By PAUL GORES

Shares of Brady Corp. fell 8.6% Friday after the company reported that earnings dropped almost 45% from the same quarter a year ago and it expects sales to be flat through the first half of its next fiscal year.

The Milwaukee-based manufacturer of industrial labels and signs posted net income of $19.2 million, or 37 cents a share, compared with $34.8 million, or 64 cents, a year ago.

In its fiscal fourth quarter ended July 31, sales slipped to $287.2 million from $396.8 million a year earlier.

"After a strong first quarter, the global economic downturn caused a 27% drop in our sales over the balance of the year," said Frank M. Jaehnert, president and chief executive. "Despite this, we earned $90 million in net income excluding restructuring charges and generated $127 million in cash flow from operations."

Brady has cut its workforce about 20% in the past year to cope with a fall-off in sales in the economic downturn, a restructuring Jaehnert said positions the company to remain financially strong during the weak economy and grow when the recovery occurs.

The company told analysts on a conference call Friday that it expects sales to grow modestly in the second half of its 2010 fiscal year.

"If the recovery comes faster we will be ready to take advantage," Jaehnert said.

Brady's earnings were 43 cents per share when restructuring costs are excluded, which was better than the average estimate of 42 cents by six analysts polled by Bloomberg News.

On Thursday, the company announced that its annual dividend for shareholders would be raised to 70 cents from 68 cents.

After Friday's earnings announcement, shares of Brady lost $2.84, closing at $30.22.

Brady Corp.

4th quarter %

7/31 2009 2008 change

Sales $287.2 $396.8 -27.6

Net income 19.2 34.8 -44.8

EPS (diluted) 0.37 0.64 -42.2

12 months

Sales $1,208.7 $1,523.0 -20.6

Net income 70.1 132.2 -47.0

EPS (diluted) 1.33 2.41 -44.8

Figures in millions except for earnings per share. Percentages are based on unrounded sales and income figures.

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