. The final opportunity to achieve the vesting criteria was fiscal 2014, and based on the performance of the Company in fiscal 2014, the vesting criteria for this was award was not met which caused this award to be forfeited.

Fiscal ~~2014~~2016 Annual Equity Grants

Named Officers
Number of Time-Based
Stock Options

Grant Date
Fair Value
Number of Time-Based RSUs
Grant Date
Fair Value
Number of Time-Based Restricted Shares
Grant Date
Fair Value
T. Felmer 33,682
$325,001 10,580
$325,118 5,000
$145,050
F. Jaehnert _
_ _
_ _
_
L. Bolognini 4,848
$142,508 4,639
$144,134 _
_
S. Millar 14,327
$137,508 4,476
$139,069 _
_
M. Williamson 25,006
$240,003 7,813
$242,750 _
_



Named Officers	Number of Time-Based Stock Options	Grant Date Fair Value		Number of Time-Based RSUs	Grant Date Fair Value
J.M. Nauman	301,399	$	1,466,668	36,741	$	733,350
A.J. Pearce	51,375	250,001		12,526	250,019
L.T. Bolognini	33,394	162,502		8,142	162,514
T.J. Felmer	56,513	275,004		13,778	275,009
R.R. Shaller	46,238	225,003		11,273	225,009

Other Elements of Compensation

Health and Welfare Benefits: We provide subsidized health and welfare benefits which include medical, dental, life and accidental death or dismemberment insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health and welfare plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. In addition, the Company ~~provides employer-paid long-term care insurance and~~ maintains a supplemental executive disability policy for executives. The supplemental disability policy provides for ~~Group Long Term Disability insurance (LTD)~~an additional 15% of ~~up to 60% of pre-tax base salary and bonus,~~compensation, up to a ~~monthly~~ maximum additional benefit of ~~$25,000.~~$5,000 per month. Brady Corporation pays the premiums for these benefits; therefore, these benefits are taxable to the executive.

Retirement Benefits: Brady employees (including named executive officers) in the United States and certain expatriate employees working for its international subsidiaries are eligible to participate in the Brady Corporation Matched 401(k) Plan (the “Matched 401(k) Plan”). In addition, named executive officers in the United States and employees at many of our United States locations are also eligible to participate in the Brady Corporation Funded Retirement Plan (“Funded Retirement Plan”).

Under the Funded Retirement Plan, the Company contributes 4% of the eligible earnings of each employee covered by the Funded Retirement Plan. In addition, participants may elect to have their annual pay reduced by up to 5% and have the amount of this reduction contributed to their Matched 401(k) Plan and matched with an additional 4% contribution by the Company. Participants may also elect to have up to another 45% of their eligible earnings contributed to the Matched 401(k) Plan (without an additional matching contribution by the Company and up to the maximum allowed by the IRS). The assets of the Matched 401(k) Plan and

~~Table of Contents~~

Funded Retirement Plan credited to each participant are invested by the trustee of the Plans as directed by each plan participant in a variety of investment funds as permitted by the Matched 401(k) Plan and the Funded Retirement Plan.

Due to the IRS income limitations for participating in the Matched 401(k) Plan and the Funded Retirement Plan, the named executive officers are eligible to participate in the Brady Restoration Plan. The Brady Restoration Plan is a non-qualified deferred compensation plan that allows an equivalent benefit to the Matched 401(k) Plan and the Funded Retirement Plan for named executive officer income above the IRS compensation limits.

Benefits are generally payable upon the death, disability, or retirement of the participant, or upon termination of employment before retirement, although benefits may be withdrawn from the Matched 401(k) Plan and paid to the participant if required for certain emergencies. Under certain specified circumstances, the Matched 401(k) Plan allows loans to be drawn on a participant's account. The participant is immediately fully vested with respect to employee contributions; all other contributions become fully vested over a two-year period of continuous service for the Matched 401(k) Plan and after six years of continuous service for the Funded Retirement Plan.

Deferred Compensation Arrangements: During fiscal 2002, the Company adopted the Brady Corporation Executive Deferred Compensation Plan (“Executive Deferred Compensation Plan”), under which executive officers, corporate staff officers and certain key management employees of the Company are permitted to defer portions of their salary and bonus into a plan account, the value of which is measured by the fair value of the underlying investments. The assets of the Executive Deferred Compensation Plan are held in a Rabbi Trust and are invested by the trustee as directed by the participant in several investment funds as permitted by the Executive Deferred Compensation Plan. The investment funds available in the Executive Deferred Compensation Plan include Brady Corporation Class A Nonvoting Common Stock and various mutual funds that are provided in the Matched 401(k) Plan. On

May 1, 2006, the plan was amended to require that deferrals into the Company's Class A Nonvoting Common Stock must remain in the Company's Class A Nonvoting Common Stock and be distributed in shares of the Company's Class A Nonvoting Common Stock.

At least one year prior to termination of employment, the executive must elect whether to receive their account balance following termination of employment in a single lump sum payment or by means of distribution under an Annual Installment Method. If the executive does not submit an election form or has not submitted one timely, then payment shall be made each year for a period of five years. The first payment must be ~~one-tenth~~one-fifth of the balance held; the second ~~one-ninth;~~one-fourth; and so on, with the balance held in the Rabbi Trust reduced by each payment. Distributions of the Company Class A Nonvoting Common Stock are made in-kind; distributions of other assets are in cash.

Effective January 1, 2008, the Executive Deferred Compensation Plan was amended and restated to comply with the provisions of Section 409A of the Internal Revenue Code. On February 17, 2011, the Executive Deferred Compensation Plan was amended and restated to revise and clarify certain Plan terms regarding the investment of amounts in the Brady Stock Fund. Amounts deferred prior to January 1, 2005 (which were fully vested under the terms of the plan), including past and future earnings credited thereon, will remain subject to the terms in place prior to January 1, 2005.

~~Millar Severance Agreement:~~ On August 1, 2014, it was announced that Mr. Millar will be departing the Company and will remain employed by the Company through September 30, 2014. On August 1, 2014, the Company entered into a written agreement with Mr. Millar in connection with the termination of his employment that provided for payment of his salary and benefits through September 30, 2014, a severance payment of AUD $299,000 to be paid in equal installments throughout the calendar year following his separation from employment on September 30, 2014 and a payment of AUD 100,000 in recognition of his work on the divestiture of the Company’s Die Cut business. The agreement also contains 12-month non-competition and non-solicitation provisions, as well as standard confidentiality, waiver and non-disparagement provisions. The Company entered into the agreement with Mr. Millar in order to obtain his assistance on transition issues after the closing of the Die Cut business divestiture and for an agreement not to compete with the Company or solicit its employees, customers and vendors for a period of 12 months after the conclusion of his employment.

Perquisites: Brady provides the named executive officers with the following ~~perquisites that are not available to other non-executive employees:~~perquisites:

~~Annual allowance for financial~~

Financial planning and tax ~~planning~~preparation;

~~Company car~~Car allowance;

Long-term care ~~insurance~~insurance; and

Personal ~~liability insurance~~

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Liability Insurance

Stock Ownership Requirements

We believe that the interests of shareholders and executives become aligned when executives become shareholders in possession of a meaningful amount of Company stock. Furthermore, this stock ownership encourages positive performance behaviors and discourages executive officers from taking undue risk. In order to encourage our executive officers and directors to acquire and retain ownership of a significant number of shares of the Company's stock, stock ownership requirements have been established.

The Board of Directors has established the following stock ownership requirements for our named executive officers:



~~F. Jaehnert~~J.M. Nauman		~~100,000 shares~~5 times base salary
T.A.J. Pearce		3 times base salary
L.T. Bolognini		2 times base salary
T.J. Felmer		~~30,000 shares~~3 times base salary
~~L. Bolognini~~R.R. Shaller		~~30,000 shares~~
~~S. Millar~~		~~30,000 shares~~
~~M. Williamson~~		~~30,000 shares~~3 times base salary

The stock ownership requirement for each director is ~~5,000 shares of Company stock. Mr. Nauman's stock ownership requirement has been set at~~ five times ~~his base salary.~~the annual retainer.

~~Each executive has a period of~~

Our NEOs are expected to obtain the required ownership levels within five years and may not sell shares, other than to ~~satisfy~~cover tax withholding requirements associated with the ~~holding requirement.~~vesting or exercise of the equity award, until such time as they meet the requirements. All ~~named executive officers except Messrs. Millar and~~NEOs other than Mr. Bolognini, ~~met and retained~~who is still within his five-year acquisition period, have achieved their respective ownership levels as of the end of fiscal ~~2014. Mr. Millar has until fiscal year 2016 and Mr. Bolognini has until fiscal 2018 to achieve their respective ownership level.~~2016. If an executive does not meet the above ownership level ~~or certain interim levels,~~within five years of becoming subject to the requirements, the Committee may direct that the executive's after-tax payout on any incentive plans will be in Class A Nonvoting Common Stock to bring the executive up to the required level, and the executive may not sell any shares, other than to cover tax withholding requirements associated with the exercise or vesting of the equity award, until such time as they meet the requirements.

The Committee reviews the actual stock ownership levels of each of the named executive officers on an annual basis to ensure the guidelines are met. For purposes of determining whether an executive meets the required ownership level, the values of Company stock owned outright, Company stock held in the Executive Deferred Compensation Plan, Company stock owned in the Employee 401(k) Plan or pension plan and time-based restricted stock or restricted stock units are included. In addition, ~~20%~~the spread value of ~~any~~ vested stock options that are “in the money” is also included. The value of performance-based restricted stock units are ~~included.~~excluded from determining whether an executive meets the required ownership level.

Insider Trading Policy

The Company's Insider Trading Policy prohibits hedging and other monetization transactions in Company securities by officers, directors and employees. The prohibition on hedging transactions includes financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. The Insider Trading Policy also prohibits the pledging of Company stock as collateral for loans or holding Company securities in a margin account by officers, directors or employees.

Employment and Change of Control Agreements

In fiscal ~~2014,~~2016, the Company did not have employment agreements with our executives. The Offer Letter entered into with Mr. Nauman on August 1, 2014, provides that he is deemed an at at-will employee, but will receive a severance benefit equal to two times the sum of his base salary and target bonus in the event his employment is terminated without cause or for good reason as described therein. The Offer Letter entered into with Mr. Shaller on June 22, 2015, provides that he is deemed an at at-will employee, but will receive a severance benefit equal to his base salary plus target bonus in the event his employment is terminated without cause or for good reason as described therein.

The Board of Directors of Brady Corporation approved change of control agreements for ~~certain executive officers~~all of the ~~Company, including all~~NEOs of the ~~named executive officers.~~Company. The agreements applicable to ~~all of~~ the covered named executive officers, other than ~~Mr. Jaehnert and~~ Mr. Nauman, provide a payment of an amount equal to two times their annual base salary and two times the average bonus payment received in the three years immediately prior to the date the change of control occurs in the event of termination or resignation upon a change of control. Under the terms of the Change of Control Agreement with Mr. Nauman, in the event of a qualifying termination within 24 months following a change of control (as such events are defined in the Change of Control Agreement), Mr. Nauman will receive two times his annual base salary, two times his target bonus, and the amount of his target bonus prorated based on when the termination occurs. The ~~agreements~~agreement for ~~Messrs.~~Mr. Felmer ~~Millar and Williamson~~ also ~~provide~~provides for reimbursement of any excise taxes imposed and all of the agreements provide for up to $25,000 of attorney fees to enforce the executive's rights under the agreement. Payments under the agreement will be spread over two years.

In May 2003, the Board approved a Change of Control Agreement for Mr. Jaehnert, which was subsequently amended and restated in December 2008 to comply with Internal Revenue Code Section 409A. This agreement expired upon Mr. Jaehnert's retirement on December 31, 2013. See the section entitled "Appointment of J. Michael Nauman" above for a description of Mr. Nauman's Change of Control Agreement.

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Under the terms of the 2012 Omnibus Incentive Stock Plan, in the event of (a) the merger or consolidation of the Corporation with or into another corporation or corporations in which the Corporation is not the surviving corporation, (b) the adoption of any plan for the dissolution of the Corporation, or (c) the sale or exchange of all or substantially all the assets of the Corporation for cash or for shares of stock or other securities of another corporation, all then-unexercised stock options become fully ~~exercisable.~~exercisable and all restrictions placed on restricted stock and restricted stock units will lapse. If any stock option is canceled subsequent to the events described above, the Corporation or the corporation assuming the obligations of the Corporation, shall pay an amount of cash or stock equal to the in-the-money value of the canceled stock options.

Non-Compete/Non-Solicitation/Confidentiality

Since fiscal 2013, agreements memorializing equity awards under the Company's 2012 Omnibus Incentive Stock Plan have contained non-competition, non-solicitation and confidential information covenants applicable to the award recipients. The confidential information covenant prohibits the use, disclosure, copying or duplication of the Company's confidential information other than in the course of authorized activities conducted in the course of the recipient's employment with the Company. The other covenants prohibit the ~~recipient,~~NEOs, except Mr. Nauman, for 12 months after termination of employment with the Company, from (i) performing duties for or as a competitor of the Company which are the same or similar to those performed by the recipient in the 24 months prior to termination of employment with the Company or (ii) inducing or encouraging employees, vendors or clients of the Company to breach, modify or terminate relationships or agreements they had with the Company during the 24 month period prior to the recipient's termination of employment. ~~See~~Mr. Nauman's covenants provide for the ~~section entitled "Appointment~~same non-competition and non-solicitation terms generally, but extend the life of ~~J. Michael Nauman" above for a description~~such covenants to 24 months after termination of employment with the ~~additional covenants applicable to Mr. Nauman.~~Company.

Compliance with Tax Regulations Regarding Executive Compensation

Section 162(m) of the Internal Revenue Code ~~added by the Omnibus Budget Reconciliation Act of 1993,~~ generally disallows a tax deduction to public companies for compensation over $1 million paid to the Company's chief executive officer or the other named executive officers. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. The Company's executive compensation program, as currently constructed, is not likely to generate significant nondeductible compensation in excess of these limits. The Committee will continue to review these tax regulations as they apply to the Company's executive compensation program. It is the Committee's intent to preserve the deductibility of executive compensation to the extent reasonably practicable and to the extent consistent with its other compensation objectives. However, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and related regulations, and the fact that such regulations and interpretations may change from time to time (with potentially retroactive effect), there is no certainty that compensation intended by the Committee to satisfy the requirements for deductibility under Section 162(m) will be deductible.

The Committee also considers it important to retain flexibility to design compensation programs, even where compensation payable under such programs may not be fully deductible, if such programs effectively recognize a full range of criteria important to the Company's success and result in a gain to the Company that would outweigh the limited negative tax effect.

Management Development and Compensation Committee Interlocks and Insider Participation

During fiscal ~~2014,~~2016, the Board's Management Development and Compensation Committee was composed of Messrs. Balkema, Harris, ~~and Richardson~~Ms. Bruno and Ms. ~~Pungello.~~Gioia, and Mr. Sirkin from November 18, 2015 to July 31, 2016. None of these persons has at any time been an employee of the Company or any of its subsidiaries. There are no relationships among the Company's executive officers, members of the Committee or entities whose executives serve on the Board that require disclosure under applicable SEC regulations.

Management Development and Compensation Committee Report

The Committee has reviewed and discussed the Compensation Discussion and Analysis with management; and based on the review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's annual report on Form 10-K.

Gary Balkema, Chairman

Elizabeth Bruno

Nancy Gioia

Frank Harris

~~Elizabeth P. Pungello~~

~~Bradley Richardson~~Harold Sirkin

~~Table of Contents~~

Compensation Policies and Practices

The Company's compensation policies for executive officers and all other employees are designed to avoid incentives to create undue risks to the Company. The Company's compensation programs are weighted towards offering long-term incentives that reward sustainable performance; do not offer significant short-term incentives that might drive high-risk investments at the expense of the long-term Company value; and are set at reasonable and sustainable levels, as determined by a review of the Company's economic position, as well as the compensation offered by comparable companies. Under the oversight of its Audit and Management Development and Compensation Committees, the Company reviewed its compensation policies, practices and procedures for all employees to evaluate and ensure that they do not foster risk taking beyond that deemed acceptable within the Company's business model. The Company believes that its compensation policies, practices and procedures do not encourage employees to take unnecessary or excessive risks that are reasonably likely to have a material adverse effect on the Company.

Summary Compensation Table

The following table sets forth compensation awarded to, earned by, or paid to the named executive officers, who served as executive officers during the fiscal year ended July 31, ~~2014~~2016, for services rendered to the Company and its subsidiaries during the fiscal years ended July 31, ~~2014~~2016, July 31, ~~2013~~2015 and July 31, ~~2012~~2014.

Name and Principal Position
Fiscal
Year

Salary
($)

Bonus
($)

Restricted Stock Awards and RSUs
($)(1)

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)(3)

All Other
Compensation
($)(4)

Total
($)
T.J. Felmer 2014 $ 384,397
—
$ 477,221
$ 325,001
$ —
$ 59,842
$ 1,246,461
Senior VP, President-Workplace Safety, Former CFO 2013 377,500
—
—
422,007
—
54,164
853,671
2012 375,481
—
—
755,909
—
105,811
1,237,201
F.M. Jaehnert 2014 360,000
—
—
—
—
541,074
901,074
Former President, CEO, & Director (5) 2013 800,000
—
—
834,740
—
101,198
1,735,938
2012 800,000
—
—
2,086,727
—
238,296
3,125,023
L.T. Bolognini - Senior VP-General Counsel & Secretary (6) 2014 327,500
—
144,134
142,508
—
51,649
665,791
S. Millar 2014 325,160
25,000
139,069
137,508
47,799
83,825
758,361
President-APAC, VP - Brady Corporation (7) 2013 304,314
—
302,100
278,247
—
73,508
958,169
M.O. Williamson 2014 383,675
—
242,750
240,003
31,422
30,694
928,544
President - IDS & VP - Brady Corporation 2013 380,666
—
—
319,984
—
62,067
762,717
2012 370,481
—
—
662,218
122,148
92,492
1,247,339



Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Restricted Stock Awards and RSUs ($)(1)		Option Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
J.M. Nauman, President, CEO, & Director (5)	2016	$	693,750	—		$	733,350	$	1,466,668	$	528,984	$	89,017	$	3,511,769
J.M. Nauman, President, CEO, & Director (5)	2015	649,039		—		2,287,151		893,282		—		86,716		3,916,188
A.J. Pearce, Senior VP & CFO (5)	2016	$	315,000	$	—	$	250,019	$	250,001	$	144,113	$	49,920	$	1,009,053
A.J. Pearce, Senior VP & CFO (5)	2015	290,121		—		540,982		238,212		—		43,418		1,112,733
L.T. Bolognini, Senior VP, General Counsel and Secretary	2016	$	333,725	$	—	$	162,514	$	162,502	$	122,143	$	52,220	$	833,104
	2015	329,902		—		143,075		141,443		—		74,950		689,370
	2014	327,500		—		144,134		142,508		—		51,649		665,791
T.J. Felmer, Senior VP, President-Workplace Safety	2016	$	386,937	—		$	275,009	$	275,004	$	111,438	$	62,934	$	1,111,322
	2015	386,937		—		820,304		322,580		—		57,364		1,587,185
	2014	384,397		—		477,221		325,001		—		59,842		1,246,461
R.R. Shaller, Senior VP & President - Identification Solutions (5)(6)	2016	$	340,000	$	—	$	225,009	$	225,003	$	171,806	$	188,467	$	1,150,285
	2015	26,154		115,000		524,590		—		—		1,749		667,493

(1)

Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year for restricted stock awards and restricted stock units ("RSUs"). The grant date fair value is calculated based on the number of shares of Class A Common Stock underlying the restricted stock awards and RSUs, times the average of the high and low trade prices of ~~Brady~~Class A Common Stock on the date of grant. The actual value of a restricted stock award or RSU will depend on the market value of the ~~Company’s~~Class A Common Stock on the date the stock is sold. The fiscal 2014 annual grant included time-based RSUs that vest one-third each year for the first three years. Effective September 21, 2012, a grant of 10,000 shares of performance-based RSUs was issued to Mr. Millar, which included a performance vesting requirement based upon earnings per share growth at either July 31, 2013 or July 31, 2014, provided that Mr. Millar remain employed through July 31, 2014. Effective October 7, 2013, an award of 5,000 shares of service-based restricted stock was issued to Mr. Felmer at a fair value of $29.70 per share as a result of his increased responsibilities with his appointment as Interim President and Chief Executive Officer.

(2)

Represents the grant date fair value computed in accordance with accounting guidance for equity grants made or modified in the applicable year for ~~performance-based and~~ time-based stock options. The assumptions used to determine the value of the awards, including the use of the Black-Scholes method of valuation by the Company, are discussed in Note 1 of the Notes to Consolidated Financial Statements of the Company contained in Item 8 of this Form 10-K, for the fiscal year ended July 31, ~~2014.~~2016. The actual value, if any, which an option holder will realize upon the exercise of an option will depend on the excess of the market value of the ~~Company’s~~Class A Common Stock over the exercise price on the date the option is exercised, which cannot be forecasted with any accuracy.

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(3)	Reflects incentive plan compensation earned during the listed fiscal years, which was paid during the next fiscal year.

(4)

The amounts in this column ~~for Messrs. Jaehnert, Felmer, Bolognini, and Williamson~~ include: matching contributions to the Company’s Matched 401(k) Plan, Funded Retirement Plan and Restoration Plan, the costs of group term life insurance for each named executive officer, use of a Company car or car allowance, and associated expenses, the cost of long-term care insurance, the cost of personal liability insurance, the cost of disability insurance and other perquisites. The perquisites may include anrelocation assistance and annual ~~allowance~~allowances for financial and tax planning and the cost of an annual physical health exam. For Mr. Jaehnert, this column for fiscal 2014 also includes $440,000 in severance payments and payment by the Company for $10,000 of legal fees and $20,000 of outplacement service fees incurred in conjunction with his separation in additionplanning. Refer to the ~~above amounts. The amounts in this column for Mr. Millar include: contributions for the Brady Australia Pension Plan, vehicle allowance and associated expenses and other perquisites as listed above.~~table below.


(5)	~~Mr. Jaehnert’s base salary did not change in fiscal 2014 from fiscal 2013. The fiscal 2014 salary of $360,000 represents~~Fiscal 2015 was the ~~amount earned~~first year during the ~~fiscal year through December 31, 2013,~~terms of Messrs. Nauman, Pearce, and Shaller in which the ~~date Mr. Jaehnert’s separation from the Company.~~criteria as a Named Executive Officer were met.


(6)	~~Fiscal 2014 is the first year during~~ Mr. ~~Bolognini’s term~~Shaller received a sign-on bonus of $115,000 in fiscal 2015 in conjunction with his appointment as ~~officer in which he met the criteria as a Named Executive Officer.~~Senior Vice President and President - Identification Solutions, effective June 22, 2015.

~~(7)~~

The amounts in this table for Mr. Millar, who works and lives in Australia, were paid to him in Australian Dollars. The amounts shown in U.S. dollars in the table above were converted from Australian Dollars at the average exchange rate for fiscal 2014: $1 = 0.9195 AUD and 2013: $1 = 0.9825 AUD. Fiscal 2013 was the first year during Mr. Millar's term as officer in which he met the criteria as a Named Executive Officer.

Name
Fiscal
Year

Retirement
Plan
Contri-butions
($)

Group
Term
Life
Insurance
($)

Company
Car
($)

Long-term
Care
Insurance
($)

Personal
Liability
Insurance
($)

Temp/
Total
Disability
($)
Severance ($)
Other
($)

Total
($)
T.J. Felmer 2014 $ 30,505
$ 1,102
$ 20,159
$ 4,048
$ —
$ —
$ 4,028
$ 59,842
2013 30,200
791
14,940
3,737
—
—
4,496
54,164
2012 72,759
478
24,761
3,737
—
—
4,076
105,811
F.M. Jaehnert (1) 2014 48,862
3,870
1,837
2,570
2,654
7,920
440,000
33,361
541,074
2013 64,000
4,028
12,201
5,141
2,654
7,920
5,254
101,198
2012 195,835
2,925
18,966
5,141
2,654
7,920
4,855
238,296
L.T. Bolognini (2) 2014 24,462
763
16,201
4,274
—
—
5,949
51,649
S. Millar 2014 57,620
—
26,205
—
—
—
—
83,825
(3) 2013 49,227
—
24,281
—
—
—
—
73,508
M. O. Williamson 2014 30,694
—
—
30,694
2013 40,581
798
10,847
5,501
—
—
4,340
62,067
2012 67,001
471
15,188
5,501
—
—
4,332
92,493



Name	Fiscal Year	Retirement Plan Contributions ($)		Company Car ($)		Group Term Life Insurance ($)		Long-term Care Insurance ($)		Long-Term Disability Insurance ($)		Relocation ($)		Other ($)		Total ($)
J.M. Nauman	2016	$	54,808	$	18,000	$	1,087	$	4,860	$	4,311	$	—	$	5,951	$	89,017
J.M. Nauman	2015	23,885		17,308		975		4,860		4,282		27,676		7,730		86,716
A.J. Pearce	2016	$	24,606	$	13,468	$	505	$	2,893	$	2,800	$	—	$	5,648	$	49,920
A.J. Pearce	2015	24,854		15,313		424		—		2,727		—		100		43,418
L.T. Bolognini	2016	$	26,557	$	11,799	$	528	$	3,946	$	4,097	$	—	$	5,293	$	52,220
	2015	25,428		14,997		520		3,946		4,116		25,443		500		74,950
	2014	24,462		16,201		763		4,274		—		—		5,949		51,649
T.J. Felmer	2016	$	30,955	$	18,000	$	610	$	3,737	$	3,221	$	—	$	6,411	$	62,934
	2015	30,955		18,000		747		3,737		3,225		—		700		57,364
	2014	30,505		20,159		1,102		4,048		4,028		—		—		59,842
R.R. Shaller	2016	$	29,600	$	18,000	$	537	$	3,427	$	4,103	$	127,244	$	5,556	$	188,467
R.R. Shaller	2015	—		1,383		—		—		91		275		—		1,749

(1) Mr. Jaehnert retired and resigned as President, Chief Executive Officer, and director effective October 7, 2013 and his employment with the Company terminated on December 31, 2013. Payment by the Company for $10,000 of legal fees and $20,000 of outplacement service fees incurred in conjunction with his separation are included under ‘Other’ in the table above.

~~(2) Fiscal 2014 was the first year during Mr. Bolognini’s term as officer in which he met the criteria as a Named Executive Officer.~~

(3) The amounts in this table for Mr. Millar, who works and lives in Australia, were paid to him in Australian Dollars. The amounts shown in U.S. dollars in the table above were converted from Australian Dollars at the average exchange rate for fiscal 2014: $1 = 0.9195AUD and 2013: $1 = 0.9825 AUD. Fiscal 2013 is the first year during Mr. Millar's term as officer in which he met the criteria as a Named Executive Officer.

~~Table of Contents~~

Grants of Plan-Based Awards for ~~2014~~2016

The following table summarizes grants of plan-based awards made during fiscal ~~2014~~2016 to the named executive officers.


	Grant Date		Compensation Committee Approval Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)									All Other Option Awards: Number of Securities Underlying Options			All Other Stock Awards: Number of Shares of Stock or Units			Exercise or Base Price of Stock or Option Awards			Grant Date Fair Value of Stock and Option Awards			Grant Date		Compensation Committee Approval Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)										All Other Option Awards: Number of Securities Underlying Options		All Other Stock Awards: Number of Shares of Stock or Units		Exercise or Base Price of Stock or Option Awards			Grant Date Fair Value of Stock and Option Awards
Name		Threshold ($)			Target ($)			Maximum ($)			(#)		(#)			(2)				($)					Threshold ($)				Target ($)			Maximum ($)			(#)			(#)			(2)		($)
J.M. Nauman																														$	—		$	700,000		$	1,400,000
																											9/25/2015		9/9/2015												301,399				$	19.96		$	1,466,668
																										9/25/2015		9/9/2015														36,741		19.96			733,350
A.J. Pearce																														—			192,000			384,000
																										9/25/2015		9/9/2015												51,375				19.96			250,001
																										9/25/2015		9/9/2015														12,526		19.96			250,019
L.T. Bolognini																														—			201,000			402,000
																										9/25/2015		9/9/2015												33,394				19.96			162,502
																										9/25/2015		9/9/2015														8,142		19.96			162,514
T.J. Felmer							$	—		$	270,900		$	541,800																		—			309,550				619,100
	9/20/2013			9/10/2013		—			—			—			33,862			10,580			$	31.07		$	653,721		9/25/2015		9/9/2015												56,513				19.96			275,004
	10/7/2013		10/6/2013		—			—			—						5,000		(3)	29.70			148,500			9/25/2015		9/9/2015														13,778		19.96			275,009
F.M. Jaehnert	—		—		—			—			—			—			—			—			—
L.T. Bolognini					—			198,000			396,000
R.R. Shaller																														—			187,000			374,000
	9/20/2013		9/10/2013		—			—			—			14,848			4,639			31.07			286,642			9/25/2015		9/9/2015												46,238				19.96			225,003
S. Millar					—			209,300			418,600
	9/20/2013		9/10/2013		—			—			—			14,327			4,476			31.07			276,577			9/25/2015		9/9/2015														11,273		19.96			225,009
M.O. Williamson					—			268,573			537,145
	9/20/2013		9/10/2013		—			—			—			25,006			7,813			31.07			482,752

(1)

At its September ~~2014~~2015 meeting, the Management Development and Compensation Compensation Committee approved the values of the annual cash incentive award under the Company's annual cash incentive plan. The structure of the plan is described in the Compensation Discussion and Analysis above and was set prior to the beginning of the fiscal year. ~~Target payout~~Payout levels can range from 0 to 200 percent of base salary.

(2)

The exercise price and base price is the average of the high and low sale prices of the Company’s Class A Common Stock as reported by the New York Stock Exchange on the date of the grant. The average of the high and low sale prices of the Company’s Class A Common Stock as reported by the New York Stock Exchange on the grant dates of September 20, 2013 and October 7, 2013 was $31.07 and $29.70, respectively.


~~(3)~~	Represents 5,000 shares of service-based restricted stock granted to Mr. Felmer on October 7, 2013 at a fair value of $29.70 per share as a result of his increased responsibilities with his appointment of Interim President and Chief Executive Officer.

Outstanding Equity Awards at ~~2014~~2016 Fiscal Year End


	Option Awards						Stock Awards		Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable (#)	Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date	Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)	Number of Securities Underlying Unexercised Options Exercisable (#)	Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date	Number of Units of Stock That Have Not Vested (#)		Market Value of Units of Stock That Have Not Vested ($)
J.M. Nauman									43,531	87,061	(1)	$	22.66	9/25/2024
									—	301,399	(2)	19.96		9/25/2025
															53,668	(7)	$	1,724,890
															26,584	(5)	854,410
															36,741	(6)	1,180,856

A.J. Pearce									5,000	—		$	38.19	11/30/2016
									5,000	—		38.31		12/4/2017
									20,000	—		36.07		7/22/2018
									5,000	—		20.95		12/4/2018
									7,000	—		28.73		9/25/2019
									10,000	—		29.10		9/24/2020
									9,000	—		27.00		9/30/2021
									9,000	—		30.21		9/21/2022
									3,016	1,507	(3)	31.07		9/20/2023
									11,609	23,216	(1)	22.66		9/25/2024
									—	51,375	(2)	19.96		9/25/2025
															434	(4)	$	13,949
															7,089	(5)	227,840
															10,953	(11)	352,029
															12,526	(6)	402,586

L.T. Bolognini									25,000			$	34.64	1/7/2023
									9,899	4,949	(3)	31.07		9/20/2023
									6,893	13,785	(1)	22.66		9/25/2024
									—	33,394	(2)	19.96		9/25/2025
															1,546	(4)	$	49,688
															4,209	(5)	135,277
															8,142	(6)	261,684

T.J. Felmer	30,000			$	33.89	8/1/2015			25,000	—		$	38.19	11/30/2016
	25,000			37.83		11/30/2015			25,000	—		38.31		12/4/2017
	25,000			38.19		11/30/2016			25,000	—		20.95		12/4/2018
	25,000			38.31		12/4/2017			23,334			29.78		8/3/2019
	25,000			20.95		12/4/2018			35,000	—		28.73		9/25/2019
	23,334			29.78		8/3/2019			11,667	—		28.35		8/2/2020
	35,000			28.73		9/25/2019			40,000	—		29.10		9/24/2020
	11,667			28.35		8/2/2020			35,000	—		27.00		9/30/2021
	40,000			29.10		9/24/2020			45,500	—		30.21		9/21/2022
		45,000	(1)	29.55		8/1/2021			22,575	11,287	(3)	31.07		9/20/2023
	23,334	11,666	(3)	27.00		9/30/2021			15,720	31,439	(1)	22.66		9/25/2024
	15,167	30,333	(4)	30.21		9/21/2022

~~Table of Contents~~

—
33,862
(7) 31.07
9/20/2023
35,000
(2) $ 915,250
10,580
(8) 276,667
5,000
(9) 130,750
F.M. Jaehnert 60,000
$ 28.84
11/18/2014
60,000
33.89
12/31/2014
50,000
37.83
12/31/2014
50,000
38.19
11/30/2016
50,000
38.31
12/4/2017
50,000
20.95
12/4/2018
56,667
29.78
8/3/2019
70,000
28.73
9/25/2019
33,334
28.35
8/2/2020
100,000
29.10
9/24/2020
130,000
(1) 29.55
8/1/2021
60,000
30,000
(3) 27.00
9/30/2021
30,000
60,000
(4) 30.21
9/21/2022

L.T. Bolognini 8,334
16,666
(6) 34.64
1/7/2023
14,848
(7) 31.07
9/20/2023
4,639
(8) $ 121,309.85

S. Millar 5,000
28.84
11/18/2014
3,500
37.83
11/30/2015
5,000
38.19
11/30/2016
5,000
38.31
12/4/2017
10,000
28.73
9/25/2019
10,000
29.10
9/24/2020
40,000
(1) 29.55
8/1/2021
10,000
(3) 27.00
9/30/2021
10,000
20,000
(4) 30.21
9/21/2022
14,327
(7) 31.07
9/20/2023
10,000
(5) $ 261,500
4,476
(8) 117,047.4
M.O.Williamson 30,000
28.84
11/18/2014
30,000
33.89
8/1/2015
25,000
37.83
11/30/2015
25,000
38.19
11/30/2016
25,000
38.31
12/4/2017
8,334
20.95
12/4/2018
23,334
29.78
8/3/2019
35,000
28.73
9/25/2019
10,000
28.35
8/2/2020
35,000
29.10
9/24/2020
40,000
(1) 29.55
8/1/2021
20,000
10,000
(3) 27.00
9/30/2021
11,500
23,000
(4) 30.21
9/21/2022
15,629
(7) 31.07
9/20/2013
35,000
(2) $ 915,250
7,813
(8) 204,310



	—	56,513	(2)	19.96		9/25/2025
							3,526	(4)	$	113,326
							9,600	(5)	308,544
							3,333	(8)	107,123
							10,000	(9)	321,400
							13,778	(6)	442,825

R.R. Shaller	—	46,238	(2)	$	19.96	9/25/2025
							16,793	(10)	$	539,727
							11,273	(6)	362,314

~~Table of Contents~~

(1)

The performance-based stock options granted on August 1, 2011 become exercisable in equal annual installments over a three-year period, with the vesting date being the date the Audit Committee accepts the resultsOne-half of the ~~fiscal year audit confirming the achievement of annual 15 percent EPS growth. In the event the annual EPS growth goal is not achieved with respect to any fiscal year, the~~ options ~~may~~ vest in full at the end of fiscal 2014 if the Corporation’s Compounded Annual Growth Rate (“CAGR”) for EPS over fiscal 2011 is 15 percent or more. Based on the performance of the Company in fiscal 2014, the vesting criteria for this award were not not met. As a result, the awards were forfeited on September ~~9, 2014,~~25, 2016, and the ~~date the Audit Committee accepted the results of the fiscal year audit.~~remaining options vest on September 25, 2017.

(2)

~~Effective July 20, 2011, the Management Development and Compensation Committee~~One-third of the ~~Board of Directors~~options vest on September 25, 2016, one-third of the ~~Company approved an amendment to the granting agreement under which the Company issued performance-based restricted stock~~options vest on January 8, 2008. Pursuant to the amendment, the shares will vest upon meeting a financial performance vesting requirement based upon the Company’s EPS growth at either July 31, 2013 or July 31, 2014, provided that the senior executives remain employed through July 31, 2014. The vesting requirement was not met at July 31, 2013. Based on the performanceSeptember 25, 2017, and one-third of the ~~Company in fiscal 2014, the vesting criteria for this award was not met. As a result, the awards were forfeited~~options vest on September ~~9, 2014, the date the Audit Committee accepted the results of the fiscal year audit.~~25, 2018.


(3)	The remaining options will vest on September ~~30, 2014.~~


~~(4)~~	~~One-half of the options vest on September 21, 2014 and the remaining options vest on September 21, 2015.~~

~~(5)~~

On September 21, 2012, Mr. Millar was awarded 10,000 restricted stock units with both a performance vesting requirement and a service vesting requirement (two years). As of July 31, 2013, the vesting criteria for this award have not been met. Based on the performance of the Company in fiscal 2014, the vesting criteria for this award were not met. As a result, the award was forfeited on September 9, 2014, the date the Audit Committee accepted the results of the fiscal year audit.


~~(6)~~	Mr. Bolognini was awarded 25,000 stock options on January 7, 2013, the date he joined the Company as an officer. One-half of the remaining options vest on January 7, 2015 and the remaining options vest on January 7, 2016.


~~(7)~~	~~One-third of the options vest on September 20, 2014, one-third of the options vest on September 20, 2015, and one-third of the options vest on September~~ 20, 2016.


~~(8)~~(4)	This award represents time-based restricted stock units ~~granted~~awarded on September 20, 2013, as part of the annual fiscal 2014 equity grant. ~~One-third of the units vest on September 20, 2014, one-third of the units vest on September 20, 2015, and one-third of the~~The remaining units vest on September 20, 2016.


~~(9)~~(5)	This award represents time-based restricted stock units awarded on September 25, 2014, as part of the annual fiscal 2015 equity grant. One-half of the units vest on September 25, 2016 and the remaining units vest on September 25, 2017.


(6)	This award represents time-based restricted stock units awarded on September 25, 2015, as part of the annual fiscal 2016 equity grant. One-third of the units vest on September 25, 2016, one-third of the units vest on September 25, 2017, and one-third of the units vest on September 25, 2018.


(7)	Mr. Nauman was awarded 53,668 shares of time-based restricted stock units on August 4, 2014, the effective date of his appointment as President, Chief Executive Officer, and Director of the Company. One-third of the units vest on August 4, 2017, one-third of the units vest on August 4, 2018, and one-third of the units vest on August 4, 2019.


(8)	Effective October ~~7, 2013,~~1, 2014, Mr. Felmer was awarded 5,000 shares of ~~service-based~~time-based restricted stock ~~in recognition~~for retention purposes. One-half of ~~his increased duties upon~~the units vest on October 1, 2016, and the remaining units vest on October 1, 2017.


(9)	Effective November 28, 2014, Mr. Felmer was awarded 10,000 shares of time-based restricted stock for retention purposes. One-third of the units vest on November 28, 2017, one-third of the units vest on November 28, 2018, and one-third of the units vest on November 28, 2019.

(10)

Mr. Shaller was awarded 20,992 shares of time-based restricted stock units on June 22, 2015, the effective date of his appointment as ~~Interim~~Senior Vice President and ~~Chief Executive Officer. The shares vest upon the earlier~~President - Identification Solutions. One-fourth of the end of Mr. Felmer’s service as Interim President and CEO or the Board appointment of a permanent President and CEO. As the Board appointed a permanent President and CEO on August 4, 2014, the 5,000 shares vestedunits vest on the ~~same date.~~second, third, fourth, and fifth anniversaries of the grant date, respectively.


(11)	Mr. Pearce was awarded 12,171 shares of time-based restricted stock units on July 15, 2015, for retention purposes. Twenty percent of the units vest on July 15, 2017, thirty percent of the units vest on July 15, 2018, and fourty percent of the units vest on July 15, 2019.

Option Exercises and Stock Vested for Fiscal ~~2014~~2016

The following table summarizes option exercises and the vesting of restricted stock during fiscal ~~2014~~2016 to the named executive officers. ~~In connection with Mr. Jaehnert’s retirement, 35,001 shares of restricted stock previously granted on August 2, 2010 vested on December 31, 2013 at a fair value of $30.93.~~


	Option Awards			Stock Awards			Option Awards			Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)		Number of Shares Acquired on Vesting	Value Realized on Vesting ($)		Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
J.M. Nauman							—	$	—	13,292	$	265,441
A.J. Pearce							—	—		5,197	118,863
L.T. Bolognini							—	—		3,651	73,714
T.J. Felmer	—	$	—		$	—	—	—		14,994	315,047
F.M. Jaehnert	60,000	624,402		35,001	1,082,581
L.T. Bolognini	—	—		—	—
S. Millar	27,000	113,074		—	—
M.O. Williamson	46,666	348,094		—	—
R.R. Shaller							—	—		4,199	130,305

~~Table of Contents~~

Non-Qualified Deferred Compensation for Fiscal ~~2014~~2016

The following table summarizes the activity within the Executive Deferred Compensation Plan and the Brady Restoration Plan during fiscal ~~2014~~2016 for the named executive officers.


Name	Executive Contributions in Last Fiscal Year ($)		Registrant Contributions in Last Fiscal Year ($)		Aggregate Earnings in Last Fiscal Year ($)			Aggregate Withdrawals/ Distributions ($)			Aggregate Balance at Last Fiscal Year End ($)		Executive Contributions in Last Fiscal Year ($)		Registrant Contributions in Last Fiscal Year ($)		Aggregate Earnings in Last Fiscal Year ($)		Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last Fiscal Year End ($)
J.M. Nauman													$	17,131	$	33,608	$	118	$	—	$	58,733
A.J. Pearce													32,985		3,046		46,577		—		530,421
L.T. Bolognini													2,627		5,255		1,591				22,933
T.J. Felmer	$	4,958	$	9,916	$	266,669		$	—		$	2,558,351	4,878		9,755		208,611		—		3,049,448
F.M. Jaehnert	13,538		37,800		(293,972		)	(252,955		)	4,667,969
L.T. Bolognini	2,168		4,336		445			—			6,950
S. Millar	—		—		2			—			2,923
M.O. Williamson	5,147		10,294		3,631			—			1,176,860
R.R. Shaller													1,846		1,600		5		—		3,452

See discussion of the Company’s nonqualified deferred compensation plan in the Compensation Discussion and Analysis. The executive contribution amounts reported here are derived from the salary and non-equity incentive plan compensation columns of the Summary Compensation Table. The registrant contribution amounts reported here are reported in the all other compensation columns of the Summary Compensation Table.

Potential Payments Upon Termination or Change in Control

As described in the Employment and Change of Control Agreements section of the Compensation Discussion and Analysis above, the Company has entered into separate severance agreements and change of control agreements with ~~each~~certain named executive officers.

The terms of severance arrangements are triggered if (i) the executive’s employment with the Company is involuntarily terminated by the Company without cause or (ii) the executive’s employment with the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total of the executive’s annual base salary and target bonus without the prior written agreement of the executive, (b) a significant diminution in the authority, duties or responsibilities of the executive without the executive’s prior written agreement, or (c) the relocation of the executive’s position to a principal work location more than 50 miles from Milwaukee, Wisconsin and that is also further from the executive’s principal place of residence, without the executive’s prior written agreement. Should Messrs. Nauman’s or Shaller’s employment be terminated under the circumstances described above, the Company would pay Mr. Nauman a severance benefit equal to two times the sum of his base salary and target bonus and would pay Mr. Shaller a severance benefit equal to his base salary plus target bonus. The other named executive ~~officers.~~ officers are not covered by severance arrangements.

The terms of the change of control agreement are triggered if, within a 24 month period beginning with the date a change of control occurs, (i) the executive’s employment with the Company is involuntarily terminated other than by reason of death, disability or cause or (ii) the executive’s employment with the Company is voluntarily terminated by the executive subsequent to (a) any reduction in the total of the executive’s annual base salary, exclusive of fringe benefits, and the executive’s target bonus in comparison with the executive’s annual base salary and target bonus immediately prior to the date the change of control occurs, (b) a significant diminution in the responsibilities or authority of the executive in comparison with the executive’s responsibility and authority immediately prior to the date the change of control occurs, or (c) the imposition of a requirement by the Company that the executive relocate to a principal work location more than 50 miles from the executive’s principal work location immediately prior to the date the change of control occurs.

Following termination due to a change in control, executives shall be paid a multiplier of their annual base salary in effect immediately prior to the date the change of control occurs, plus a multiplier of their average bonus payment received over a three-year period prior to the date the change of control occurs. For ~~Messrs.~~Mr. Nauman, a multiplier of the target bonus amount in effect immediately prior to the date change of control applies instead of the average bonus payment received over the prior three-year period. For Mr. Felmer, ~~Millar, and Williamson,~~ the Company will also reimburse the executive for any excise tax incurred by the executive as a result of Section 280(g) of the Internal Revenue Code. If the payments upon termination due to change of control result in any excise tax incurred by ~~Mr.~~Messrs. Nauman, Pearce, Bolognini and Shaller as a result of Section 280(g) of the Internal Revenue Code, hethe officer will be solely responsible for such excise tax. The Company will also reimburse a maximum of $25,000 of legal fees incurred by the executive in order to enforce the change of control agreement, in which the executive prevails.

The following information and tables set forth the amount of payments to each named executive officer in the event of termination of employment as a result of a change of control. ~~See the section entitled "Jaehnert Severance Agreement" above in the Compensation Discussion and Analysis section for a description of the severance benefits paid to Mr. Jaehnert upon his resignation.~~ No other employment agreements have been entered into between the Company and any of the named executive officers in fiscal year ~~2014.~~2016.

Assumptions and General Principles

The following assumptions and general principles apply with respect to the tables that follow in this section.

The amounts shown in the tables assume that each named executive officer terminated employment on July 31, ~~2014~~2016. Accordingly, the tables reflect amounts earned as of July 31, ~~2014~~2016, and include estimates of amounts that would be paid to the named executive officer upon the termination or occurrence of a change in control. The actual amounts that would be paid to a named executive officer can only be determined at the time of termination.

The tables below include amounts the Company is obligated to pay the named executive officer as a result of the severance agreement and executed change in control agreement. The tables do not include benefits that are paid generally to all salaried employees or a broad group of salaried employees. Therefore, the named executive officers would receive benefits in addition to those set forth in the tables.

~~100~~

~~Table of Contents~~

A named executive officer is entitled to receive base salary earned during his term of employment regardless of the manner in which the named executive officer’s employment is terminated. As such, this amount is not shown in the tables.

~~Thomas~~ J. ~~Felmer~~Michael Nauman

The following table shows the amount payable assuming that the terms of the change of control agreement were triggered on July 31, ~~2014~~2016, and the named executive officer had to legally enforce the terms of the agreement.


Base Salary ($)(1)	Bonus ($) (2)	Restricted Stock Award/Unit Acceleration Gain $(3)	Stock Option Acceleration Gain $ (4)	Excise Tax Reimbursement ($)	Legal Fee Reimbursement ($) (5)	Total ($)	Base Salary ($)(1)	Bonus ($) (2)		Restricted Stock Unit Acceleration Gain $(3)		Stock Option Acceleration Gain $ (4)		Legal Fee Reimbursement ($) (5)		Total ($)
774,000	348,899	1,322,667	—	463,778	25,000	2,934,344
$							1,400,000	$	1,400,000	$	3,760,155	$	4,496,378	$	25,000	$	11,081,533



Wisconsin		39-0178960
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
6555 West Good Hope Road, Milwaukee, WI		53223
(Address of principal executive offices)		(Zip Code)



Title of each class		Name of each exchange on which registered
Class A Nonvoting Common Stock, Par Value $.01 per share		New York Stock Exchange



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨



PART I	Page
Item.1 Business	3
General Development of Business	3
Financial Information About Industry Segments	3
Narrative Description of Business	34
Overview	34
Research and Development	5
Operations	6
Environment	6
Employees	6
Financial Information About Foreign and Domestic Operations and Export Sales	6
Information Available on the Internet	6
Item 1A. Risk Factors	7
Item 1B. Unresolved Staff Comments	1211
Item 2. Properties	1211
Item 3. Legal Proceedings	1211
Item 4. Mine Safety Disclosures	1211
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1312
Item 6. Selected Financial Data	1514
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1615
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	3228
Item 8. Financial Statements and Supplementary Data	3329
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	7362
Item 9A. Controls and Procedures	7463
Item 9B. Other Information	7665
PART III
Item 10. Directors, ~~and~~ Executive Officers ~~of the Registrant~~and Corporate Governance	7665
Item 11. Executive Compensation	8170
Compensation Discussion and Analysis	8170
Management Development and Compensation Committee Interlocks and Insider Participation	9482
Management Development and Compensation Committee Report	9482
Compensation Policies and Practices	9582
Summary Compensation Table	9583
Grants of Plan-Based Awards for 20146	9784
Outstanding Equity Awards at ~~2014~~2016 Fiscal Year End	9785
Option Exercises and Stock Vested for Fiscal 20146	9986
Non-Qualified Deferred Compensation for Fiscal 20146	~~100~~87
Potential Payments Upon Termination or Change in Control	~~100~~87
Compensation of Directors	~~102~~90
Director Compensation Table — Fiscal 20146	~~103~~91
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~104~~92
Item 13. Certain Relationships, Related Transactions, and Director Independence	~~106~~94
Item 14. Principal Accounting Fees and Services	~~107~~95
PART IV
Item 15. Exhibits and Financial Statement Schedules	~~108~~96
Signatures	~~114~~101


	2009		2010		2011		2012		2013		2014		2011		2012		2013		2014		2015		2016
Brady Corporation	$	100.00	$	96.90	$	105.43	$	96.91	$	124.47	$	100.49	$	100.00	$	91.91	$	118.05	$	95.31	$	88.53	$	125.18
S&P 500 Index	100.00		113.84		136.21		148.64		185.80		217.28		100.00		109.13		136.41		159.52		177.4		187.12
S&P SmallCap 600 Index	100.00		119.17		148.63		154.56		208.31		231.31		100.00		103.99		140.15		155.62		174.25		184.46
Russell 2000 Index	100.00		118.33		146.65		146.94		198.06		215.02		100.00		100.19		135.02		146.57		164.21		164.10



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plan
May 1, 2014 - May 31, 2014	287,717	$	25.18	287,717	966,242
June 1, 2014 - June 30, 2014	—	—		—	966,242
July 1, 2014 - July 31, 2014	—	—		—	966,242
Total	287,717	$	25.18	287,717	966,242



*	$100 invested on July 31, ~~2009~~2011 in stock or index—including reinvestment of dividends. Fiscal years ended July 31:


	Payments Due by Period												Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Uncertain Timeframe		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Uncertain Timeframe
Long-Term Debt Obligations	$	201,810	$	42,514	$	99,050	$	—	$	60,246	$	—
Long-term Debt Obligations													$	211,982	$	49,794	$	—	$	162,188	$	—	$	—
Operating Lease Obligations	71,453		16,163		21,640		16,700		16,950		—		74,768		16,243		27,125		15,903		15,497		—
Purchase Obligations (1)	52,933		51,302		204		1,351		76		—		32,166		32,155		10		1		—		—
Interest Obligations	26,123		8,487		10,519		5,109		2,008		—		10,640		4,247		2,131		4,262		—		—
Tax Obligations	17,849		—		—		—		—		17,849		15,294		—		—		—		—		15,294
Other Obligations (2)	7,101		476		1,120		1,368		4,137		—		3,365		499		826		698		1,342		—
Total	$	377,269	$	118,942	$	132,533	$	24,528	$	83,417	$	17,849	$	348,215	$	102,938	$	30,092	$	183,052	$	16,839	$	15,294


(1)	Purchase obligations include all open purchase orders as of July 31, ~~2014~~2016.


(2)	Other obligations represent expected payments under the Company’s U.S. postretirement medical plan and international pension plans as disclosed in Note 54 to the ~~consolidated financial statements,~~Consolidated Financial Statements, under Item 8 of this report.



Fair values:
	Cash and cash equivalents	$	12,904
	Accounts receivable — net	21,178
	Total inventories	16,788
	Prepaid expenses and other current assets	4,233
	Goodwill	168,150
	Other intangible assets	109,300
	Other assets	483
	Property, plant and equipment	18,015
	Accounts payable	(10,060		)
	Wages and amounts withheld from employees	(4,234		)
	Taxes, other than income taxes	(600		)
	Accrued income taxes	(57		)
	Other current liabilities	(5,181		)
	Other long-term liabilities	(16,858		)
		314,061
	Less: cash acquired	(12,904		)
Fair value of total consideration		$	301,157



	2013			2012
Net sales, as reported	$	1,157,792		$	1,071,504
Net sales, pro forma	1,226,217			1,241,372
(Loss) earnings from continuing operations, as reported	(138,257		)	103,493
(Loss) earnings from continuing operations, pro forma	(133,957		)	104,014
Basic (loss) earnings from continuing operations per Class A Common Share, as reported	(2.70		)	1.97
Basic (loss) earnings from continuing operations per Class A Common Share, pro forma	(2.61		)	1.98
Diluted (loss) earnings from continuing operations per Class A Common Share, as reported	(2.70		)	1.95
Diluted (loss) earnings from continuing operations per Class A Common Share, pro forma	(2.61		)	1.96



Current assets net of cash	$	5,082
Property, plant & equipment	2,743
Goodwill	22,844
Customer relationships	8,903
Tradenames	6,878
Non-compete agreements	186

Total assets acquired net of cash	$	46,636
Liabilities assumed	7,555
Debt assumed	1,432

Net assets acquired	$	37,649


	2014		2013		2012		2016		2015		2014
IDS	67.4	%	63.8	%	59.4	%	69.3	%	68.8	%	67.4	%
WPS	32.6	%	36.2	%	40.6	%	30.7	%	31.2	%	32.6	%
Total	100	%	100	%	100	%	100.0	%	100.0	%	100.0	%



	IDS			WPS			Die-Cut			Total
Balance as of July 31, 2012	$	367,893		$	276,941		$	31,957		$	676,791
Current year acquisitions	170,180			—			—			170,180
Current year divestitures	(2,882		)	—			—			(2,882		)
Reclassification to assets held for sale	(4,129		)	—			(33,218		)	(37,347		)
Impairment charge	(18,225		)	(172,280		)	—			(190,505		)
Translation adjustments	4,192			(4,454		)	1,261			999
Balance as of July 31, 2013	$	517,029		$	100,207		$	—		$	617,236
Impairment charge	(100,412		)	—			—			(100,412		)
Purchase accounting adjustments	(2,168		)	—			—			(2,168		)
Translation adjustments	(2,160		)	2,508			—			348
Balance as of July 31, 2014	$	412,289		$	102,715		$	—		$	515,004



	Unrealized gain (loss) on cash flow hedges			Gain on postretirement medical plan			Foreign currency translation adjustments			Accumulated other comprehensive income
Ending balance, July 31, 2012	$	876		$	978		$	57,557		$	59,411
Other comprehensive (loss) income before reclassification	(425		)	1,103			(3,446		)	(2,768		)
Amounts reclassified from accumulated other comprehensive income	(352		)	(228		)	—			(580		)
Ending balance, July 31, 2013	$	99		$	1,853		$	54,111		$	56,063
Other comprehensive (loss) income before reclassification	(21		)	3,313			1,334			4,626
Amounts reclassified from accumulated other comprehensive income	(90		)	(312		)	3,869			3,467
Ending balance, July 31, 2014	$	(12	)	$	4,854		$	59,314		$	64,156



	2014			2013
Obligation at beginning of year	$	13,023		$	14,225
Service cost	674			770
Interest cost	534			476
Actuarial (gain)/loss	(4,691		)	(1,745		)
Benefit payments	(473		)	(703		)
Plan amendments	(1,011		)	—
Obligation at end of fiscal year	$	8,056		$	13,023


	One-Percentage Point Increase		One-Percentage Point Decrease			One-Percentage Point Increase		One-Percentage Point Decrease
Effect on future service and interest cost	$	14	$	(14	)	$	3	$	(3	)
Effect on accumulated postretirement benefit obligation at July 31, 2014	26		(28		)
Effect on accumulated postretirement benefit obligation at July 31, 2016						17		(18		)


(2)	~~Includes~~The year ended July 31, 2014 includes a $3.1 million increase in valuation allowances against certain state tax credit ~~carry-forwards during the year ended July 31, 2014.~~carryforwards.


(3)	~~Includes~~The years ended July 31, 2014 and 2015 include increases in current year uncertain tax positions, while the ~~reduction~~year ended July 31, 2016 includes reductions of uncertain tax positions resulting from the ~~settlement~~closure of ~~certain domestic~~audits and ~~foreign income tax audits during the~~lapses in statutes of limitations.


(4)	The year ended July 31, ~~2014.~~2015 includes $5.0 million of foreign tax credit carryforward from the fiscal 2014 U.S. tax return.


Balance at July 31, 2011	$	22,343

Additions based on tax positions related to the current year	6,983
Additions for tax positions of prior years	9,460
Reductions for tax positions of prior years	—
Lapse of statute of limitations	(949		)
Settlements with tax authorities	—
Cumulative Translation Adjustments and other	(1,305		)

Balance as of July 31, 2012	$	36,532

Additions based on tax positions related to the current year	4,015
Additions for tax positions of prior years (1)	2,809
Reductions for tax positions of prior years	—
Lapse of statute of limitations	(5,613		)
Settlements with tax authorities	(590		)
Cumulative Translation Adjustments and other	422

Balance as of July 31, 2013	$	37,575

Balance at July 31, 2013				$	37,575
Additions based on tax positions related to the current year	4,596			4,596
Additions for tax positions of prior years	—			—
Reductions for tax positions of prior years	(14,569		)	(14,569		)
Lapse of statute of limitations	(3,711		)	(3,711		)
Settlements with tax authorities	(5,832		)	(5,832		)
Cumulative Translation Adjustments and other	(210		)	(210		)

Balance as of July 31, 2014	$	17,849		$	17,849
Additions based on tax positions related to the current year				5,862
Additions for tax positions of prior years				—
Reductions for tax positions of prior years				(280		)
Lapse of statute of limitations				(805		)
Settlements with tax authorities				(221		)
Cumulative Translation Adjustments and other				(1,272		)

Balance as of July 31, 2015				$	21,133
Additions based on tax positions related to the current year				3,093
Additions for tax positions of prior years				1,290
Reductions for tax positions of prior years				(9,369		)
Lapse of statute of limitations				(344		)
Settlements with tax authorities				(456		)
Cumulative Translation Adjustments and other				(53		)

Balance as of July 31, 2016				$	15,294



Jurisdiction		Open Tax Years
United States — Federal		~~F’13~~F’15 — ~~F’14~~F’16
France		~~F’13~~F’12 — ~~F’14~~F’16
Germany		F’09 — ~~F’14~~F’16
United Kingdom		~~F’11~~F’14 — ~~F’14~~F’16



	July 31, 2014		Interest Rate
USD-denominated borrowing on revolving loan agreement	$	42,000	1.2472	%
USD-denominated borrowing on China line of credit	6,923		1.3548	%
RMB-denominated borrowing on China line of credit (USD equivalent)	12,499		5.0400	%
Notes payable	$	61,422	2.0311	%


Years Ending July 31,
2015	$	42,514
2016	42,514
2017	56,536		$	49,794
2018	—		—
2019	—		—
Thereafter	60,246

2020			50,188
2021			112,000
Total	$	201,810	$	211,982


	Unearned Restricted Stock			Deferred Compensation			Shares Held in Rabbi Trust, at cost			Total			Unearned Restricted Stock			Deferred Compensation			Shares Held in Rabbi Trust, at cost			Total
Balances at July 31, 2011	$	(5,362	)	$	12,093		$	(11,595	)	$	(4,864	)
Shares at July 31, 2011				560,078			560,078
Sale of shares at cost	—			(1,407		)	1,368			(39		)
Purchase of shares at cost	—			924			(924		)	—
Amortization of restricted stock	1,599			—			—			1,599
Balances at July 31, 2012	(3,763		)	11,610			(11,151		)	(3,304		)
Shares at July 31, 2012				$	517,105		$	517,105
Sale of shares at cost	$	—		(1,461		)	1,419			$	(42	)
Purchase of shares at cost	—			891			(891		)	—
Forfeitures of restricted stock	838			—			—			838
Amortization of restricted stock	1,788			—			—			1,788
Balances at July 31, 2013	$	(1,137	)	$	11,040		$	(10,623	)	$	(720	)	$	(1,137	)	$	11,040		$	(10,623	)	$	(720	)
Shares at July 31, 2013				469,797			469,797									469,797			469,797
Sale of shares at cost	—			(1,637		)	1,496			(141		)	—			(1,637		)	1,496			(141		)
Purchase of shares at cost	—			821			(821		)	—			—			821			(821		)	—
Effect of plan amendment	—			(2,435		)	—			(2,435		)	—			(2,435		)	—			(2,435		)
Amortization of restricted stock	1,137			—			—			1,137			1,137			—			—			1,137
Balances at July 31, 2014	$	—		$	7,789		$	(9,948	)	$	(2,159	)	—			$	7,789		$	(9,948	)	(2,159		)
Shares at July 31, 2014				338,711			423,415									338,711			423,415
Sale of shares at cost													$	—		(2,325		)	2,235			$	(90	)
Purchase of shares at cost													—			220			(1,035		)	(815		)
Balances at July 31, 2015													$	—		$	5,684		$	(8,748	)	$	(3,064	)
Shares at July 31, 2015																252,261			362,025
Sale of shares at cost													—			(1,238		)	1,278			40
Purchase of shares at cost													—			178			(1,017		)	(839		)
Balances at July 31, 2016													$	—		$	4,624		$	(8,487	)	$	(3,863	)
Shares at July 31, 2016																201,418			347,081



Black-Scholes Option Valuation Assumptions	2016			2015			2014
Expected term (in years)	6.11			6.05			5.97
Expected volatility	29.95		%	34.01		%	37.32		%
Expected dividend yield	2.59		%	2.48		%	2.35		%
Risk-free interest rate	1.64		%	1.90		%	1.80		%
Weighted-average market value of underlying stock at grant date	$	20.02		$	22.76		$	30.98
Weighted-average exercise price	$	20.02		$	22.76		$	30.98
Weighted-average fair value of options granted during the period	$	4.58		$	6.12		$	9.17


	Option Price				Options Outstanding		Weighted Average Exercise Price		Option Price				Options Outstanding		Weighted Average Exercise Price
Balance as of July 31, 2011	$	13.31	—	$40.37	5,726,017		$	29.24
Balance as of July 31, 2015									$	20.95	—	$38.31	3,500,951		$	29.64
Options granted	27.00		—	33.54	1,212,450		27.91		19.96		—	25.35	881,744		20.02
Options exercised	13.31		—	29.78	(266,991	)	20.21		20.95		—	31.07	(194,419	)	26.98
Options cancelled	16.00		—	38.31	(417,725	)	31.16		19.96		—	38.31	(479,570	)	30.89
Balance as of July 31, 2012	$	13.31	—	$40.37	6,253,751		$	29.24
Options granted	30.21		—	36.25	828,450		30.58
Options exercised	13.31		—	31.54	(1,080,089	)	22.79
Options cancelled	16.39		—	38.31	(895,527	)	30.02
Balance as of July 31, 2013	$	17.23	—	$40.37	5,106,585		$	30.68
Options granted	29.28		—	31.07	375,272		30.98
Options exercised	17.33		—	30.21	(490,507	)	26.45
Options cancelled	20.95		—	38.31	(787,090	)	32.71
Balance as of July 31, 2014	$	17.23	—	$40.37	4,204,260		$	30.82
Balance as of July 31, 2016									$	19.96	—	$38.31	3,708,706		$	27.33



	Options Outstanding				Options Outstanding and Exercisable
Range of Exercise Prices	Number of Shares Outstanding at July 31, 2014	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares Exercisable at July 31, 2014	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$17.00 - $27.99	664,383	6.2	$	25.00	504,258	5.8	$	24.32
$28.00 - $37.99	2,956,377	5.7	30.66		1,916,590	4.4	30.77
$38.00 - $40.99	583,500	2.8	38.26		583,500	2.8	38.26
Total	4,204,260	5.4	30.82		3,004,348	4.3	$	31.15



	Options Outstanding				Options Outstanding and Exercisable
Range of Exercise Prices	Number of Shares Outstanding at July 31, 2016	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Shares Exercisable at July 31, 2016	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$19.96 - $26.99	1,433,278	8.1	$	21.80	291,899	5.2	$	20.97
$27.00 - $32.99	1,696,428	4.9	29.05		1,617,628	4.7	29.12
$33.00 - $38.31	579,000	1.3	37.78		579,000	1.3	37.78
Total	3,708,706	5.6	27.61		2,488,527	4.0	$	30.18


Service-Based RSUs and Restricted Shares	Shares		Weighted Average Grant Date Fair Value
Balance as of July 31, 2012	—		$	—
Service-Based Restricted Shares and RSUs					Shares		Weighted Average Grant Date Fair Value
Balance as of July 31, 2015					677,454		$	24.72
New grants	5,000		32.99		173,394		20.07
Vested	—		—		(113,640	)	24.97
Forfeited	—		—		(58,827	)	23.81
Balance as of July 31, 2013	5,000		$	32.99
New grants	108,055		30.93
Vested	—		—
Forfeited	(8,198	)	31.05
Balance as of July 31, 2014	104,857		$	31.02
Balance as of July 31, 2016					678,381		$	23.57



Performance-Based RSUs and Restricted Shares	Shares		Weighted Average Grant Date Fair Value
Balance as of July 31, 2012	310,000		$	31.38
New grants	10,000		30.21
Vested	(33,333	)	28.35
Forfeited	(55,000	)	32.83
Balance as of July 31, 2013	231,667		$	31.43
New grants	—		—
Vested	(35,001	)	28.35
Forfeited	(116,666	)	31.61
Balance as of July 31, 2014	80,000		$	32.50


		Revenues* Years Ended July 31,									Long-Lived Assets** As of Years Ended July 31,							Revenues* Years Ended July 31,									Long-Lived Assets** As of Years Ended July 31,
		2014			2013			2012			2014		2013		2012			2016			2015			2014			2016		2015		2014
Geographic information:
United States		$	675,771		$	615,861		$	522,393		$	425,733	$	576,539	$	479,791		$	663,511		$	677,401		$	675,771		$	376,045	$	389,150	$	425,733
Other		615,974			602,582			611,899			314,456		319,706		411,134			519,579			559,649			615,974			216,076		224,151		314,456
Eliminations		(66,711		)	(60,651		)	(62,788		)	—		—		—			(62,465		)	(65,319		)	(66,711		)	—		—		—
Consolidated total		$	1,225,034		$	1,157,792		$	1,071,504		$	740,189	$	896,245	$	890,925		$	1,120,625		$	1,171,731		$	1,225,034		$	592,121	$	613,301	$	740,189
* Revenues are attributed based on country of origin.	* Revenues are attributed based on country of origin.																* Revenues are attributed based on country of origin.
** Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.	** Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.																** Long-lived assets consist of property, plant, and equipment, other intangible assets and goodwill.


	Inputs Considered As							Inputs Considered As
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Fair Values		Balance Sheet Classifications	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Fair Values		Balance Sheet Classifications
July 31, 2014
July 31, 2016
Trading securities	$	15,962	$	—	$	15,962	Other assets	$	13,834	$	—	$	13,834	Other assets
Foreign exchange contracts	—		166		166		Prepaid expenses and other current assets	—		2,138		2,138		Prepaid expenses and other current assets
Total Assets	$	15,962	$	166	$	16,128		$	13,834	$	2,138	$	15,972
Foreign exchange contracts	$	—	$	389	$	389	Other current liabilities	$	—	$	738	$	738	Other current liabilities
Total Liabilities	$	—	$	389	$	389		$	—	$	738	$	738
July 31, 2013
July 31, 2015
Trading securities	$	14,975	$	—	$	14,975	Other assets	$	15,356	$	—	$	15,356	Other assets
Foreign exchange contracts	—		294		294		Prepaid expenses and other current assets	—		685		685		Prepaid expenses and other current assets
Total Assets	$	14,975	$	294	$	15,269		$	15,356	$	685	$	16,041
Foreign exchange contracts	$	—	$	890	$	890	Other current liabilities	$	—	$	1,280	$	1,280	Other current liabilities
Total Liabilities	$	—	$	890	$	890		$	—	$	1,280	$	1,280