NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Nine Months Ended April 30, 2023
(Unaudited)
(In thousands, except share and per share amounts)
NOTE A — Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by Brady Corporation and subsidiaries (the "Company," "Brady," "we," or "our") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the foregoing statements contain all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of the Company as of April 30, 2023 and July 31, 2022, its results of operations and comprehensive income for the three and nine months ended April 30, 2023 and 2022, and cash flows for the nine months ended April 30, 2023 and 2022. The condensed consolidated balance sheet as of July 31, 2022 has been derived from the audited consolidated financial statements as of that date. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from the estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to rules and regulations of the Securities and Exchange Commission. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentation. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2022.
NOTE B — New Accounting Pronouncements
Adopted Standards
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities (e.g. deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers” as if the acquirer had originated the contracts. The guidance is applied prospectively to acquisitions occurring on or after the effective date. The Company early adopted ASU No. 2021-08 during the quarter ended October 31, 2022. The adoption of the new standard will only have an impact on the Company's condensed consolidated financial statements in the event of future acquisitions.
NOTE C — Additional Balance Sheet Information
Inventories
Inventories as of April 30, 2023 and July 31, 2022, consisted of the following:
| | | | | | | | | | | |
| April 30, 2023 | | July 31, 2022 |
Finished products | $ | 103,623 | | | $ | 112,323 | |
Work-in-process | 28,802 | | | 29,272 | |
Raw materials and supplies | 50,384 | | | 48,428 | |
Total inventories | $ | 182,809 | | | $ | 190,023 | |
Property, plant and equipment
Property, plant and equipment is presented net of accumulated depreciation in the amount of $287,368 and $272,376 as of April 30, 2023 and July 31, 2022, respectively.
NOTE D — Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the nine months ended April 30, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| IDS | | WPS | | Americas & Asia | | Europe & Australia | | Total |
Balance as of July 31, 2022 | $ | 556,151 | | | $ | 30,681 | | | $ | — | | | $ | — | | | $ | 586,832 | |
Translation adjustments | 3,319 | | | 625 | | | — | | | — | | | 3,944 | |
Balance as of January 31, 2023 | 559,470 | | | 31,306 | | | — | | | — | | | 590,776 | |
Reallocation due to change in segments | (559,470) | | | (31,306) | | | 442,290 | | | 148,486 | | | — | |
Divestiture of business | — | | | — | | | (1,954) | | | — | | | (1,954) | |
Translation adjustments | — | | | — | | | 382 | | | 1,480 | | | 1,862 | |
Balance as of April 30, 2023 | $ | — | | | $ | — | | | $ | 440,718 | | | $ | 149,966 | | | $ | 590,684 | |
Effective February 1, 2023, the Company is organized and managed within two regions: Americas & Asia and Europe & Australia, which are the reportable segments. Prior to February 1, 2023, the Company was organized and managed on a global basis within two business platforms: Identification Solutions ("IDS") and Workplace Safety ("WPS"). As a result, goodwill was allocated to the new reportable segments in accordance with ASC 350, "Intangibles - Goodwill and Other." Refer to Note H, "Segment Information," and Management's Discussion and Analysis for additional information regarding the Company's segment change.
During the nine-month period ended April 30, 2023, goodwill increased $3,852 primarily due to the positive effects of foreign currency translation, which was partially offset by a reduction due to the sale of our PremiSys business within the Americas & Asia segment during the three months ended April 30, 2023.
Other intangible assets as of April 30, 2023 and July 31, 2022, consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| April 30, 2023 | | July 31, 2022 |
| 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: | | | | | | | | | | | | | | | |
Tradenames | 3 | | $ | 1,762 | | | $ | (1,525) | | | $ | 237 | | | 3 | | $ | 1,749 | | | $ | (1,014) | | | $ | 735 | |
Customer relationships | 9 | | 64,049 | | | (13,996) | | | 50,053 | | | 9 | | 105,404 | | | (48,428) | | | 56,976 | |
Technology | 5 | | 9,241 | | | (3,718) | | | 5,523 | | | 5 | | 9,136 | | | (2,241) | | | 6,895 | |
Unamortized other intangible assets: | | | | | | | | | | | | | | | |
Tradenames | N/A | | 9,397 | | | — | | | 9,397 | | | N/A | | 9,422 | | | — | | | 9,422 | |
Total | | | $ | 84,449 | | | $ | (19,239) | | | $ | 65,210 | | | | | $ | 125,711 | | | $ | (51,683) | | | $ | 74,028 | |
The decrease in the gross carrying amount and accumulated amortization of other intangible assets as of April 30, 2023 compared to July 31, 2022 was primarily due to the removal of a fully amortized customer relationship intangible asset as the period of economic benefit related to this asset has lapsed.
Amortization expense of intangible assets was $2,461 and $3,735 for the three months ended April 30, 2023 and 2022, respectively, and $9,350 and $11,291 for the nine months ended April 30, 2023 and 2022, respectively.
NOTE E — Leases
The Company leases certain manufacturing facilities, warehouse and office spaces, and vehicles accounted for as operating leases. Lease terms typically range from one year to ten years. As of April 30, 2023, the Company did not have any finance leases.
Operating lease expense was $3,997 and $4,346 for the three months ended April 30, 2023 and 2022, respectively, and $11,645 and $13,198 for the nine months ended April 30, 2023 and 2022, respectively, which was recognized in either "Cost of goods sold" or "Selling, general and administrative" expenses in the condensed consolidated statements of income, based on the
nature of the lease. Short-term lease expense, variable lease expenses, and sublease income was immaterial to the condensed consolidated statements of income for the three and nine months ended April 30, 2023 and 2022.
Supplemental cash flow information related to the Company's operating leases for the nine months ended April 30, 2023 and 2022, was as follows:
| | | | | | | | | | | |
| Nine months ended April 30, |
| 2023 | | 2022 |
Operating cash outflows from operating leases | $ | 13,196 | | | $ | 14,582 | |
Operating lease assets obtained in exchange for new operating lease liabilities (1) | 6,545 | | | 2,553 | |
(1) Includes new leases and remeasurements or modifications of existing leases.
NOTE F — Accumulated Other Comprehensive Loss
Other comprehensive loss consists of foreign currency translation adjustments, unrealized gains and losses from cash flow hedges, and the unamortized gain on post-retirement plans, net of their related tax effects.
The following table illustrates the changes in the balances of each component of accumulated other comprehensive loss, net of tax, for the nine months ended April 30, 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| Unrealized gain on cash flow hedges | | Unamortized gain on post-retirement plans | | Foreign currency translation adjustments | | Accumulated other comprehensive loss |
Beginning balance, July 31, 2022 | $ | 954 | | | $ | 1,436 | | | $ | (111,467) | | | $ | (109,077) | |
Other comprehensive income before reclassification | 1,966 | | | — | | | 12,985 | | | 14,951 | |
Amounts reclassified from accumulated other comprehensive loss | (946) | | | (329) | | | — | | | (1,275) | |
Ending balance, April 30, 2023 | $ | 1,974 | | | $ | 1,107 | | | $ | (98,482) | | | $ | (95,401) | |
The decrease in accumulated other comprehensive loss as of April 30, 2023 compared to July 31, 2022 was primarily due to the depreciation of the U.S. dollar against certain other currencies during the nine-month period. The foreign currency translation adjustments column in the table above includes the impact of foreign currency translation, foreign currency translation on intercompany notes, and the settlements of net investment hedges, net of tax.
The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended April 30, 2022 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Unrealized gain on cash flow hedges | | Unamortized gain on post-retirement plans | | Foreign currency translation adjustments | | Accumulated other comprehensive loss |
Beginning balance, July 31, 2021 | $ | 729 | | | $ | 1,888 | | | $ | (58,570) | | | $ | (55,953) | |
Other comprehensive income (loss) before reclassification | 307 | | | (59) | | | (42,408) | | | (42,160) | |
Amounts reclassified from accumulated other comprehensive loss | (486) | | | (289) | | | — | | | (775) | |
Ending balance, April 30, 2022 | $ | 550 | | | $ | 1,540 | | | $ | (100,978) | | | $ | (98,888) | |
The increase in accumulated other comprehensive loss as of April 30, 2022 compared to July 31, 2021, was primarily due to the appreciation of the U.S. dollar against certain other currencies during the nine-month period.
Of the amounts reclassified from accumulated other comprehensive loss during the nine months ended April 30, 2023 and 2022, unrealized gains on cash flow hedges were reclassified to "Cost of goods sold" and unamortized gains on post-retirement plans were reclassified into "Investment and other income" on the condensed consolidated statements of income.
The following table illustrates the income tax (expense) benefit on the components of other comprehensive (loss) income for the three and nine months ended April 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Income tax (expense) benefit related to items of other comprehensive (loss) income: | | | | | | | |
Cash flow hedges | $ | (8) | | | $ | (15) | | | $ | 116 | | | $ | (206) | |
Pension and other post-retirement benefits | — | | | (3) | | | (62) | | | 12 | |
Other income tax adjustments and currency translation | — | | | (87) | | | — | | | 346 | |
Income tax (expense) benefit related to items of other comprehensive (loss) income | $ | (8) | | | $ | (105) | | | $ | 54 | | | $ | 152 | |
NOTE G — Revenue Recognition
The Company recognizes revenue when control of the product or service transfers to the customer at an amount that represents the consideration expected to be received in exchange for those products and services. The Company’s revenues are primarily from the sale of identification solutions and workplace safety products that are shipped and billed to customers. All revenue is from contracts with customers and is included in “Net sales” on the condensed consolidated statements of income. See Note H, “Segment Information,” for the Company’s disaggregated revenue disclosure.
The Company offers extended warranty coverage that is included in the sales price of certain products, which it accounts for as service warranties. The Company accounts for the deferred revenue associated with extended service warranties as a contract liability. The balance of contract liabilities associated with service warranty performance obligations was $2,737 and $2,675 as of April 30, 2023 and July 31, 2022, respectively. The current portion and non-current portion of contract liabilities are included in “Other current liabilities” and “Other liabilities," respectively, on the condensed consolidated balance sheets. The Company recognized revenue of $311 and $297 during the three months ended April 30, 2023 and 2022, respectively, and $928 and $882 during the nine months ended April 30, 2023 and 2022, respectively, that was included in the contract liability balance at the beginning of the respective period from the amortization of extended service warranties. Of the contract liability balance outstanding at April 30, 2023, the Company expects to recognize 12% by the end of fiscal 2023, an additional 37% by the end of fiscal 2024, and the remaining balance thereafter.
NOTE H — Segment Information
Effective February 1, 2023, the Company is organized and managed within two regions: Americas & Asia and Europe & Australia, which are the reportable segments. Prior to February 1, 2023, the Company was organized and managed on a global basis within three operating segments: Identification Solutions and People Identification ("PDC"), which aggregated into the IDS reportable segment, and Workplace Safety ("WPS"), which was the WPS reportable segment. As such, all segment-related data has been recast to the new reportable segments.
The following is a summary of net sales by segment and geographic region for the three and nine months ended April 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Net sales: | | | | | | | |
Americas & Asia | | | | | | | |
Americas | $ | 198,074 | | | $ | 196,266 | | | $ | 584,505 | | | $ | 560,184 | |
Asia | 24,739 | | | 26,313 | | | 76,870 | | | 83,108 | |
Total | $ | 222,813 | | | $ | 222,579 | | | $ | 661,375 | | | $ | 643,292 | |
Europe & Australia | | | | | | | |
Europe | $ | 100,480 | | | $ | 102,809 | | | $ | 284,432 | | | $ | 296,426 | |
Australia | 13,823 | | | 13,163 | | | 40,127 | | | 38,363 | |
Total | $ | 114,303 | | | $ | 115,972 | | | $ | 324,559 | | | $ | 334,789 | |
| | | | | | | |
Total Company | $ | 337,116 | | | $ | 338,551 | | | $ | 985,934 | | | $ | 978,081 | |
The following is a summary of segment profit for the three and nine months ended April 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Segment profit: | | | | | | | |
Americas & Asia | $ | 49,192 | | | $ | 45,021 | | | $ | 130,511 | | | $ | 114,659 | |
Europe & Australia | 17,099 | | | 16,050 | | | 47,316 | | | 46,165 | |
Total Company | $ | 66,291 | | | $ | 61,071 | | | $ | 177,827 | | | $ | 160,824 | |
The following is a reconciliation of segment profit to income before income taxes for the three and nine months ended April 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Total profit from reportable segments | $ | 66,291 | | | $ | 61,071 | | | $ | 177,827 | | | $ | 160,824 | |
Unallocated amounts: | | | | | | | |
Administrative costs | (7,060) | | | (8,182) | | | (18,429) | | | (20,728) | |
Gain on sale of business | 3,770 | | | — | | | 3,770 | | | — | |
Investment and other income (expense) | 785 | | | (1,308) | | | 1,596 | | | (1,343) | |
Interest expense | (753) | | | (329) | | | (2,886) | | | (763) | |
Income before income taxes | $ | 63,033 | | | $ | 51,252 | | | $ | 161,878 | | | $ | 137,990 | |
The following is a summary of sales by business platform for the three and nine months ended April 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
IDS | $ | 262,984 | | | $ | 264,124 | | | $ | 775,023 | | | $ | 757,727 | |
WPS | 74,132 | | | 74,427 | | | 210,911 | | | 220,354 | |
Total Company | $ | 337,116 | | | $ | 338,551 | | | $ | 985,934 | | | $ | 978,081 | |
NOTE I — Net Income per Common Share
Reconciliations of the numerator and denominator of the basic and diluted per share computations for the Company’s Class A and Class B common stock are summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Numerator (in thousands): | | | | | | | |
Net income (Numerator for basic and diluted income per Class A Nonvoting Common Share) | $ | 48,052 | | | $ | 40,054 | | | $ | 125,479 | | | $ | 108,915 | |
Less: | | | | | | | |
Preferential dividends | — | | | — | | | (769) | | | (803) | |
Preferential dividends on dilutive stock options | — | | | — | | | (4) | | | (8) | |
Numerator for basic and diluted income per Class B Voting Common Share | $ | 48,052 | | | $ | 40,054 | | | $ | 124,706 | | | $ | 108,104 | |
Denominator (in thousands): | | | | | | | |
Denominator for basic income per share for both Class A and Class B | 49,653 | | | 51,326 | | | 49,755 | | | 51,700 | |
Plus: Effect of dilutive equity awards | 348 | | | 242 | | | 278 | | | 355 | |
Denominator for diluted income per share for both Class A and Class B | 50,001 | | | 51,568 | | | 50,033 | | | 52,055 | |
Net income per Class A Nonvoting Common Share: | | | | | | | |
Basic | $ | 0.97 | | | $ | 0.78 | | | $ | 2.52 | | | $ | 2.11 | |
Diluted | $ | 0.96 | | | $ | 0.78 | | | $ | 2.51 | | | $ | 2.09 | |
Net income per Class B Voting Common Share: | | | | | | | |
Basic | $ | 0.97 | | | $ | 0.78 | | | $ | 2.51 | | | $ | 2.09 | |
Diluted | $ | 0.96 | | | $ | 0.78 | | | $ | 2.49 | | | $ | 2.08 | |
Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value were greater than the average market price of the Company's Class A Nonvoting Common Stock because the effect would have been anti-dilutive. The amount of anti-dilutive shares were 447,210 and 526,603 for the three months ended April 30, 2023 and 2022, respectively, and 555,247 and 492,527 for the nine months ended April 30, 2023 and 2022, respectively.
NOTE J — Fair Value Measurements
In accordance with fair value accounting guidance, the Company determines fair value based on the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The inputs used to measure fair value are classified into the following hierarchy:
Level 1 — Unadjusted quoted prices in active markets for identical instruments that are accessible as of the reporting date.
Level 2 — Other significant pricing inputs that are either directly or indirectly observable.
Level 3 — Significant unobservable pricing inputs, which result in the use of management's own assumptions.
The following table summarizes the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2023 and July 31, 2022:
| | | | | | | | | | | | | | | | | |
| April 30, 2023 | | July 31, 2022 | | Fair Value Hierarchy |
Assets: | | | | | |
Deferred compensation plan assets | $ | 17,798 | | | $ | 18,037 | | | Level 1 |
Foreign exchange contracts | 1,135 | | | 489 | | | Level 2 |
Liabilities: | | | | | |
Foreign exchange contracts | 66 | | | 32 | | | Level 2 |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Deferred compensation plan assets: The Company’s deferred compensation investments consist of investments in mutual funds, which are included in "Other assets" on the condensed consolidated balance sheets. These investments were classified as Level 1 as the shares of these investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.
Foreign exchange contracts: The Company’s foreign exchange contracts were classified as Level 2 as the fair value was based on the present value of the future cash flows using external models that use observable inputs, such as interest rates, yield curves and foreign exchange rates. See Note K, “Derivatives and Hedging Activities,” for additional information.
The fair values of cash and cash equivalents, accounts receivable, accounts payable, and other liabilities approximated carrying values due to their short-term nature.
NOTE K — Derivatives and Hedging Activities
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 on a future date, with maturities of less than 18 months, which qualify as cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objective of the Company’s foreign currency exchange risk management program is to minimize the impact of currency movements due to transactions in other than the respective subsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s net investment denominated in a currency other than the U.S. dollar. To achieve this objective, the Company hedges a portion of known exposures using forward foreign exchange currency contracts.
Main foreign currency exposures are related to transactions denominated in the British Pound, Euro, Canadian dollar, Australian dollar, Mexican Peso, Chinese Yuan, Malaysian Ringgit and Singapore dollar. Generally, these risk management transactions will involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currency transactions.
The U.S. dollar equivalent notional amounts of outstanding forward exchange contracts were as follows:
| | | | | | | | | | | |
| April 30, 2023 | | July 31, 2022 |
Designated as cash flow hedges | $ | 6,328 | | | $ | 25,276 | |
Non-designated hedges | 4,670 | | | 4,057 | |
Total foreign exchange contracts | $ | 10,998 | | | $ | 29,333 | |
Cash Flow Hedges
The Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value on the condensed consolidated balance sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income ("OCI") and reclassified into income in the same period or periods during which the hedged transaction affects income. As of April 30, 2023 and July 31, 2022, unrealized gains of $1,945 and $1,040 have been included in OCI, respectively.
Net Investment Hedges
The Company has designated certain third party foreign currency denominated debt borrowed under its credit agreement as net investment hedges. These debt obligations, denominated in Euros and British Pounds, were designated as net investment hedges to hedge portions of the Company's net investment in its European operations. The Company’s foreign currency denominated debt obligations are valued under a market approach using publicized spot prices, and the net gains or losses attributable to the changes in spot prices are recorded as cumulative translation within AOCI and are included in the foreign currency translation adjustments section of the condensed consolidated statements of comprehensive income. As of April 30, 2023 and July 31, 2022, the cumulative balance recognized in accumulated other comprehensive income were losses of $1,502 and $0, respectively, on any outstanding foreign currency denominated debt obligations.
The following table summarizes the amount of pre-tax gains and losses related to derivatives designated as hedging instruments:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended April 30, | | Nine months ended April 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Gains (losses) recognized in OCI: | | | | | | | |
Forward exchange contracts (cash flow hedges) | $ | 496 | | | $ | 475 | | | $ | 2,165 | | | $ | 674 | |
Foreign currency denominated debt (net investment hedges) | (661) | | | — | | | (1,502) | | | — | |
Gains reclassified from OCI into cost of goods sold | | | | | | | |
Forward exchange contracts (cash flow hedges) | 463 | | | 44 | | | 1,261 | | | 647 | |
Fair values of derivative instruments in the condensed consolidated balance sheets were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| April 30, 2023 | | July 31, 2022 |
| Prepaid expenses and other current assets | | Other current liabilities | | Long-term obligations | | Prepaid expenses and other current assets | | Other current liabilities |
Derivatives designated as hedging instruments: | | | | | | | | | |
Foreign exchange contracts (cash flow hedges) | $ | 1,131 | | | $ | 66 | | | $ | — | | | $ | 489 | | | $ | 30 | |
Foreign currency denominated debt (net investment hedges) | — | | | — | | | (37,849) | | | — | | | — | |
Derivatives not designated as hedging instruments: | | | | | | | | | |
Foreign exchange contracts (non-designated hedges) | 4 | | | — | | | — | | | — | | | 2 | |
Total derivative instruments | $ | 1,135 | | | $ | 66 | | | $ | (37,849) | | | $ | 489 | | | $ | 32 | |
NOTE L — Income Taxes
The income tax rate for the three months ended April 30, 2023 and 2022, was 23.8% and 21.8%, respectively. The income tax rate for the nine months ended April 30, 2023 and 2022, was 22.5% and 21.1%, respectively. The increase in the tax rate in both the three and nine-month periods was due to the sale of the PremiSys business as well as lapses in the statutes of limitations that did not reoccur in 2023. The Company expects its ongoing annual income tax rate to be approximately 21% based on its current global business mix and based on tax laws and statutory tax rates currently in effect.
NOTE M — Subsequent Events
On May 16, 2023, the Board of Directors declared a quarterly cash dividend to shareholders of the Company’s Class A and Class B Common Stock of $0.23 per share payable on July 31, 2023, to shareholders of record at the close of business on July 10, 2023.