UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended
June 25, 2010
Commission File Number:
001-09249
GRACO INC.
(Exact name of registrant as specified in its charter)
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Minnesota
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41-0285640
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(State of incorporation)
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(I.R.S. Employer Identification Number)
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88 - 11
th
Avenue N.E.
Minneapolis, Minnesota
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55413
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(Address of principal executive offices)
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(Zip Code)
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(612) 623-6000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2)
has been subject to such filing requirements for the past 90 days.
Yes
X
No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that
the registrant was required to submit and post such files).
Yes
X
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act.
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Large Accelerated Filer
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X
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Accelerated Filer
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Non-accelerated Filer
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Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
Yes
No
X
60,248,000 shares of the Registrants Common Stock, $1.00 par value, were outstanding as of
July 16, 2010.
PART I
Item 1.
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands except per share amounts)
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Thirteen Weeks Ended
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Twenty-six Weeks Ended
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June 25,
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June 26,
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June 25,
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June 26,
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2010
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2009
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2010
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2009
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Net Sales
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$
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192,088
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$
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147,712
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$
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356,809
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$
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285,592
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Cost of products sold
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90,168
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74,704
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165,594
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148,256
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Gross Profit
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101,920
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73,008
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191,215
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137,336
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Product development
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9,472
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9,781
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18,946
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19,832
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Selling, marketing and distribution
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32,647
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28,292
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61,807
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60,225
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General and administrative
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20,592
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16,489
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38,547
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32,704
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Operating Earnings
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39,209
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18,446
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71,915
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24,575
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Interest expense
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1,041
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1,221
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2,121
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2,587
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Other expense (income), net
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(268
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)
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91
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(107
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)
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686
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Earnings Before Income Taxes
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38,436
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17,134
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69,901
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21,302
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Income taxes
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13,600
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5,500
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24,500
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6,900
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Net Earnings
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$
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24,836
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$
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11,634
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$
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45,401
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$
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14,402
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Basic Net Earnings
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per Common Share
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$
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0.41
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$
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0.19
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$
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0.75
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$
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0.24
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Diluted Net Earnings
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per Common Share
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$
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0.41
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$
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0.19
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$
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0.74
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$
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0.24
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Cash Dividends Declared
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per Common Share
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$
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0.20
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$
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0.19
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$
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0.40
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$
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0.38
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See notes to consolidated financial statements.
3
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
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June 25,
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December
25,
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2010
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2009
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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4,878
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$
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5,412
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Accounts receivable, less allowances of $6,400 and $6,500
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138,279
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100,824
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Inventories
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76,198
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58,658
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Deferred income taxes
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20,408
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20,380
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Other current assets
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3,535
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3,719
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Total current assets
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243,298
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188,993
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Property, Plant and Equipment
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Cost
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337,848
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334,440
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Accumulated depreciation
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(204,041
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)
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(195,387
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)
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Property, plant and equipment, net
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133,807
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139,053
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Goodwill
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91,740
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91,740
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Other Intangible Assets, net
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34,229
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40,170
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Deferred Income Taxes
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11,776
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8,372
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Other Assets
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8,273
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8,106
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Total Assets
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$
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523,123
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$
|
476,434
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current Liabilities
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Notes payable to banks
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$
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13,599
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$
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12,028
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Trade accounts payable
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33,780
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17,983
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Salaries and incentives
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21,611
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14,428
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Dividends payable
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12,053
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12,003
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Other current liabilities
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45,338
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47,373
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Total current liabilities
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126,381
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103,815
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Long-term debt
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80,000
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86,260
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Retirement Benefits and Deferred Compensation
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74,651
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73,705
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Uncertain Tax Positions
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3,000
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3,000
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Shareholders Equity
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Common stock
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60,314
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59,999
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Additional paid-in-capital
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203,716
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190,261
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Retained earnings
|
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23,892
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|
|
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11,121
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Accumulated other comprehensive income (loss)
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|
(48,831
|
)
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|
(51,727
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)
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Total shareholders equity
|
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|
239,091
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209,654
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Total Liabilities and Shareholders Equity
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$
|
523,123
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$
|
476,434
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See notes to consolidated financial statements.
4
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)
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|
Twenty-six Weeks Ended
|
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June 25,
|
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June 26,
|
|
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2010
|
|
2009
|
Cash Flows From Operating Activities
|
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|
|
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Net Earnings
|
|
$
|
45,401
|
|
|
$
|
14,402
|
|
Adjustments to reconcile net earnings to
net cash provided by operating activities
|
|
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Depreciation and amortization
|
|
|
17,319
|
|
|
|
16,953
|
|
Deferred income taxes
|
|
|
(5,247
|
)
|
|
|
(696
|
)
|
Share-based compensation
|
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|
5,127
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|
|
|
5,209
|
|
Excess tax benefit related to share-based
payment arrangements
|
|
|
(900
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)
|
|
|
(300
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)
|
Change in
|
|
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|
|
|
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Accounts receivable
|
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|
(40,392
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)
|
|
|
15,370
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|
Inventories
|
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|
(17,742
|
)
|
|
|
22,691
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|
Trade accounts payable
|
|
|
9,552
|
|
|
|
(3,218
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)
|
Salaries and incentives
|
|
|
7,624
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|
|
|
(6,015
|
)
|
Retirement benefits and deferred compensation
|
|
|
4,996
|
|
|
|
7,215
|
|
Other accrued liabilities
|
|
|
1,287
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|
|
|
(2,135
|
)
|
Other
|
|
|
1,020
|
|
|
|
16
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
28,045
|
|
|
|
69,492
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|
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Cash Flows From Investing Activities
|
|
|
|
|
|
|
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|
Property, plant and equipment additions
|
|
|
(5,932
|
)
|
|
|
(9,129
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
123
|
|
|
|
495
|
|
Investment in life insurance
|
|
|
(1,499
|
)
|
|
|
(1,499
|
)
|
Capitalized software and other intangible asset additions
|
|
|
(193
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)
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|
|
(200
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)
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|
|
|
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Net cash used in investing activities
|
|
|
(7,501
|
)
|
|
|
(10,333
|
)
|
|
|
|
|
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Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Net borrowings (payments) on short-term lines of credit
|
|
|
3,004
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|
|
|
(3,621
|
)
|
Borrowings on long-term line of credit
|
|
|
-
|
|
|
|
68,126
|
|
Payments on long-term line of credit
|
|
|
(6,260
|
)
|
|
|
(104,211
|
)
|
Excess tax benefit related to share-based
payment arrangements
|
|
|
900
|
|
|
|
300
|
|
Common stock issued
|
|
|
8,815
|
|
|
|
5,289
|
|
Common stock retired
|
|
|
(3,462
|
)
|
|
|
(141
|
)
|
Cash dividends paid
|
|
|
(24,122
|
)
|
|
|
(22,686
|
)
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(21,125
|
)
|
|
|
(56,944
|
)
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
47
|
|
|
|
(425
|
)
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(534
|
)
|
|
|
1,790
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
5,412
|
|
|
|
12,119
|
|
|
|
|
|
|
End of period
|
|
$
|
4,878
|
|
|
$
|
13,909
|
|
|
|
|
|
|
See notes to consolidated financial statements
5
GRACO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
|
|
The consolidated balance sheet of Graco Inc. and Subsidiaries (the Company) as of June
25, 2010 and the related statements of earnings for the thirteen and twenty-six weeks
ended June 25, 2010 and June 26, 2009, and cash flows for the twenty-six weeks ended June
25, 2010 and June 26, 2009 have been prepared by the Company and have not been audited.
|
|
|
|
In the opinion of management, these consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) necessary to present
fairly the financial position of Graco Inc. and Subsidiaries as of June 25, 2010, and
the results of operations and cash flows for all periods presented.
|
|
|
|
Certain information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been condensed
or omitted. Therefore, these statements should be read in conjunction with the
financial statements and notes thereto included in the Companys 2009 Annual Report on
Form 10-K.
|
|
|
|
The results of operations for interim periods are not necessarily indicative of results
that will be realized for the full fiscal year.
|
2.
|
|
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings available to
common shareholders
|
|
$
|
24,836
|
|
|
$
|
11,634
|
|
|
$
|
45,401
|
|
|
$
|
14,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding for basic
earnings per share
|
|
|
60,597
|
|
|
|
59,903
|
|
|
|
60,402
|
|
|
|
59,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of stock
options computed using the
treasury stock method and
the average market price
|
|
|
587
|
|
|
|
280
|
|
|
|
546
|
|
|
|
273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding for diluted
earnings per share
|
|
|
61,184
|
|
|
|
60,183
|
|
|
|
60,948
|
|
|
|
60,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.41
|
|
|
$
|
0.19
|
|
|
$
|
0.75
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.41
|
|
|
$
|
0.19
|
|
|
$
|
0.74
|
|
|
$
|
0.24
|
|
6
|
|
Stock options to purchase 2,987,000 and 3,920,000 shares were not included in the 2010
and 2009 computations of diluted earnings per share, respectively, because they would
have been anti-dilutive.
|
3.
|
|
Information on option shares outstanding and option activity for the twenty-six weeks
ended June 25, 2010 is shown below (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
Option
|
|
Exercise
|
|
Options
|
|
Exercise
|
|
|
Shares
|
|
Price
|
|
Exercisable
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 25, 2009
|
|
|
4,813
|
|
|
$
|
28.98
|
|
|
|
2,445
|
|
|
$
|
28.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
827
|
|
|
|
27.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(203
|
)
|
|
|
11.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(31
|
)
|
|
|
32.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, June 25, 2010
|
|
|
5,406
|
|
|
$
|
29.43
|
|
|
|
2,901
|
|
|
$
|
30.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company recognized year-to-date share-based compensation of $5.1 million in
2010 and $5.2 million in 2009. As of June 25, 2010, there was $8.8 million of
unrecognized compensation cost related to unvested options, expected to be recognized
over a weighted average period of 2.1 years.
|
|
|
|
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average assumptions and
results:
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
Expected life in years
|
|
|
6.0
|
|
|
|
6.0
|
|
Interest rate
|
|
|
2.7
|
%
|
|
|
2.1
|
%
|
Volatility
|
|
|
34.0
|
%
|
|
|
30.1
|
%
|
Dividend yield
|
|
|
3.0
|
%
|
|
|
3.7
|
%
|
Weighted average fair value per share
|
|
$
|
7.38
|
|
|
$
|
4.27
|
|
|
|
Under the Companys Employee Stock Purchase Plan, the Company issued 436,000 shares
in 2010 and 312,000 shares in 2009. The fair value of the employees purchase rights
under this Plan was estimated on the date of grant. The benefit of the 15 percent
discount from the lesser of the fair market value per common share on the first day and
the last day of the plan year was added to the fair value of the employees purchase
rights determined using the Black-Scholes option-pricing model with the following
assumptions and results:
|
7
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
Expected life in years
|
|
|
1.0
|
|
|
|
1.0
|
|
Interest rate
|
|
|
0.3
|
%
|
|
|
0.7
|
%
|
Volatility
|
|
|
42.8
|
%
|
|
|
51.5
|
%
|
Dividend yield
|
|
|
2.9
|
%
|
|
|
4.5
|
%
|
Weighted average fair value per share
|
|
$
|
8.48
|
|
|
$
|
5.60
|
|
4.
|
|
The components of net periodic benefit cost for retirement benefit plans were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
894
|
|
|
$
|
1,141
|
|
|
$
|
2,135
|
|
|
$
|
2,420
|
|
Interest cost
|
|
|
3,138
|
|
|
|
3,115
|
|
|
|
6,415
|
|
|
|
6,335
|
|
Expected return on assets
|
|
|
(3,325
|
)
|
|
|
(2,850
|
)
|
|
|
(6,800
|
)
|
|
|
(5,550
|
)
|
Amortization and other
|
|
|
1,548
|
|
|
|
2,313
|
|
|
|
3,052
|
|
|
|
4,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
2,255
|
|
|
$
|
3,719
|
|
|
$
|
4,802
|
|
|
$
|
7,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
150
|
|
|
$
|
100
|
|
|
$
|
275
|
|
|
$
|
250
|
|
Interest cost
|
|
|
295
|
|
|
|
300
|
|
|
|
620
|
|
|
|
650
|
|
Amortization
|
|
|
(95
|
)
|
|
|
-
|
|
|
|
(95
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
350
|
|
|
$
|
400
|
|
|
$
|
800
|
|
|
$
|
900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company paid $1.5 million in June 2010 and $1.5 million in June 2009 for
contracts insuring the lives of certain employees who are eligible to participate in
certain non-qualified pension and deferred compensation plans. These insurance
contracts will be used to fund the non-qualified pension and deferred compensation
arrangements. The insurance contracts are held in a trust and are available to general
creditors in the event of the Companys insolvency. Cash surrender value of $5.9
million and $4.4 million is included in other assets in the consolidated balance sheet
as of June 25, 2010 and December 25, 2009, respectively.
|
8
5.
|
|
Total comprehensive income was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
24,836
|
|
|
$
|
11,634
|
|
|
$
|
45,401
|
|
|
$
|
14,402
|
|
|
Cumulative translation
adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
234
|
|
|
Pension and postretirement
medical liability adjustment
|
|
|
1,491
|
|
|
|
2,422
|
|
|
|
2,959
|
|
|
|
4,751
|
|
|
Gain (loss) on interest
rate hedge contracts
|
|
|
933
|
|
|
|
364
|
|
|
|
1,638
|
|
|
|
291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
(896
|
)
|
|
|
(1,030
|
)
|
|
|
(1,701
|
)
|
|
|
(1,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
26,364
|
|
|
$
|
13,390
|
|
|
$
|
48,297
|
|
|
$
|
17,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of accumulated other comprehensive income (loss) were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 25,
|
|
December 25,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Pension and postretirement medical
liability adjustment
|
|
$
|
(46,696
|
)
|
|
$
|
(48,560
|
)
|
Gain (loss) on interest rate hedge contracts
|
|
|
(1,312
|
)
|
|
|
(2,344
|
)
|
Cumulative translation adjustment
|
|
|
(823
|
)
|
|
|
(823
|
)
|
|
|
|
|
|
|
|
Total
|
|
$
|
(48,831
|
)
|
|
$
|
(51,727
|
)
|
|
|
|
|
|
|
|
6.
|
|
The Company has three reportable segments: Industrial, Contractor and Lubrication. The
Company does not track assets by segment. Sales and operating earnings by segment for the
thirteen and twenty-six weeks ended June 25, 2010 and June 26, 2009 were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
$
|
100,461
|
|
|
$
|
73,334
|
|
|
$
|
197,253
|
|
|
$
|
148,566
|
|
|
Contractor
|
|
|
73,782
|
|
|
|
60,386
|
|
|
|
124,579
|
|
|
|
107,834
|
|
|
Lubrication
|
|
|
17,845
|
|
|
|
13,992
|
|
|
|
34,977
|
|
|
|
29,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
192,088
|
|
|
$
|
147,712
|
|
|
$
|
356,809
|
|
|
$
|
285,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
$
|
29,565
|
|
|
$
|
13,435
|
|
|
$
|
60,039
|
|
|
$
|
24,930
|
|
|
Contractor
|
|
|
13,203
|
|
|
|
12,043
|
|
|
|
18,086
|
|
|
|
13,282
|
|
|
Lubrication
|
|
|
1,868
|
|
|
|
(1,745
|
)
|
|
|
3,575
|
|
|
|
(3,181
|
)
|
|
Unallocated
corporate (expense)
|
|
|
(5,427
|
)
|
|
|
(5,287
|
)
|
|
|
(9,785
|
)
|
|
|
(10,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
39,209
|
|
|
$
|
18,446
|
|
|
$
|
71,915
|
|
|
$
|
24,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
7.
|
|
Major components of inventories were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 25,
|
|
December
25,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Finished products and components
|
|
$
|
42,251
|
|
|
$
|
36,665
|
|
Products and components in various
stages of completion
|
|
|
27,270
|
|
|
|
22,646
|
|
Raw materials and purchased components
|
|
|
39,597
|
|
|
|
31,826
|
|
|
|
|
|
|
|
|
|
|
|
109,118
|
|
|
|
91,137
|
|
Reduction to LIFO cost
|
|
|
(32,920
|
)
|
|
|
(32,479
|
)
|
|
|
|
|
|
|
|
Total
|
|
$
|
76,198
|
|
|
$
|
58,658
|
|
|
|
|
|
|
|
|
8.
|
|
Information related to other intangible assets follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
Life
|
|
Original
|
|
Accumulated
|
|
Currency
|
|
Book
|
|
|
(years)
|
|
Cost
|
|
Amortization
|
|
Translation
|
|
Value
|
June
25,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
3 - 8
|
|
$
|
41,075
|
|
|
$
|
(21,748
|
)
|
|
$
|
(181
|
)
|
|
$
|
19,146
|
|
Patents, proprietary technology
and product documentation
|
|
3 - 10
|
|
|
21,072
|
|
|
|
(13,548
|
)
|
|
|
(85
|
)
|
|
|
7,439
|
|
Trademarks, trade names and other
|
|
3 - 10
|
|
|
8,154
|
|
|
|
(3,690
|
)
|
|
|
-
|
|
|
|
4,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,301
|
|
|
|
(38,986
|
)
|
|
|
(266
|
)
|
|
|
31,049
|
|
Not Subject to Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand names
|
|
|
|
|
3,180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
73,481
|
|
|
$
|
(38,986
|
)
|
|
$
|
(266
|
)
|
|
$
|
34,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 25, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
3 - 8
|
|
$
|
41,075
|
|
|
$
|
(18,655
|
)
|
|
$
|
(181
|
)
|
|
$
|
22,239
|
|
Patents, proprietary technology
and product documentation
|
|
3 - 10
|
|
|
22,862
|
|
|
|
(13,708
|
)
|
|
|
(87
|
)
|
|
|
9,067
|
|
Trademarks, trade names
and other
|
|
3 - 10
|
|
|
8,154
|
|
|
|
(2,470
|
)
|
|
|
-
|
|
|
|
5,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,091
|
|
|
|
(34,833
|
)
|
|
|
(268
|
)
|
|
|
36,990
|
|
Not Subject to Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand names
|
|
|
|
|
3,180
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
75,271
|
|
|
$
|
(34,833
|
)
|
|
$
|
(268
|
)
|
|
$
|
40,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
Amortization of intangibles was $2.9 million in the second quarter of 2010 and $5.9
million year-to-date. Estimated annual amortization expense is as follows: $11.2
million in 2010, $10.7 million in 2011, $9.1 million in 2012, $4.3 million in 2013, $0.9
million in 2014 and $0.7 million thereafter.
|
|
9.
|
|
Components of other current liabilities were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
June 25,
|
|
December
25,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
Accrued self-insurance retentions
|
|
$
|
7,650
|
|
|
$
|
7,785
|
|
Accrued warranty and service liabilities
|
|
|
6,882
|
|
|
|
7,437
|
|
Accrued trade promotions
|
|
|
4,108
|
|
|
|
2,953
|
|
Payable for employee stock purchases
|
|
|
2,420
|
|
|
|
5,115
|
|
Income taxes payable
|
|
|
2,433
|
|
|
|
1,550
|
|
Other
|
|
|
21,845
|
|
|
|
22,533
|
|
|
|
|
|
|
Total other current liabilities
|
|
$
|
45,338
|
|
|
$
|
47,373
|
|
|
|
|
|
|
|
|
A liability is established for estimated future warranty and service claims that relate
to current and prior period sales. The Company estimates warranty costs based on
historical claim experience and other factors including evaluating specific product
warranty issues. Following is a summary of activity in accrued warranty and service
liabilities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six
|
|
|
|
|
Weeks Ended
|
|
Year Ended
|
|
|
June 25,
|
|
December 25,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
Balance, beginning of year
|
|
$
|
7,437
|
|
|
$
|
8,033
|
|
Charged to expense
|
|
|
1,385
|
|
|
|
4,548
|
|
Margin on parts sales reversed
|
|
|
1,295
|
|
|
|
2,876
|
|
Reductions for claims settled
|
|
|
(3,235
|
)
|
|
|
(8,020
|
)
|
|
|
|
|
|
Balance, end of period
|
|
$
|
6,882
|
|
|
$
|
7,437
|
|
|
|
|
|
|
10.
|
|
The Company accounts for all derivatives, including those embedded in other contracts,
as either assets or liabilities and measures those financial instruments at fair value.
The accounting for changes in the fair value of derivatives depends on their intended use
and designation.
|
|
|
|
As part of its risk management program, the Company may periodically use forward
exchange contracts and interest rate swaps to manage known market exposures. Terms of
derivative instruments are structured to match the terms of the risk being managed and
are generally held to maturity. The Company does not hold or issue derivative financial
instruments for trading purposes. All other contracts that contain provisions meeting
the definition of a derivative also meet the requirements of, and have
|
11
|
|
been designated
as, normal purchases or sales. The Companys policy is to not enter into contracts with
terms that cannot be designated as normal purchases or sales.
|
|
|
|
In 2007, the Company entered into interest rate swap contracts that effectively fix the
rates paid on a total of $80 million of variable rate borrowings. One contract fixed
the rate on $40 million of borrowings at 4.7 percent plus the applicable spread
(depending on cash flow leverage ratio) until December 2010. The second contract fixed
an additional $40 million of borrowings at 4.6 percent plus the applicable spread until
January 2011. Both contracts have been designated as cash flow hedges against interest
rate volatility. Consequently, changes in the fair market value are recorded in
accumulated other comprehensive income (loss) (AOCI). Amounts included in AOCI will be
reclassified to earnings as interest rates increase and as the swap contracts approach
their expiration dates. Net amounts paid or payable under terms of the contracts were
charged to interest expense and totaled $1.8 million in the first half of 2010.
|
|
|
|
The Company periodically evaluates its monetary asset and liability positions
denominated in foreign currencies. The Company enters into forward contracts or options,
or borrows in various currencies, in order to hedge its net monetary positions. These
instruments are recorded at current market values and the gains and losses are included
in other expense (income), net. There were seven contracts outstanding as of June 25,
2010, with notional amounts totaling $18 million. The Company believes it uses strong
financial counterparts in these transactions and that the resulting credit risk under
these hedging strategies is not significant.
|
|
|
|
The Company uses significant other observable inputs to value the derivative instruments
used to hedge interest rate volatility and net monetary positions. The fair market
value and balance sheet classification of such instruments follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
June 25,
|
|
December
25,
|
|
|
Classification
|
|
2010
|
|
2009
|
Gain (loss) on interest
rate hedge contracts
|
|
Other current liabilities
|
|
$
|
(2,084
|
)
|
|
$
|
(3,722
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign
currency forward contracts
|
|
|
|
|
|
|
|
|
|
|
Gains
|
|
|
|
$
|
84
|
|
|
$
|
207
|
|
Losses
|
|
|
|
|
(431
|
)
|
|
|
(249
|
)
|
|
|
|
|
|
|
|
Net
|
|
Other current liabilities
|
|
$
|
(347
|
)
|
|
$
|
(42
|
)
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
Item 2.
|
GRACO INC. AND SUBSIDIARIES
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company designs, manufactures and markets systems and equipment to move, measure, control,
dispense and spray fluid materials. Management classifies the Companys business into three
reportable segments: Industrial, Contractor and Lubrication. Key strategies include
developing and marketing new products, expanding distribution globally, opening new markets
with technology and channel expansion and completing strategic acquisitions.
The following Managements Discussion and Analysis reviews significant factors affecting the
Companys results of operations and financial condition. This discussion should be read in
conjunction with the financial statements and the accompanying notes to the financial
statements.
Results of Operations
Net sales, net earnings and earnings per share were as follows (in millions except per share
amounts and percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-six Weeks Ended
|
|
|
|
June 25,
|
|
June 26,
|
|
%
|
|
June 25,
|
|
June 26,
|
|
%
|
|
|
2010
|
|
2009
|
|
Change
|
|
2010
|
|
2009
|
|
Change
|
Net Sales
|
|
$
|
192.1
|
|
|
$
|
147.7
|
|
|
|
30%
|
|
$
|
356.8
|
|
|
$
|
285.6
|
|
|
|
25%
|
Net Earnings
|
|
$
|
24.8
|
|
|
$
|
11.6
|
|
|
|
113%
|
|
$
|
45.4
|
|
|
$
|
14.4
|
|
|
|
215%
|
Diluted Net Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per Common Share
|
|
$
|
0.41
|
|
|
$
|
0.19
|
|
|
|
116%
|
|
$
|
0.74
|
|
|
$
|
0.24
|
|
|
|
208%
|
Sales, gross profit margins and net earnings for the quarter and year-to-date improved
significantly compared to last year. Sales increased in all segments and geographic regions.
Currency translation had a favorable effect on year-to-date sales ($6 million) and net
earnings ($3 million) but there was no significant effect on consolidated results for the
quarter.
13
Consolidated Results
Sales by geographic area were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
Americas
1
|
|
$
|
110.2
|
|
|
$
|
88.3
|
|
|
$
|
196.9
|
|
|
$
|
168.5
|
|
Europe
2
|
|
|
44.0
|
|
|
|
34.6
|
|
|
|
85.8
|
|
|
|
70.4
|
|
Asia Pacific
|
|
|
37.9
|
|
|
|
24.8
|
|
|
|
74.1
|
|
|
|
46.7
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
192.1
|
|
|
$
|
147.7
|
|
|
$
|
356.8
|
|
|
$
|
285.6
|
|
|
|
|
|
|
|
|
|
|
1
North and South America, including the U.S.
2
Europe, Africa and Middle East
Sales for the quarter increased 25 percent in the Americas, 27 percent in Europe (33 percent at
consistent translation rates) and 53 percent in Asia Pacific (47 percent at consistent translation
rates). Translation rates did not have a significant impact on the overall sales increase of 30
percent. Year-to-date sales increased 17 percent in the Americas, 22 percent in Europe and 59
percent in Asia Pacific (51 percent at consistent translation rates). The overall year-to-date
growth rate of 25 percent included 2 percentage points from translation.
Gross profit margin, expressed as a percentage of sales, was 53 percent for the quarter and 53
1
/
2
percent year-to-date, up from 49
1
/
2
percent and 48 percent, for the comparable periods last year,
respectively. Higher production volume in 2010 was the major factor in the improvement in both the
quarter and year-to-date rates. Costs related to workforce reductions lowered the 2009 first-half
gross margin rate and the favorable effects of currency translation contributed to the increase in
the 2010 year-to-date rate. Selling price increases, lower material and pension costs, and
divisional mix also contributed to the increase in margin rates.
Total operating expenses were up $7 million year-to-date. Improved results drove the increase,
mainly from higher incentives expense, partially offset by lower pension expense.
The year-to-date effective income tax rate of 35 percent for 2010 was higher than the 32 percent
rate for the comparable period of 2009. The federal R&D credit has not been renewed for 2010, so
no credit is included in the 2010 rate.
14
Segment Results
Certain measurements of segment operations compared to last year are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Net sales (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
45.5
|
|
|
$
|
35.5
|
|
|
$
|
87.4
|
|
|
$
|
71.3
|
|
Europe
|
|
|
27.1
|
|
|
|
19.8
|
|
|
|
55.0
|
|
|
|
43.7
|
|
Asia Pacific
|
|
|
27.9
|
|
|
|
18.0
|
|
|
|
54.9
|
|
|
|
33.6
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100.5
|
|
|
$
|
73.3
|
|
|
$
|
197.3
|
|
|
$
|
148.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings as a
percentage of net sales
|
|
|
29 %
|
|
|
|
18 %
|
|
|
|
30 %
|
|
|
|
17 %
|
|
|
|
|
|
|
|
|
|
|
The Industrial segment had strong sales increases in all regions. For the quarter, sales
increased 28 percent in the Americas, 37 percent in Europe (43 percent at consistent
translation rates) and 54 percent in Asia Pacific (50 percent at consistent translation
rates). Year-to-date sales increased 23 percent in the Americas, 26 percent in Europe and 63
percent in Asia Pacific (57 percent at consistent translation rates).
Higher volume and lower costs and expenses (from actions taken in 2009 and 2008), along with
price increases, contributed to the improvement in operating earnings as a percentage of
sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractor
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-six Weeks Ended
|
|
|
June 25,
|
|
June 26,
|
|
June 25,
|
|
June 26,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
Net sales (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
51.6
|
|
|
$
|
41.0
|
|
|
$
|
83.5
|
|
|
$
|
72.8
|
|
Europe
|
|
|
15.2
|
|
|
|
14.0
|
|
|
|
27.8
|
|
|
|
24.8
|
|
Asia Pacific
|
|
|
7.0
|
|
|
|
5.4
|
|
|
|
13.3
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
73.8
|
|
|
$
|
60.4
|
|
|
$
|
124.6
|
|
|
$
|
107.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings as a
percentage of net sales
|
|
|
18 %
|
|
|
|
20 %
|
|
|
|
15 %
|
|
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter, Contractor segment sales increased 26 percent in the Americas, 10 percent in
Europe (15 percent at consistent translation rates) and 29 percent in Asia Pacific (22 percent
at consistent translation rates). Year-to-date sales increased 15 percent in the Americas, 12
percent in Europe and 29 percent in Asia Pacific (21 percent at consistent translation rates).
Stocking shipments of new products contributed to strong second quarter sales, but costs and
expenses related to the new product introduction resulted in a small decrease in operating
earnings as a percentage of sales.
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lubrication
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
|
Twenty-six Weeks Ended
|
|
|
|
June 25,
|
|
|
June 26,
|
|
|
June 25,
|
|
|
June 26,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
13.2
|
|
|
$
|
11.8
|
|
|
$
|
26.0
|
|
|
$
|
24.4
|
|
Europe
|
|
|
1.5
|
|
|
|
0.8
|
|
|
|
2.9
|
|
|
|
1.9
|
|
Asia Pacific
|
|
|
3.1
|
|
|
|
1.4
|
|
|
|
6.0
|
|
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17.8
|
|
|
$
|
14.0
|
|
|
$
|
34.9
|
|
|
$
|
29.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings as a
percentage of net sales
|
|
|
10 %
|
|
|
|
(12)%
|
|
|
|
10 %
|
|
|
|
(11)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter, Lubrication segment sales increased 12 percent in the Americas. From small
bases, sales approximately doubled in Europe and Asia Pacific. Year-to-date, sales increased
7 percent in the Americas, 55 percent in Europe and 108 percent in Asia Pacific.
Higher volume and lower costs and expenses (from actions taken in 2009 and 2008) contributed
to the improvement in operating earnings as a percentage of sales.
Liquidity and Capital Resources
In the first half of 2010, the Company used cash to reduce borrowings under its long-term line
of credit by $6 million and paid dividends of $24 million. The Company also purchased $10
million of its common stock, of which $6
1
/
2
million settled in the third quarter and is included
in trade accounts payable as of June 25, 2010. Significant uses of cash in the
first half of 2009 included $36 million for reduction of borrowings under the long-term line
of credit and $23 million for payment of dividends.
Since the end of 2009, inventories increased by $18 million to meet higher demand. Accounts
receivable increased by $37 million due to higher sales levels.
At June 25, 2010, the Company had various lines of credit totaling $269 million, of which $178
million was unused. Internally generated funds and unused financing sources are expected to
provide the Company with the flexibility to meet its liquidity needs in 2010.
16
Outlook
Investments in new product development, international sales people and global distribution
channel are paying off in the form of improved results. While second quarter is generally the
strongest quarter for the Contractor business, management expects modest improvement in end
markets in the Americas and Europe over the last half of 2010, and anticipates that activity
in Asia Pacific will remain strong.
SAFE HARBOR CAUTIONARY STATEMENT
A forward-looking statement is any statement made in this report and other reports that the
Company files periodically with the Securities and Exchange Commission, or in press or
earnings releases, analyst briefings and conference calls, which reflects the Companys
current thinking on market trends and the Companys future financial performance at the time
they are made. All forecasts and projections are forward-looking statements.
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. Please
refer to Item 1A of, and Exhibit 99 to, the Companys Annual Report on Form 10-K for fiscal
year 2009 for a more comprehensive discussion of these and other risk factors.
Investors should realize that factors other than those identified above and in Item 1A and
Exhibit 99 might prove important to the Companys future results. It is not possible for
management to identify each and every factor that may have an impact on the Companys
operations in the future as new factors can develop from time to time.
17
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes related to market risk from the disclosures made in
the Companys 2009 Annual Report on Form 10-K.
Item 4.
Controls and Procedures
Evaluation of disclosure controls and procedures
As of the end of the fiscal quarter covered by this report, the Company carried out an
evaluation of the effectiveness of the design and operation of its disclosure controls and
procedures. This evaluation was done under the supervision and with the participation of the
Companys President and Chief Executive Officer, the Chief Financial Officer and Treasurer,
the Vice President and Controller, and the Vice President, General Counsel and Secretary.
Based upon that evaluation, they concluded that the Companys disclosure controls and
procedures are effective in gathering, analyzing and disclosing information needed to satisfy
the Companys disclosure obligations under the Exchange Act.
Changes in internal controls
During the quarter, there was no change in the Companys internal control over financial reporting
that has materially affected or is reasonably likely to materially affect the Companys internal
control over financial reporting.
18
PART II
OTHER INFORMATION
Item 1A.
Risk Factors
There have been no material changes to the Companys risk factors from those disclosed in the
Companys 2009 Annual Report on Form 10-K.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On September 18, 2009, the Board of Directors authorized the Company to purchase up to
6,000,000 shares of its outstanding common stock, primarily through open-market transactions.
The authorization expires on September 30, 2012.
In addition to shares purchased under the Board authorizations, the Company purchases shares
of common stock held by employees who wish to tender owned shares to satisfy the exercise
price or tax withholding on option exercises.
Information on issuer purchases of equity securities follows:
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Maximum
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Total
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Number of
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Number
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Shares that
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of Shares
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May Yet Be
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Purchased
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Purchased
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as Part of
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Under the
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Total
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Average
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Publicly
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Plans or
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Number
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Price
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Announced
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Programs
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of Shares
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Paid per
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Plans or
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(at end of
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Period
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Purchased
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Share
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Programs
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period)
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Mar 27, 2010 Apr
23, 2010
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-
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$
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-
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-
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6,000,000
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Apr 24, 2010 May
21, 2010
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13,891
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$
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32.80
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10,000
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5,990,000
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May 22, 2010 Jun
25, 2010
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313,589
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$
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29.73
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313,589
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5,676,411
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19
Item 6.
Exhibits
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10.1
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Executive Officer Stock Holding Policy adopted by the Graco Inc. Board of Directors on April 23, 2010.
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31.1
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Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a).
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31.2
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Certification of Chief Financial Officer and Treasurer pursuant to rule 13a-14(a).
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32
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Certification of President and Chief Executive Officer and Chief Financial Officer and
Treasurer pursuant to Section 1350 of Title 18, U.S.C.
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99.1
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Press Release, Reporting Second Quarter Earnings, dated July 21, 2010.
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101
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Interactive Data File.
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20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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GRACO INC.
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Date:
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July 21, 2010
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By:
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/s/ Patrick J. McHale
Patrick J. McHale
President and Chief Executive Officer
(Principal Executive Officer)
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Date:
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July 21, 2010
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By:
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/s/ James A. Graner
James A. Graner
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Chief Financial Officer and Treasurer
(Principal Financial Officer)
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Date:
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July 21, 2010
|
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By:
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/s/ Caroline M. Chambers
Caroline M. Chambers
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Vice President and Controller
(Principal Accounting Officer)
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