Barbara Bolens - Vice President, Treasurer & Director of Investor Relations Frank M. Jaehnert - President, Chief Executive Officer, Director Thomas Felmer - Chief Financial Officer, Senior Vice President Matthew Williamson - Vice President, President - Brady Americas Peter Sephton - Vice President, President - Brady Europe Allan Klotsche - Vice President, President - Brady Asia-Pacific

Charles D. Brady - BMO Capital Markets Allison Poliniak - Wachovia Capital Markets [Chris Waltzer] - Robert W. Baird Anthony Kure - Keybanc Capital Markets Ajit Pai - Thomas Weisel Partners

Good day ladies and gentlemen. And welcome to the Q2 Fiscal 2009 Brady Corporation Earnings Conference Call. My name is Becky and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and- answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Ms. Barbara Bolens, Director of Investor Relations. Please proceed.

Thank you very much. We’re glad you could join us for our conference call this morning. During the call, you will hear from Frank Jaehnert, CEO, and then Tom Felmer, CFO, who will be presenting Brady’s quarterly financial review. Also joining us this morning; is Matt Williamson, President of Brady Americas, Peter Sephton, President of Brady Europe, and Allan Klotsche, President of Brady Asia-Pacific, who will all assist in providing the regional reports. As usual after brief presentations by the team, we will open up the floor to questions. We encourage you to follow along with the slides located on the Internet as we will be referring to the individual slides as we proceed through the presentation. These slides can be found on our website at www.investor.bradycorp.com. You do have a couple of minutes to get to those while we go through our Safe Harbor statement and other usual information. Please note that in this call, we may make comments about forward-looking information. Words such as expect, believe and anticipate are a few examples of words identifying our forward-looking statement. It is important to note that forward-looking information is subject to various risk factors and uncertainties, which could significantly impact expected results. Risk factors were noted in our news release this morning and in Brady’s 10-K filed with the SEC in September of 2008. Second, please note that this teleconference is copyrighted by Brady Corporation and there may be no rebroadcasting of this without express written consent of Brady. Note also that, we will be taping the call and broadcasting it on the Internet and your participation in the question-and-answer session will constitute your consent to being recorded. Thank you and now here’s Frank Jaehnert.

Thanks Barbara and good morning and thanks for joining us. Sales in our second quarter were down 27%, with organic sales down 21% and exchange rate translations shaving off another 6%. The gross global recession in our life time affected all our geographic regions there is somewhat more pronounced weakness in businesses selling into the OEM market. The weakness in sales in our second quarter was compounded by several holidays such as Christmas, New Year and the Lunar New Year celebrations in Asia, which caused many of our customers to shut their business down for extended periods, some times for a couple of weeks or even more. This rapid deterioration in sales was much more than what we anticipated. Fortunately, because of our swift and bold actions to cut expenses, we were able to mitigate the impact on our bottom-line. Our net loss was $4.2 million, which included after tax restructuring charges of the $14 million, primarily for a severance related to our workforce reduction. Net income before restructuring charges was $9.8 million or 3.7% of sales. While we believe that business is not going to be as weak going forward as it was in the second quarter, we stand ready to make further adjustments in our cost structure, should this become necessary. You will hear more from the regional president, that business was weak across all geographies in all businesses. However, we believe we have not lost market share. As a result of the much weaker than anticipated sales in the second quarter and our limited visibility to any improvements in our end-markets. We have reduced our guidance for the fiscal year. Tom will go through the specifics of the guidance but it reflects current business conditions and does not anticipate additional restructuring charges beyond what we have already announced. I will return after the regional reports, to provide color on how we are approaching the remainder of fiscal 2009. Now, here’s Tom.

Thank you, Frank. Starting on slide three. I would like to walk you through the financial highlights for our second quarter. As Frank mentioned, sales for the quarter were $266 million, down 27% or $98 million versus the prior year. Even though, we saw a dramatic decline in sales in the quarter, we were able to reduce costs to a point that we only saw an 80 basis point decline in gross margins versus prior year, down to 47.3%. We also aggressively managed SG&A, bringing these costs down $29 million from prior year resulting in a 150 basis point increase as a percent of sales to 35.1% in the quarter. We have executed about two-thirds of the years planned restructuring activities in the quarter, which resulted in pre-tax charges of $19.4 million. By region, our restructuring expense was approximately $11 million in the Americas, $6 million in Europe and $2 million in Asia. Severance expense made up the majority of our restructuring in the closure of our facility in Bratislava, with the only material facility action taken. The cost savings associated with the restructuring activity will be split approximately evenly between gross margin and SG&A. On slide four, we detailed a financial breakout of the restructuring charges taken during the quarter. Of the total $19.4 million, $17 million of that was employee related severance, $1.2 million asset write-offs and $1.1 million of other charges. We paid out $5.9 million of the charges, during the quarter and an additional $12.5 million remains to be paid out in future quarters. Operating income was $4.6 million for the quarter down 89% from the prior year, excluding restructuring, operating income was $24 million, down 43% from prior year. We generated a net loss of $4.2 million or $0.8 per share for the quarter, excluding restructuring, Brady had net income of $9.8 million or $0.19 per share. And despite the challenging quarter, we were still able to generate a positive cash flow from operations $26.7 million in the quarter. CapEx was 6.5 million, depreciation & amortization with $13.5 million. On slide five, you can see the details of our 27% sales decline with organic sales down 21% and currency contributing 6% in decline. We saw double-digit declines in all regions. On slide six, we show slight deterioration of gross margin and SG&A compared to prior year. However, as I said a few minutes ago, considering the 27% drop in sales, we feel that the aggressive cost reduction actions that we announced in November were both timely and well executed. Next on slide seven, we continue to invest in R&D and new product development. R&D investment was up 40 basis points as a percent of sales. In the quarter, we extended our successful IP Printer with an Auto-cutter feature; we also introduced a new label design software LabelMark version 4.0, as well as an environmentally friendly line of PermaSleeve player ID labels. Slides eight and nine provide graphic views of our quarterly operating income, net income, diluted earnings per share and EBITDA compared with prior year. On slide eight, you can see that excluding restructuring charges, operating income is down 43% and net income was down 63%. The reason net income is down more than operating income is due to a decline in other income expends in the increased tax rate for the quarter. On slide 10, you can see that we continue to generate significant cash in our business and second quarter cash flow from operations was $26.7 million. On slides 11 and 12, we have Brady strong balance sheet, which shows a healthy cash balance of $185 million as well our debt of $479 million in a reasonable leverage of 2.1 debt-to-EBITDA and a 1.3 net debt-to-EBIT ratio. Our updated guidance for fiscal 2009 can be found on slide 13. While it remains very difficult to predict clear comments for the next six months, we feel that it is prudent to take our net income guidance down $10 million from the guidance that we provided in November. Assumptions that we have built into our guidance include; that the economy will remain soft although down for our fiscal year. We anticipate mid-teens, percent declines and base business for the balance for the fiscal year. And we assume current exchange rate, we assume a full year tax rate of 28%. Capital expenditures of $30 million and depreciation and amortization of $60 million for the full year, both unchanged from our previous guidance. In our November call, we stated that we would incur pretax restructuring changes of $30 million that would generate approximately $45 million in pre-tax annual savings, two- thirds of which we will realize in fiscal 2009. In the quarter we recognized $19.4 million of our plan restructuring and remain on-track with our original guidance. With these assumptions, we’ve updated our guidance for the year and expect to generate pre-restructuring net income of $85 million to $95 million and $1.61 to $1.80 diluted earnings per share. Including restructuring charges, we expect to generate $65 to $75 million of net income and $1.23 to $1.42 of diluted earnings per share. With that background, we’ll continue with our regional updates. Matt Williamson will begin with the Americas region.

Good morning. Thanks Tom and please refer to slide number 14. Americas sales in the second quarter were $123 million, which was down 22% compared to the prior year. Organic sales declined 20% acquisitions had a 1% impact on the quarter and currency negatively impacted growth by 3%. In the U.S, our Brady business was down significantly to the prior year driven by two factors. The first is a dramatic downturn in the economy, which has negatively impacted products sold in markets such as manufacturing and construction. As company’s business levels have slowed considerably this is driven a drop in demand for our products. We also believe that there has been an effort among our end-users to reduce inventory. The second is related to our distribution partners decreasing inventory, which is confirmed to their point of sales shipments to their customers versus their actual purchases from us. Their point of sale results or there out-of-the-door sales, show much less of the decline than our actual sales through our channel partners. This gap as a result of de-stocking is significantly greater than it was for the same quarter last year. In Brazil, we experienced a significant decline, which is in sharp contrast to the strong results we had been experiencing there. This was driven by a sudden slowdown in the electronics and automotive OEMs many of them closed operations for 30 days around the holidays. In Canada, the Brady business was down significantly in the quarter driven by deterioring economic conditions as well as cancellations in oil sands related projects. Mexico had nice growth, but had slowed to modest growth towards the end of the quarter. In our direct marketing businesses, organic sales were also down significantly although much less sale than we realized in our Brady business due to the greater mix of compliance product sales. The weakness that we have experienced is being driven by overall economic conditions with the declines in the manufacturing sector proving to be the greatest challenge. The direct marketing business in Canada grew slightly. In our people ID business, we are seeing a sales decline as many customers in markets delay capital projects of our proprietary software and systems, even though our business security remains a market driver. In addition, sales of our badging products have been hurt as attendances are at off-site meetings, conferences and trade shows all of which generally require badging. In addition, the tremendous number of layoffs we are seeing in U.S. businesses directly affects the demand for employee badging products. Segment profit for the Americas declined 31% or 10% to $22 million for the quarter. As a percent of sales, segment profit decreased to 17.9% compared to 20.5% in the prior year. The loss of sales volume has impacted our ability to observe fixed cost and overhead. Our margins for some products are coming under greater pressure as customers seek to bid multiple suppliers and demand lower prices. To offset this impact, we are more aggressively managing our cost base in a number of ways. For example, in the quarter we realized savings from the headcount reduction taken at the end of December and we fully realize this impact in future quarters. We are passing along price increases where we can but these are limited. We continue to apply pressure to our suppliers to realize lower raw material costs now that commodity linked material costs have come back down. Third, we continue to implement lean management principles across our businesses in order to drive better space utilization, labor efficiency and cycle times. In addition, we have specific initiatives in place to significantly drive down our working capital over the next quarter. So as more inline with our current sales volume run rates. Now turn the time to Peter Sephton, who will report on the European business results.

Thanks Matt. I’ll bring your attention to slide 15. Sales for the European region were $87.2 million down 29% against last year. Organic business was down 17% while a stronger U.S dollar against all European currency have a 12% negative impact. On this quarter, there is no effect from acquisitions. When you look at our businesses regionally we see declines in most geographies driven by the economic slowdown and extended plant shut-downs. The result is surprisingly mixed. Our business in France, the [Padlock] and in our German Direct Marketing businesses saw modest declines whereas our U.K business declined more sharply. This mixed results is driven by the different speed of impact, the recession is having in the region, which in turn is impacted by a more restricted employment market in certain countries. A better analysis of the underlying results of our European business on the economic dynamics that play across the region comes from analyzing the mix between OEM and MRO. And here Europe’s focus on the MRO helped mitigate sharp declines in our OEM business. Our businesses in product line serving the MRO market, which includes our direct marketing businesses make up the majority of our sales in Europe and declined by low double-digits over the second quarter of last year. In MRO, our direct marketing businesses sales held up reasonably well and saw a low double-digit decline in constant currency. No country was immune from the slowdown, although lower sales were more visible in Northern Europe and the U.K than in Southern Europe. And France, a series of successful multi-channel campaigns helped to soften the effect of a weakening economy. In the U.K, our sales were mixed to sell to the public sector from our safety shop direct marketing brand increased solidly. Whilst our seeking U.K brand declined more sharply at this traditional market as in the private sector. All our recently acquired business Transposafe, Scafftag and B.I.G are performing well. And this supports our strategy to acquire high growth MRO businesses with a strong value proposition. Turning now to our business served in the OEM markets, which include high performance labeling and die-cut, we suffered a much more pronounced decline plus we had anticipated this demise early and planned for the closure of our Slovakian operation at the start of this fiscal year. The decline in this part of the business was very rapid. As a result, we have made further costs in staff reductions ensuring that we are able to maintain our first class service to our key customers and continue to provide value. Segment profit was $22.9 million, a decline of 26% but in local currency this decline was slightly less than the decline in our organic sales results at about 15%. I should point out that quarter two of last year in Europe saw an exceptional 37% increase in profits. So this is a tough comparable. More encouragingly, profit as a percent of sales improved further from 25.3% to 26.3% held by strong cost management. Overall, we are pleased with the absolute value on quality of our earnings is proven to be very robust and a very challenging economic environment, allowing us to continue to invest further in profitable and sustainable businesses. Turning now to the rest of the world, Europe is now in the thick of recession, which is hitting the continent hard and in many aspects faster than most governments expected. Our capacity in Europe for generating a strong profit and cash flow from a diverse customer base is very solid. We would believe that this together with our focus on our MRO and shifting resources to more profitable businesses will help us to ensure that even with a sharp sales decline our profitability and quality of earnings will remain solid. I will now turn the call over to Asia-Pacific with Al Klotsche. Over to you, Al.

Thanks Peter We will now focus on Slide 16. Asia-Pacific sales for the second quarter were $56.3 million, down 34% from last year‘s sales in the first quarter, which were $84.9 million. Organic sales declined 29% while currency had a negative impact of 5% and acquisitions had no impact on this quarter’s sales growth. While, all of our product lines were impacted by the slowdown. The sharpest downturn has been with our electronics business. This comes on the heels of two very strong quarters prior to this. You may recall that Brady’s Asia-Pacific sales in the last two quarters’ grew at a very nice rate. Our sales to mobile phone customers were up approximately 30% for the fourth-quarter of fiscal 2008. And in first quarter of fiscal 2009, while during those same six months our customers reported sales were down 2%. In the most recent quarter however, our sales were down 34% all our customers have reported a reduction in sales in the neighborhood of 10% to 15%. In addition to this, they have reported a reduction in their inventories of 15%. To us, this clearly indicates that our strong sales in the second half of our fiscal 2008, wound up in inventory, which was consumed during the end of the year and the beginning of 2009 thus causing a significant slowdown in our orders. Taking all things into consideration, we remain confident that our market share has remained constant over this period of time. The demands for working capital and pricing pressures have driven some of our smaller competitors out of the market place. There now appears to be some acceptance among our customers, that there is little excess margin to be squeezed out of the supply chain. Throughout the quarter, we took action to reduce our variable cost including the shortened work weeks, restrictions on discretionary spending and reductions in our workforce. We are pleased to see that a number of our strategic suppliers have begun working more aggressively with us on cost reductions and lower cost material substitutions. Similar to other parts of the world, governments across Asia have introduced economic stimulus packages many of which are focused on pumping money in the infrastructure development. This should provide some nice opportunities for us in coming quarters for our MRO products. Segment profit for the region was $4.1 million down 67% from last year segment profit of $12.7 million. As mentioned earlier, we’ve taken significant measures to reduce cost in our business, but the full effect of these reductions was not realized during the second quarter. Looking forward, we expect Q3 revenues to look much like our second quarter. And if industry cycles repeat themselves OEM sales should begin to pick up towards the end of our fourth quarter. Our focus on the design centers remains and our success rate appears to be very much inline with prior years. We remain confident that we will be able to retain market share and are well positioned to bring new solutions to the design centers with a major push on our new products. We continue to use lean techniques to drive waste and cost out of our business and we’ll continue to optimize our footprint by the end of this summer. I will now turn the call back to Frank Jaehnert.

Thank Al. As you have heard from our business leaders, we are taking this recession very serious and are committed to do whatever it takes to not only weather the storm but to emerge from it as a winner. We know that our strong financial positions especially our strong balance sheet provides us with a competitive advantage, which will allow us to continue to invest in those opportunities that we will position us well for the future such as research and development, new products, e-commerce, the Brady business performance systems and acquisitions. We thank you for your interest in Brady and we’ll now start the Q&A. Becky, please provide the instructions to our listeners.

(Operator Instructions). And your first question comes from Allison Poliniak - Wachovia Securities. Allison Poliniak - Wachovia Capital Markets, LLC: Frank, just going to back to some thing you said in your opening remarks. I think, you said sort of sales you’re not seeing as we going forward is that mainly due to the holidays that won’t we see repeated in fiscal Q3 or is it something else that you’re seeing?

That’s the main reason; we had Christmas, New Year and Lunar New Year. In the second quarter, we certainly don’t have this repeating itself. And I think the other aspect which we considered is inventory reductions in our distribution channel and as Al mentioned some of our OEM customers. So we think we had a double whammy and we do not expect this to go forward, of course, what we don’t know is what’s the economy going to do, but everything else being equal, we do not expect such a weak quarter. Allison Poliniak - Wachovia Capital Markets, LLC: And then I guess a second, Al you touched a little bit about this, but looking at the OEM electronics. The competitive landscape in Asia right now. Just given the significant volume declines, do you think that could force even more of the smaller competitors out of that industry for you?

I do we’ve seen some of that happen over the last quarter and I think that cash flow becomes a major issue when you are holding inventory and sales aren’t coming in as quickly as before. So we expect some of the smaller and weaker competitors to either dropout or fade away.

And your next question comes from Charlie Brady - BMO Capital Markets. Charles Brady - BMO Capital Markets: Just first a house keeping question. What exchange rate primarily Euro are you embedded in your guidance?

Our current exchange rate at Euro is just under 130. Charles Brady - BMO Capital Markets: And I don’t know if you covered this, how did the hard disk drive market fair in the quarter?

I didn’t specifically address that. It was not down as much as our mobile phone business. But it was still hurt somewhat, but not to the same degree. Charles Brady - BMO Capital Markets: Do you have an expectation for mobile handset to the forecast or what that business will look like remainder of the year?

Well I can sort of repeat what some of our customers are telling us and our customers, well originally going a back a quarter ago, they said that it was going to be a slow start to the calendar 2009 with maybe 5% to 10% drop offs in sales versus prior year and then they saw it picking up in the second half. I think we are starting to read between the lines that may be they see a little bit of a delay in that pickup. And the best thing I can tell you is that our market share is remaining steady. Our new product development is focused on some of the higher-end solutions. So we still expect softness in this market with hopefully a rebound coming towards the end of the calendar year as people build out for 2009 holidays. Charles Brady - BMO Capital Markets: Frank can you just help me understand a little better your visibility into the distribution channel and I guess more specifically, insights you get from exactly what the inventory level there are and how much more de-stocking might have to occur?

Fortunately, we have [inaudible] who keeps a close watch over this and Matt, what can you share into that?

Well, we don’t have first of all, a lot of specific information on that other than what our sales managers’ and channel managers’ would give access to in discussions with the managers’ of our distributors. So, that is anecdotal information and what the plans are for these distributors and these are things that we’re being told by these distributors. The other thing that we have, which is more a specific information is we are able to track the sales of our products versus what they are purchasing from us and I touched on this on my comments, and so we can compare this overtime and there is no question that we are seeing that they are de-stocking and that they are out-the-door sales are more positive than their purchases from us. So, we’re tracking us and that probably the most factual information that we have; what we see every quarter and how that compares to the previous year.

This would be for a hand full of larger distributors. Charles Brady - BMO Capital Markets: Right. That may be a point of sale information about our own products.

Right. The major national chains that have inventory and various different ways they may have them in regional centers versus individual stocking locations, sort of properly get commission to our sales people. We have to get point of sale information. So that gives us specific insight into what they are buying versus what they are actually selling. Charles Brady - BMO Capital Markets: Can you give us a sense of what the out-the-door sales would be for those distributors on average? What the differential would be between what they are actually buying from you and what their out-the-door sale would be?

Do we know that? Is that what you are asking? Charles Brady - BMO Capital Markets: Yes, and I guess you are saying out-the-door sales have not declined as much as the actual purchases directly from you. I am just trying to get a sense of how wide that differential is?

I think these are two questions. First, do we know, the answer is yes. Are we willing to share it? And the answers is no. And then, I don’t want to come across this, we don’t want to tell you, I don’t think it’s a big enough number to be representative. So, we have a couple of lots of distributors where we know it. And I wouldn’t want anybody to draw a conclusion. As I said, if there is a gap of 5% or 10% or something like that, we would apply that across the board may be even across other countries. So I just ask for your understanding on this aspect. Then the visibility is very, very low. I am more concerned about the overall visibility of our business. We don’t have back orders or any thing like this. We get an order today and ship it tomorrow. And things can change daily, but what we do believe is that both in large OEM accounts and in larger distributors that we had a reduction of inventory, which led to our sales to our distributors in OEM being less than what their sales were out-of-the-door of our product. And we think that this is going to come down going forward. Charles Brady - BMO Capital Markets: Thanks very much. That’s very helpful for the color. I appreciate it.

And your next question comes from the line of Ajit Pai - Thomas Weisel. Ajit Pai - Thomas Weisel: A couple of quick questions. I think the first one is you talked about opportunities in MRO in Asia. Could you give us some color right now; I think the OEM business has been quite weak there. What’s the mix of that business is? How much is now MRO and how much is now OEM there? And then on that same question, I think you talked about in the supply chain people acknowledging that there isn’t any excess margin to come out. So by that, what exactly did you mean in the commentary, does that mean that your pricing is now stable or does that mean that they will give you better pricing because there is less absorption of overhead?

Well to the first question about our mix in Asia, we really don’t reveal all of the specifics, but we are still over 50% of our mix coming from OEM, but it’s much closer to 50 than it has been in the past. Relative to the pricing question, I guess what I would say is, we’ve had some pretty difficult discussions with some of our OEMs and look them in the eye and say, the quarterly price reduction discussions that we’ve historically had with you, we are just not going to be able to have for the foreseeable future, because there is nothing left to give. And the reaction to that is certainly they don’t warmly embrace that, but the reaction is it seems like they are getting that message pretty consistently across many other different suppliers. Ajit Pai - Thomas Weisel: Okay so then it’s fair to assume that from a pricing perspective things are flat. And then for our modeling purposes, we just assume that fixed overhead leverage could still impact margins depending on whether we are modeling an increase or decrease in volumes, is that fair?

Yeah. I am digesting your question a little bit, I think so. Ajit Pai - Thomas Weisel: And just looking at the sort of acquisition pipeline, you folks have de-leveraged, still sort of generating cash. Valuations have been coming in the broader market right now and it’s been while since you have made a very significant large acquisition. So, could you give us some color as to whether your lenders have tightened or relaxed the lending to you? Are you seeing any changes in their views on allowing you to borrow for acquisitions in case you have to, not that you can’t use this for cash flow from operations? And what you are seeing in terms of valuation expectations in the market?

Ajit, let me take this question. The reason that we didn’t make many acquisitions or I think, we didn’t make one for a year now, is not so much cash related or lending related, it is related to us just being careful. What we see, we have had conversations with, we have ongoing conversations with acquisition targets and we trust to realize all of a sudden they are faced out; it starts to cave in and then go down big time. And then the question is how bad is it going to get? And should we, at this point of time, pull the trigger and buy this company? And price expectations from the sellers are still based on how business was a couple of months ago. So, now not necessarily willing to come down with their price expectations, yet. So it’s a high price expectation still on the seller side, it is us being very cautious about how business can look like there. Our strategy right now is to continue to establish relationships, hold relationships, but with the understanding that we might not do any thing for half a year, until we have a better visibility of how this economy is going to play out. So that I would say as the primary driver of us not doing as many acquisitions. Ajit Pai - Thomas Weisel: And is there a geography that you are still focused on? I think Asia as a percentage of your overall revenues is still small. Would it be focused there or you are looking at opportunities across to globe?

We are looking at opportunities across the globe. However, Asia has always been a more challenging geography to make acquisitions. If you look at how many acquisitions are being done in Japan. For instance, it is not too many, may be 100 a year by foreign entities. Even countries which are made a little bit more open to acquisition activity in Asia, is to the far cry from what we can see in Europe and in the United States. And so I think, overtime unless some thing changes significantly, there is a small opportunity in Europe and in the United States than there is in Asia. Ajit Pai - Thomas Weisel: And then the last question will just be uses of cash. You have used your cash for dividends, for acquisitions, for CapEx and then for share repurchases, as well. So how would you prioritize your current use of cash I think for the next 6 months you said that acquisitions are sort of de-prioritized? But what about the share repurchases as well as any sort of CapEx item, that we should think about?

Number one priority for cash deployment is certainly internal, investing in let’s say CapEx, which would help us to become more productive or more efficient or into a new computer software right now. We are in the middle of implementing three software packages, which should make us more efficient for instance, one in collecting receivables, the system cards get paid and this would be some thing we are working and implementing salesforce.com to make our sales force more efficient. And then we are also implementing a new HRIS system. And we are investing in a capital expenditure to make us more productive in all of our cost. These are certainly our number one priority. Just to make sure that we increase our competitiveness. Dividend has always been some thing what we have taken very seriously and we have paid dividend since 1984 and we just announced, that was yesterday or the day before yesterday that we are going to continue to pay the dividend for the last quarter. So that’s also very important to us. As far as share repurchase is concerned, that’s some thing we discuss and we have been doing historically and consider doing going forward as well. Of course, this is always a function of what’s on the horizon, what’s the stock price, there are many factors to explain to this, but I would not want to take stock across the table either at this part of time.

And your next question comes from Anthony Kure - Keybanc. Anthony Kure - Keybanc Capital Markets: Just a couple of questions related to the inventory question. And that is; I understand there is a de-stocking or an opinion that there is some de-stocking going on, just wonder if you have gut feel as to; given what has already happened. Do you feel like your inventory levels now are at the right size or below replacement level or are still too high?

Let me try it to give you an answer. It’s really, really hard to tell, because our customers are just under, they will share with us how much inventory they have. We can trust from a trend point of view and from the difference what we know what they are selling, what their sales growth is and what our sales growth is. We just now, that they have reduced the inventory level compared to what they had to maybe one or two quarters ago. We know this, now how far down are they, how much inventory of our product did they carry? We do not know if they feel they are now fine, or they still think they have too much or maybe they have cut too far. We just don’t know this and so it’s very, very hard, because we just don’t have the data. Anthony Kure - Keybanc Capital Markets: How would this type of de-stocking activity compared to maybe the last time you may have seen a similar dynamic, I don’t if this happened in 2001 or 2002, but would this be more severe or can you compare it to that.

Maybe, Matt, can give us some opinion on this?

No opinion. Don’t know.

One thing I think over the last 10 years, I think distributors and user around customers have been holding less inventory. So, I think that would be less impact full. What you would be seeing in the distribution is they are just right now reacting to what I see as their drop in sales. So, that would be the only additional comment that I could add.

I can give you may be little bit flavor. We are sitting here in our conference room debating especially on the OEM side. How come our sales are so strong, what Al said, you know something like 30% increase to mobile phone manufactures or to their sub-contractors in the fourth-quarter, was it the third and fourth-quarter something like that right of our fiscal year. And we are just wondering, because the economy was clearly pulling down and I think we might have even shared this on a conference call. We are wondering what their plans are? Do they think they are going to take share from each other mobile phone manufacturers or do they think that people might not buy a new car but maybe they will buy a new phone instead? So, we are just sitting around and we are wondering, why it is that our sales are so strong. I think now we have the answer. They didn’t tell us much as I hoped, they build up inventory and then now they started drop in the inventory and don’t order from us anymore as much as they used to. That’s as much I can share but beyond this is really, really difficult. Anthony Kure - Keybanc Capital Markets: Along the lines of the shutdowns you saw during the prior quarter and we are hearing of shorter work weeks from some facilities also, have those I mean, you alluded to it already based on your comments, but have you actually seen in February some plants coming back online or work weeks been more normalized or maybe you can kind of talk about how things have progressing since the end of the quarter?

I can share with you some perspectives from Asia. The Chinese New Year was the last week in January and many companies in normal times, which shut down for a period of about 7 to 10 days and we saw a number of our customers adding a week or 10 days on the front-end or the back-end and then in some extreme cases on both ends. And so, when we started looking at the beginning of February it was a pretty bouncy sales period of time, because we still have a number of customers that weren’t working for “normal times”. Now that we are towards the end of February, I think we are starting to see normalized levels of work and when I say normalized, I mean at the 2009 normal rates. So, the rates that we are seeing today are sort of what we would anticipate seeing going forward in the next couple of quarters. Anthony Kure - Keybanc Capital Markets: How about in the Americas or Europe; any similar type dynamic playing out there?

I would make two comments. First of all, I did make this specific comment regarding the situation in Brazil and those facilities took a very specific time period off and those companies are back online. However, what we are seeing there is that these companies are negotiating with the unions down there, which are government unions to reduce the work we can and go to instead of eliminating their workforce to minimize the time that people are working and so they have to negotiate with the government unions to do that. So although they came back on, they are in a negotiation in terms of how to reduce going forward. And then in the U.S. we have not seen that, however, you just look at all the news, people are looking to cutting staff, reducing the number of shifts that they are working. So if you are looking for maybe a sign of hopefulness there that some are coming back on, it is somewhat neutralized by the fact that there is just less production activity in the U.S. and cutting the workforce and the number of shifts and so on. Anthony Kure - Keybanc Capital Markets: Any comments from Europe, Peter?

I would add to Matt comments, we are seeing some factories come back online after the government funded plant shutdown. We have some unique situations across Europe, where governments will actually sponsor or pay 80% of employee wage bills for a shutdown. So we have seen some automotive and steel manufactures come back online, it’s not a big part of our business right in the way. So I guess we’re a little bit protective from it, but I agree with Matt, Federal when it comes online, and almost 800 jobs and a shorter working week, last week in the U.K. and Federal when it comes back online there is another one that goes on to a shorter week. I think it’s going to be more of the same there for a period of time.

(Operator Instructions). And your next question comes from Robert McCarthy - Robert W. Baird. Robert McCarthy - Robert W. Baird: I wanted to first ask for a little clarification on a couple of things you talked about before. I think Tom you made a comment about excess working capital levels and looking to work some of that off and the upcoming quarter, I wonder is that really just a generalized comment reflecting disappointing absolute sales levels or do you see a particular issue in one particular category and/or region. What I am thinking is that we might be mostly talking about inventory or alternatively given longer collection periods that are typical in foreign markets, maybe it’s the lag on catching up on receivables or I’m just looking for some color there.

Right now, our receivables are actually in pretty good shape. The area that we are focused on is our inventories; just make sure that our inventories are at appropriate levels. We saw a significant decline in sales. We want to make sure that we don’t get caught down the road with excess inventory, that’s where our focus is today. Robert McCarthy - Robert W. Baird: And in terms of restructuring actions you closed the plant in Bratislava; do I understand that we’re not at this point anyway looking at any incremental plant closures?

Well, we always look at how we can optimize our plant footprints, over the last five years we have made almost 30 acquisitions plus there is a lot of facilities out there and that’s just a regular course of business for us. The only action we have taken this quarter from the past quarter was Bratislava. We are not announcing anything for the next quarter, but we constantly look at that. So overtime, I am sure there will be more, we don’t have any specific announcements. Robert McCarthy - Robert W. Baird: Okay. I guess I didn’t ask that right. There is nothing in your current plan that would require another plant closure?

No. Robert McCarthy - Robert W. Baird: And then I wanted to, if I can, just explore a little bit more, the competitive situation that you are facing Al in Asia-Pacific. What I am keen on is the observation that certain small competitors have already disappeared and you believe that there are some others who have cash flow problems, size may be sitting on inventory et cetera, yet pricing stabilizing for you so does that mean that we really aren’t concerned about the needs of some of these more desperate competitors to try to use price to either move inventory or try to win business, because they are not really with your current customers or do we perhaps still have a little bit of short-term risks of the pricing environment as this competitive dynamic shakes out some more players.

Yes. I think there is always that short-term risk Rob. They are going to make some desperate last attempt to try to gain business, but more so than in a period that I can recall, customers are actually calling us to the table and asking us about the health of Brady Corporation and they are asking us to look at our balance sheets and how strong we are as a company and so while the purchasing agents are trying to squeeze things on the price. They are also starting to look at the macro picture and saying, but we can’t afford to upset our supply chain by picking some supplier that is on very questionable standing in terms of cash flow and working capital. So, I think we are gaining some creditability on stock in the eyes of our customers because of the strength that Brady Corporation. It’s not to say that there won’t be pricing pressures going forward. But I think that more so than ever, we are appreciated and respected for the stability that we bring to our customers. Robert McCarthy - Robert W. Baird: Al that’s perfect in terms of getting to where I was going with my question. You make the general and I recognize that market share data is something that you really have to estimate. But the core of this question is your observation and you are convinced your market share was at least flat in the quarter. When I heard that my thought was why isn’t it up given the strain on a supply chain and I guess you are telling us that your expectation is that it will be it’s simply too early for that to have been reflected in resourcing in orders and shipments.

I mean determining market share is definitely not on the exact science. We have an advantage in this business because the customers publish so much data and there is a lot of data published on the inventory returns. Anecdotally, we started out by asking our sales people on the ground, how are you feeling? Are you winning more deals or losing more deals? And their answer was, “we are hanging in there. And we are doing very well; it doesn’t feel like our market share is any different than last year.” But we wanted to prove that out numerically and that’s were we went through the analysis of our sales and what each of our customers did I gave you general industry data we have that by customer, which is more specific than l would like to share. But so you need to take that into consideration and you take into consideration the drop in inventory levels that they have had and we feel good that we are not losing market share, but our data realistically is going to be plus or minus 5% or 10%

Unfortunately, I have had my share of recession. The thing is Brady now is 13 years and seen almost 6 years. So unfortunately, I have some experience here. And every time when we come out of a recession, we realize there is less competition, because we lost some of the weaker players and you might even remember this Rob, I have mentioned this in many conversations with analysts and with the shareholders. As hard as the recession is on our company and our shareholders, declining sales, declining profit, lay offs and all other stuff you don’t want to have and share price going down and so forth. Mid-term, the longer and the deeper the recession is, the better is for strong companies. And I consider ourselves an above average financially strong company and we are going to be one of those companies who are going to benefit from this and maybe it’s because I’m little bit more optimistic than may be the average person. I think when this all is over and done, we might have an opportunity to pick up some share, because shares are going to be less to people. There is going to be a reduced capacity and business is going to pick up and I think it’s going to be good for us. Robert McCarthy - Robert W. Baird: Yes. I think we are on the same page, Frank. My contribution of the dialog is the idea that because of the unique dynamics of the Asian electronics market, you might actually get a stronger effect that way than you have seen in prior cycles, because of the need to transition that market to a more rational basis of competition.

That’s our hope. On the other hand, I think it’s still early. I remember when we announced internally our headcount reductions and [pay] rates especially in Asia in end of October we announced this internally, there were a lot of people questioning our rationale, because many of our businesses were still running three-shift operations, seven days a week and we are running overtime. And that starts in October, end of October as I talk about two more weeks, middle of November to end of November for the Asians to realize its really deteriorating big time. So you now you has not been even though it feels bad, it has not been too bad for two long in Asia, because the question you asked earlier, “Hey Al, you said your market share is flat, why didn’t you pick up any thing” That’s a question. I could have asked, that’s a typical CEO question, right. That’s fine, market share flood. But I want to see increasing market share. I think it’s just too early yet, those people are still hanging in and it is throttle, but they are still hanging in. And may be might be desperate and cut prices to just get business.

And your next question comes from Rick Lane - Broadview Advisors. Rick Lane - Broadview Advisors: A couple of questions here. I’d start with Al. You’d mentioned the OEM, MRO mix change in the Asia, no doubt the OEM business is under more pressure with account for a lot of that, but are you making strides and getting more MRO business in Europe or it may be just a little bit more color on that mix?

Well, yes, I mean we’ve had a concerted effect over the last couple of years to, we don’t want to lose market share in our OEM space, but we are trying to divert some of our resources, strategic resources towards some of the MRO sectors and we are having some success without it, starts out as you are well aware of building a distribution channel that’s a critical element of success in the MRO space. And so we have been doing that for the last 12 to 18 months we have some new loyal distribution partners. People that have been with us for 18 months now understand our products and are starting to gain some traction in the market place. So really what’s swung that market share percentage that I was referring to earlier was that our MRO business is not been impacted the same way that our OEM did. Rick Lane – Broadview Advisors: Sure. If there is such a thing under normal economic conditions what would you guess your run-rate mix would be between OEM and MRO right now?

Sixty-fortiesh. Rick Lane – Broadview Advisors: Really that much.

60 is the OEM Rick Lane – Broadview Advisors: Yes, of course, but I might have guessed, it was still more like 80-20 on a normalized basis.

Yes, it’s tough to say what normal means right now. But I think it was sort of 60-40 and then it would be 80-20. Rick Lane – Broadview Advisors: Where do you think that would be in let’s say three years again under normal economic circumstances?

Well that was tough question for me. Now I honestly can’t answer that. Rick Lane – Broadview Advisors: But what do you think would be realistic though?

I can give you an answer Rick. When I worked at Bosch their goal was always to become less dependent on automotive and automotive was about 50% and so they always tried to push it below 50% but then all of a sudden the economy turned around and business boomed and automotive was solidly above 50 and I think we might have a similar situation here that, Al doesn’t want to lose any business in OEM and he wants to certainly grow in MRO and maybe even through acquisition. But once we get through this negative cycle growth in OEM, we will probably out pace, out perform growth in MRO and if we have 60-40 if that’s the case and you grow faster in the 60% portion. Now it’s hard to keep up in the MRO side here. But they have certainly strategy to diversify more, so it’s hard to tell it all depends on how big is the [inaudible], but I do realize that is not satisfactory but that’s all we can tell you

Well there are two other things Rick, I mean that I just can see three years out one is acquisition and second is adjacent core moves or core business moves. So I am sorry that I can’t answer your question definitively, because I think that if we have a move into an adjacent market space with our core products or an acquisition that could sell significantly skew the numbers that my guess would be way off.

But you are addressing that question to Asia, because at the end of the question you mentioned Europe, at the end so it’s from Europe, you are addressing it to Asia. Rick Lane – Broadview Advisors: Yes, I was. But and as long as I have got your Peter. My next question was, I am just trying to understand how you are thinking about this and positioning Brady Corp during this downturn and that obviously United States started the economic downturn first, Europe followed and towards that end organic sales were weaker and the United States, then Europe but from all the things that we read here in the United States I am curious what you are thinking and it seems like U.K obviously worst in the continent and may be more coincident with the United States with respect to the downturn. But in continental Europe, does it feel like it’s going to get worse than the United States, again so far Europe has lagged the United States, as far as timing and I would say magnitude?

That’s a great question. So, Peter, I couldn’t answer this question.

Okay. I have some to add on that. I may be can answer I don’t it will get worse than in the U.S, I don’t think it will get worse. Is there a time lag? Yes, for sure there is and the U.K is a more relying economy to the U.S. more flexible labor market we saw, which we have seen some pretty steep declines and I think we have got more of it to come. And the rest of continental Europe, I think there are many factors at play, levels of personal indebtedness typically a much lower, you look at Germany and consumers just aren’t settled with debt. And I think that will play out as time goes on for I think it will be mixed and I think we are seeing this way with the length across here. We have seen it in the U.K, sharp economy U.K more modest declines in other parts of Europe, Rick. Who knows the outcome of this, I don’t think it will be worst than the U.S. whether it will be better of in a most socialist Europe with control plant shut-downs, government assisted plant shut-downs, that’s an economic model that needs to be proved now and my crystal ball isn’t telling me the answer to that.

We have now had the conference call for an hour. Are there any further questions, Becky?

Yes sir, we have two questions in queue.

All right.

And your next question comes from Benjamin Wang - Bank of America/Merrill Lynch. Benjamin Wang - Bank of America/Merrill Lynch: My questions have actually been answered. Thank you.

Hello, Bank of America.

I believe he said his question was answered. So your final question comes from [Jim Kissinger] – Kissinger Loughton Capital. Jim Kissinger – Kissinger Loughton Capital: A couple of quick things. Could you give me a run-down on what the debt structure looks like right now and when stuff is due and what the revolver looks like?

Hi Jim, it’s Barb. The debt, the $479 million that’s on the balance sheet is our long-term private placement, it amortizes equally over the last seven years of each deal. So for example, this fiscal year we have $21 million amortizing, next year is we have $50 million, so it’s a very steady amortization schedule. Our revolver is $200 million that’s fully available. Jim Kissinger – Kissinger Loughton Capital: Okay and are there any covenants that are even close on the either the debt on the private placement stuff or the revolver?

No, right now in our 10-Q from first quarter we laid out what the covenant structure is, but the debt-to- EBITDA on the revolver is three-to-one and we having a presentation that we are two-to-one right now. Jim Kissinger – Kissinger Loughton Capital: Okay good. You said there is 20% workforce reduction, 10 permanent and 10 temporary. Is there much more slack in the temporary side, is there more to take out there, if business gets tougher. How much is actually there and where are those temp workers?

Let me try to answer this, Jim. We have always historically try to protect our permanent, well you cannot really call them permanent, but our Brady employees and have used the temporary label more on variable. So that’s certainly always the first we look at but then of course also it’s geographic difference. So we have a higher portion of temporary workers in Asia and then of course, it depends how business is, let’s say business goes down the U.S. and we have less temporaries, what we have to do is then we have go to our regular Brady employee and has to go down and of course that’s where it started. It started here in the U.S. and the reason why we have temporaries not as many, we took big a portion out of our regular employees and then when Asia started to slowdown of course, we had a bigger bite out of temporary. Now, we still have temporary employees, we can go further down, but it all depends what business is it, how many employees are there? We are having shortened work weeks in some of our businesses here in the U.S. and then Asia and not sure about Europe. Peter, have we anything in Europe any shortened work weeks.

Yes, we got some well, I think there is no from an industry basis.

The way Jim I would answer at this point of time, I would like to get a little bit of stability in our Brady work force non-temporary, I mean Brady employed work force. We have taken a big time goal and we have frozen pay and wages. We didn’t give any increases and we just want to wait a little bit and see after the holidays are over. After January is behind us and may be February, you probably have a better feel as to how our cost reductions will hit the bottom line, as somebody said earlier in the conference call, the majority of the cost reductions in the work force were end of December. Now, the code of course had already one month where those people were gone November and December divested around. So, we haven’t seen the full impact yet. I would like to get some stability in there and a lot of work with shortened work week than may be doing other lay off. But I also said, in my script when I read it earlier, that we will do whatever it takes that’s why we have told investors over the last couple of years. They always asked us what if the recession hits you, what’s going to be different this time than last time. And we told you, we are going to take bold and swift actions. And I think that’s what we have done. We certainly, we are surprised by the dramatic deterioration in organic sales in all geographies and in all product lines. But we have taken bold action and taking it down, so we as bad as sales were, we were pleased with what we could do to preserve a reasonable financial performance, because of our cost reduction effort. I mean, Tom said you took $29 million out of SG&A compared to prior year and costs of goods sold you see we only had a 80% basis point reduction in [Guatemala]. Now, it’s probably mix driven also because of less OEM and more MRO. But still it’s reflective of cost reduction efforts. Jim Kissinger – Kissinger Loughton Capital: Frank, I guess may be to add a little bit color to that. If you really only took this reduction for one-month of the three month quarter, if you would have annualized that would you have saved another $5 million bucks this quarter I mean, I am trying to figure out kind of where the basis on the fixed cost side of this thing. And if you would have been clear going and reduce set staff on the very first day of the quarter instead of two-thirds of the way through, would the cost structure have been down another 5 million bucks, 3 million, 8 million.

Yes. We didn’t want to reduce our work force because business slow down. Right because you got to serve your customers and so we couldn’t have done it October 1, but absolutely had we done it earlier, we would have saved more, now I would like to get back to a comment Al made earlier, because I really liked it. I am still digesting your question what I can tell you however the following, we believe that this $30 million of restructuring, pre-tax restructuring charges. We believe that this year we are going to save about $30 million in cost to next year, because it’s going to be more about $45 million. So this much I can tell you now is it $5 million more or less I have to think about this. I want to give it an answer here without having had a chance to talk with some of my financial staff typically they are a bit more accurate than what I am.

I just think we have to keep in mind is in SG&A there is a currency impact in SG&A, which is worth some you can calculate most of that from the numbers you see and so sales are down bonuses and commissions from sales forces on the world are down. So those are also contributing factors, but as far as breaking it down and annualizing, we don’t have that information here today. Jim Kissinger – Kissinger Loughton Capital: Okay, one last one then, CapEx you said would be about $30 million for fiscal ‘09. If you look at that, is that a recent run-rate for 10 you have said $30 really kind of maintenance to CapEx along with some productivity tools, the kinds of things you guys do year-in and year-out.

I think if you look back to the return, our run rate is I think is about 2% of sales. So I would use that as a guideline?

We would do capital expenditure right now, it would be not be for expansion purposes, it would be for productivity enhancement or some thing what makes us more efficient or reduce our lead time or I talked about software before, which makes us a better company. It would not be expanding like having another headquarter building here in Milwaukee that is certainly Jim you listen you probably won’t see this for a while. Jim Kissinger – Kissinger Loughton Capital: So there is a lot of real estate available Frank you could really snag a great location at a cheap price, but you would have a lot of upset people?

With the temperatures we have right now, we would probably be looking somewhere in the South. And I’m not talking about South Milwaukee kind of a -- Jim Kissinger – Kissinger Loughton Capital: I got connections down there I can help with you that. And that leave you guys go thank you very much.

All right, gentleman you do have one question would I take that now?

Sure.

Okay great. Your final question comes from [Thomas Kim] - Green Arrow. Thomas Kim - Green Arrow: I was wondering if you could help us out and give any color with respect to free cash flow guidance and your expectations there either in comparison to adjusted net income or just on a standalone basis. Thanks very much.

We did not give any guidance right. No, Tom, we didn’t give any guidance I mean we give a lot of guidance, net income, we talked about our efforts to reduce inventory, over the next couple weeks; we talked about CapEx. We talked about amortization and depreciation. But we didn’t give any free cash flow guidance per se and I don’t even think we have the numbers right now ready to share. I apologize even though we took your question, unfortunately we cannot give you an answer. Thomas Kim – Green Arrow: Got you. I appreciate it. Frank M. Jaehnert: Right.

And you have no further questions at this time. I would now like to turn the call back over to Barbara Bolens for closing remarks.

Thank you, very much and we appreciate your participation today. The replay of this call will be available both via the Internet and via phone, starting today and will be available for a week. The replay number to access the call is 888-286-8010 with the pass code of 55435103. If you have any questions as always please contact us. Thank for your interest in Brady and have a great day. Becky, please disconnect the call. and are: Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.: THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S: If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!