Graco Aligns Operations with Market Conditions
December 17 2008 - 5:00PM
Business Wire
Graco Inc. (NYSE: GGG) today announced a workforce reduction as
part of its efforts to align operations with current market and
economic conditions. Patrick McHale, Graco�s president and chief
executive officer, said, �It is impossible to ignore the impact of
the global recession on our business and the challenging market
that we anticipate in the year ahead. The company�s fourth-quarter
incoming order rates remain 15 percent to 20 percent below the
comparable 2007 period (measured at consistent exchange rates). As
a result, we must take the difficult step of reducing our workforce
and adjusting our cost structure to meet the current realities of
our business. We regret the impact on our employees.� The workforce
reduction will affect approximately 150 people, or 6 percent of
Graco�s global employee base. The company expects to take a pretax
charge of $5 million related to severance and early retirement
costs in the fourth quarter of 2008. The workforce reduction is
expected to be complete by early 2009 and is expected to lower the
Company�s cost structure $9 million. The Company is also reducing
capital expenditures and discretionary spending to further control
costs. The Company anticipates impairment charges up to $4 million
in the fourth quarter as the decline in business levels is
reflected in the review of intangible assets. As previously
announced, the fourth quarter results also include additional
expenses of $3 million associated with the roll-out of entry-level
paint sprayers to additional paint and home center stores in the
fourth quarter. McHale commented further that, �we believe our
long-term prospect for growth is strong and that we will be
well-positioned to respond to customer requirements when economic
conditions improve. Graco continues to be committed to making
strategic investments in new product development, distribution
expansion, new markets and strategic acquisitions.� Graco Inc.
supplies technology and expertise for the management of fluids in
both industrial and commercial applications. It designs,
manufactures and markets systems and equipment to move, measure,
control, dispense and spray fluid materials. A recognized leader in
its specialties, Minneapolis-based Graco serves customers around
the world in the manufacturing, processing, automotive,
construction and maintenance industries. For additional information
about Graco Inc., please visit us at www.graco.com. Cautionary
Statement Regarding Forward-Looking Statements A forward-looking
statement is any statement made in this earnings release and other
reports that the Company files periodically with the Securities and
Exchange Commission, as well as in press releases, analyst
briefings, conference calls and the Company�s Annual Report to
shareholders, which reflects the Company�s current thinking on
market trends and the Company�s future financial performance at the
time they are made. All forecasts and projections are
forward-looking statements. The Company undertakes no obligation to
update these statements in light of new information or future
events. The Company desires to take advantage of the �safe harbor�
provisions of the Private Securities Litigation Reform Act of 1995
by making cautionary statements concerning any forward-looking
statements made by or on behalf of the Company. The Company cannot
give any assurance that the results forecasted in any
forward-looking statement will actually be achieved. Future results
could differ materially from those expressed, due to the impact of
changes in various factors. These risk factors include, but are not
limited to: economic conditions in the United States and other
major world economies, currency fluctuations, political
instability, changes in laws and regulations, and changes in
product demand. In addition, the Company�s ability to recognize
cost savings from the workforce reduction and respond to economic
conditions as they improve may be impacted by our ability to
execute and maintain the workforce reduction, control other costs,
and manage any disruption to our business from the workforce
reduction. Please refer to Item 1A of, and Exhibit 99 to, the
Company�s Annual Report on Form 10-K for fiscal year 2007 (and most
recent Form 10-Q, if applicable) for a more comprehensive
discussion of these and other risk factors. These reports are
available on the Company�s website at www.graco.com and the
Securities and Exchange Commission�s website at www.sec.gov.
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