NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
Basis of Presentation
The consolidated balance sheet of Graco Inc. and Subsidiaries (the “Company”) as of
June 28, 2019
and the related statements of earnings, comprehensive income and shareholders' equity for the
three and six
months ended
June 28, 2019
and
June 29, 2018
, and cash flows for the
six months
ended
June 28, 2019
and
June 29, 2018
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 the Company as of
June 28, 2019
, 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 Company’s
2018
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.
The Company has
three
reportable segments: Industrial, Process and Contractor. Sales and operating earnings by segment were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Net Sales
|
|
|
|
|
|
|
|
Industrial
|
$
|
188,507
|
|
|
$
|
190,459
|
|
|
$
|
377,607
|
|
|
$
|
385,655
|
|
Process
|
85,064
|
|
|
85,059
|
|
|
171,958
|
|
|
165,094
|
|
Contractor
|
154,757
|
|
|
149,052
|
|
|
283,633
|
|
|
280,169
|
|
Total
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
Operating Earnings
|
|
|
|
|
|
|
|
Industrial
|
$
|
64,428
|
|
|
$
|
67,030
|
|
|
$
|
129,631
|
|
|
$
|
136,155
|
|
Process
|
18,378
|
|
|
17,065
|
|
|
38,392
|
|
|
34,767
|
|
Contractor
|
40,054
|
|
|
38,382
|
|
|
66,593
|
|
|
69,793
|
|
Unallocated corporate (expense)
|
(10,499
|
)
|
|
(9,099
|
)
|
|
(17,728
|
)
|
|
(15,641
|
)
|
Total
|
$
|
112,361
|
|
|
$
|
113,378
|
|
|
$
|
216,888
|
|
|
$
|
225,074
|
|
Assets by segment were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
June 28,
2019
|
|
December 28,
2018
|
Industrial
|
$
|
633,813
|
|
|
$
|
640,683
|
|
Process
|
364,496
|
|
|
350,306
|
|
Contractor
|
361,832
|
|
|
283,727
|
|
Unallocated corporate
|
280,406
|
|
|
198,025
|
|
Total
|
$
|
1,640,547
|
|
|
$
|
1,472,741
|
|
Geographic information follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Net Sales (based on customer location)
|
|
|
|
|
|
|
|
United States
|
$
|
221,565
|
|
|
$
|
212,541
|
|
|
$
|
424,450
|
|
|
$
|
406,323
|
|
Other countries
|
206,763
|
|
|
212,029
|
|
|
408,748
|
|
|
424,595
|
|
Total
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
|
|
|
|
|
|
|
|
|
|
June 28,
2019
|
|
December 28,
2018
|
Long-lived Assets
|
|
|
|
United States
|
$
|
229,398
|
|
|
$
|
178,331
|
|
Other countries
|
57,123
|
|
|
50,964
|
|
Total
|
$
|
286,521
|
|
|
$
|
229,295
|
|
3.
Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Net earnings available to common shareholders
|
$
|
88,137
|
|
|
$
|
89,140
|
|
|
$
|
174,886
|
|
|
$
|
174,650
|
|
Weighted average shares outstanding for basic earnings per share
|
166,684
|
|
|
167,260
|
|
|
166,150
|
|
|
168,166
|
|
Dilutive effect of stock options computed using the treasury stock method and the average market price
|
5,363
|
|
|
6,005
|
|
|
5,303
|
|
|
6,291
|
|
Weighted average shares outstanding for diluted earnings per share
|
172,047
|
|
|
173,265
|
|
|
171,453
|
|
|
174,457
|
|
Basic earnings per share
|
$
|
0.53
|
|
|
$
|
0.53
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Diluted earnings per share
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Stock options to purchase
1,532,000
and
1,099,000
shares were not included in the
June 28, 2019
and
June 29, 2018
computations of diluted earnings per share, respectively, because they would have been anti-dilutive.
4.
Share-Based Awards
Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Shares
|
|
Weighted Average
Exercise Price
|
|
Options
Exercisable
|
|
Weighted Average
Exercise Price
|
Outstanding, December 28, 2018
|
12,270
|
|
|
$
|
24.67
|
|
|
7,312
|
|
|
$
|
20.17
|
|
Granted
|
1,285
|
|
|
45.91
|
|
|
|
|
|
Exercised
|
(1,241
|
)
|
|
15.59
|
|
|
|
|
|
Canceled
|
(22
|
)
|
|
32.72
|
|
|
|
|
|
Outstanding, June 28, 2019
|
12,292
|
|
|
$
|
27.79
|
|
|
7,731
|
|
|
$
|
22.98
|
|
The Company recognized year-to-date share-based compensation of
$17.5 million
in
2019
and
$15.8 million
in
2018
. As of
June 28, 2019
, there was
$12.4 million
of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of
2.0
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:
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
Expected life in years
|
7.5
|
|
|
7.5
|
|
Interest rate
|
2.6
|
%
|
|
2.8
|
%
|
Volatility
|
24.6
|
%
|
|
25.5
|
%
|
Dividend yield
|
1.4
|
%
|
|
1.2
|
%
|
Weighted average fair value per share
|
$
|
12.26
|
|
|
$
|
12.84
|
|
Under the Company’s Employee Stock Purchase Plan, the Company issued
398,000
shares in
2019
and
480,000
shares in
2018
. 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:
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
Expected life in years
|
1.0
|
|
|
1.0
|
|
Interest rate
|
2.6
|
%
|
|
2.1
|
%
|
Volatility
|
22.7
|
%
|
|
21.3
|
%
|
Dividend yield
|
1.4
|
%
|
|
1.2
|
%
|
Weighted average fair value per share
|
$
|
11.36
|
|
|
$
|
10.28
|
|
5.
Retirement Benefits
The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 28,
2019
|
|
June 29,
2018
|
|
June 28,
2019
|
|
June 29,
2018
|
Pension Benefits
|
|
|
|
|
|
|
|
Service cost
|
$
|
1,635
|
|
|
$
|
1,998
|
|
|
$
|
3,644
|
|
|
$
|
4,211
|
|
Interest cost
|
3,572
|
|
|
3,411
|
|
|
7,310
|
|
|
6,845
|
|
Expected return on assets
|
(4,216
|
)
|
|
(4,632
|
)
|
|
(8,575
|
)
|
|
(8,718
|
)
|
Amortization and other
|
1,838
|
|
|
2,080
|
|
|
3,817
|
|
|
4,175
|
|
Net periodic benefit cost
|
$
|
2,829
|
|
|
$
|
2,857
|
|
|
$
|
6,196
|
|
|
$
|
6,513
|
|
Postretirement Medical
|
|
|
|
|
|
|
|
Service cost
|
$
|
123
|
|
|
$
|
175
|
|
|
$
|
273
|
|
|
$
|
350
|
|
Interest cost
|
264
|
|
|
265
|
|
|
581
|
|
|
529
|
|
Amortization
|
29
|
|
|
136
|
|
|
137
|
|
|
272
|
|
Net periodic benefit cost
|
$
|
416
|
|
|
$
|
576
|
|
|
$
|
991
|
|
|
$
|
1,151
|
|
6.
Shareholders’ Equity
Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and
Postretirement
Medical
|
|
Cumulative
Translation
Adjustment
|
|
Total
|
Three Months Ended June 28, 2019
|
|
|
|
|
|
Balance, March 29, 2019
|
$
|
(85,232
|
)
|
|
$
|
(56,799
|
)
|
|
$
|
(142,031
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
1,232
|
|
|
1,232
|
|
Reclassified to pension cost and deferred tax
|
1,487
|
|
|
—
|
|
|
1,487
|
|
Balance, June 28, 2019
|
$
|
(83,745
|
)
|
|
$
|
(55,567
|
)
|
|
$
|
(139,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 28, 2019
|
|
|
|
|
|
Balance, December 28, 2018
|
$
|
(86,889
|
)
|
|
$
|
(57,968
|
)
|
|
$
|
(144,857
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
2,401
|
|
|
2,401
|
|
Reclassified to pension cost and deferred tax
|
3,144
|
|
|
—
|
|
|
3,144
|
|
Balance, June 28, 2019
|
$
|
(83,745
|
)
|
|
$
|
(55,567
|
)
|
|
$
|
(139,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 29, 2018
|
|
|
|
|
|
Balance, March 30, 2018
|
$
|
(92,458
|
)
|
|
$
|
(40,613
|
)
|
|
$
|
(133,071
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(15,112
|
)
|
|
(15,112
|
)
|
Reclassified to pension cost and deferred tax
|
2,109
|
|
|
—
|
|
|
2,109
|
|
Balance, June 29, 2018
|
$
|
(90,349
|
)
|
|
$
|
(55,725
|
)
|
|
$
|
(146,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 29, 2018
|
|
|
|
|
|
Balance, December 29, 2017
|
$
|
(78,430
|
)
|
|
$
|
(49,359
|
)
|
|
$
|
(127,789
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(6,366
|
)
|
|
(6,366
|
)
|
Reclassified to pension cost and deferred tax
|
3,534
|
|
|
—
|
|
|
3,534
|
|
Reclassified to retained earnings
|
(15,453
|
)
|
|
—
|
|
|
(15,453
|
)
|
Balance, June 29, 2018
|
$
|
(90,349
|
)
|
|
$
|
(55,725
|
)
|
|
$
|
(146,074
|
)
|
Amounts related to pension and postretirement medical adjustments are reclassified to non-service components of pension cost that are included within other non-operating expenses.
In February 2018, the Financial Accounting Standards Board ("FASB") issued a new standard related to reclassification of certain tax effects from accumulated other comprehensive income (AOCI). We adopted the new standard in the first quarter of 2018. We elected to reclassify
$15.5 million
from accumulated other comprehensive income to retained earnings, representing the amount of "stranded" tax effects resulting from the change in the U.S. federal tax rate and the consequent revaluation of deferred tax assets related to pension and postretirement medical expense.
7.
Inventories
Major components of inventories were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
June 28,
2019
|
|
December 28,
2018
|
Finished products and components
|
$
|
147,159
|
|
|
$
|
142,535
|
|
Products and components in various stages of completion
|
87,670
|
|
|
83,768
|
|
Raw materials and purchased components
|
122,318
|
|
|
115,705
|
|
Subtotal
|
357,147
|
|
|
342,008
|
|
Reduction to LIFO cost
|
(59,602
|
)
|
|
(58,026
|
)
|
Total
|
$
|
297,545
|
|
|
$
|
283,982
|
|
8.
Intangible Assets
Components of other intangible assets were (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite Life
|
|
Indefinite Life
|
|
|
|
Customer
Relationships
|
|
Patents and
Proprietary
Technology
|
|
Trademarks,
Trade Names
and Other
|
|
Trade
Names
|
|
Total
|
As of June 28, 2019
|
|
|
|
|
|
|
|
|
|
Cost
|
$
|
182,410
|
|
|
$
|
18,913
|
|
|
$
|
1,020
|
|
|
$
|
60,220
|
|
|
$
|
262,563
|
|
Accumulated amortization
|
(73,974
|
)
|
|
(9,557
|
)
|
|
(545
|
)
|
|
—
|
|
|
(84,076
|
)
|
Foreign currency translation
|
(10,352
|
)
|
|
(861
|
)
|
|
(72
|
)
|
|
(3,638
|
)
|
|
(14,923
|
)
|
Book value
|
$
|
98,084
|
|
|
$
|
8,495
|
|
|
$
|
403
|
|
|
$
|
56,582
|
|
|
$
|
163,564
|
|
Weighted average life in years
|
13
|
|
|
10
|
|
|
4
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 28, 2018
|
|
|
|
|
|
|
|
|
|
Cost
|
$
|
179,449
|
|
|
$
|
18,571
|
|
|
$
|
1,020
|
|
|
$
|
59,537
|
|
|
$
|
258,577
|
|
Accumulated amortization
|
(67,322
|
)
|
|
(8,647
|
)
|
|
(439
|
)
|
|
—
|
|
|
(76,408
|
)
|
Foreign currency translation
|
(10,817
|
)
|
|
(895
|
)
|
|
(73
|
)
|
|
(4,074
|
)
|
|
(15,859
|
)
|
Book value
|
$
|
101,310
|
|
|
$
|
9,029
|
|
|
$
|
508
|
|
|
$
|
55,463
|
|
|
$
|
166,310
|
|
Weighted average life in years
|
13
|
|
|
10
|
|
|
4
|
|
|
N/A
|
|
|
|
Amortization of intangibles for the quarter was
$3.8 million
in
2019
and
$4.0 million
in
2018
and for the year to date was
$7.7 million
in
2019
and
$8.0 million
in
2018
. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
Estimated Amortization Expense
|
$
|
15,503
|
|
|
$
|
15,289
|
|
|
$
|
15,089
|
|
|
$
|
15,001
|
|
|
$
|
14,088
|
|
|
$
|
39,686
|
|
Changes in the carrying amount of goodwill for each reportable segment were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
Process
|
|
Contractor
|
|
Total
|
Balance, December 28, 2018
|
$
|
177,124
|
|
|
$
|
97,168
|
|
|
$
|
19,554
|
|
|
$
|
293,846
|
|
Additions, adjustments from business acquisitions
|
—
|
|
|
1,575
|
|
|
—
|
|
|
1,575
|
|
Foreign currency translation
|
803
|
|
|
49
|
|
|
—
|
|
|
852
|
|
Balance, June 28, 2019
|
$
|
177,927
|
|
|
$
|
98,792
|
|
|
$
|
19,554
|
|
|
$
|
296,273
|
|
The Company completed business acquisitions in 2019 that were not material to the consolidated financial statements.
|
|
9.
|
Other Current Liabilities
|
Components of other current liabilities were (in thousands):
|
|
|
|
|
|
|
|
|
|
June 28,
2019
|
|
December 28,
2018
|
Accrued self-insurance retentions
|
$
|
7,920
|
|
|
$
|
7,870
|
|
Accrued warranty and service liabilities
|
11,797
|
|
|
11,056
|
|
Accrued trade promotions
|
7,229
|
|
|
11,449
|
|
Payable for employee stock purchases
|
6,437
|
|
|
11,916
|
|
Customer advances and deferred revenue
|
41,509
|
|
|
39,995
|
|
Income taxes payable
|
9,727
|
|
|
8,515
|
|
Right of return refund liability
|
12,996
|
|
|
12,705
|
|
Operating lease liability, current
|
8,416
|
|
|
—
|
|
Other
|
35,504
|
|
|
39,535
|
|
Total
|
$
|
141,535
|
|
|
$
|
143,041
|
|
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):
|
|
|
|
|
Balance, December 28, 2018
|
$
|
11,056
|
|
Charged to expense
|
5,001
|
|
Margin on parts sales reversed
|
1,537
|
|
Reductions for claims settled
|
(5,797
|
)
|
Balance, June 28, 2019
|
$
|
11,797
|
|
Deferred Revenues
For certain products or services and customer types, we require payment before delivery to the customer
.
We defer revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. This is also the case for services associated with certain product sales. The balance in the deferred revenue and customer advances was
$41.5 million
as of
June 28, 2019
and
$40.0 million
as of
December 28, 2018
. Net sales for the year to date included
$29.9 million
in
2019
and
$20.0 million
in
2018
that related to deferred revenue as of the beginning of each period.
10.
Fair Value
Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Level
|
|
June 28,
2019
|
|
December 28,
2018
|
Assets
|
|
|
|
|
|
Cash surrender value of life insurance
|
2
|
|
$
|
16,572
|
|
|
$
|
14,320
|
|
Forward exchange contracts
|
2
|
|
78
|
|
|
82
|
|
Total assets at fair value
|
|
|
$
|
16,650
|
|
|
$
|
14,402
|
|
Liabilities
|
|
|
|
|
|
Contingent consideration
|
3
|
|
$
|
4,700
|
|
|
$
|
7,200
|
|
Deferred compensation
|
2
|
|
4,373
|
|
|
4,203
|
|
Total liabilities at fair value
|
|
|
$
|
9,073
|
|
|
$
|
11,403
|
|
Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred
compensation plans. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.
Contingent consideration liability represents the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of an acquired business based on future revenues.
Long-term notes payable with fixed interest rates have a carrying amount of
$225 million
, including
$75 million
classified as current, and an estimated fair value of
$240 million
as of
June 28, 2019
and
$235 million
as of
December 28, 2018
. The fair value of variable rate borrowings approximates carrying value. The Company uses significant other observable inputs to estimate fair value (level 2 of the fair value hierarchy) based on the present value of future cash flows and rates that would be available for issuance of debt with similar terms and remaining maturities.
11.
Recent Accounting Pronouncements
Leases
Adoption of New Accounting Standard
The Company adopted ASU No. 2016-02—
Leases (Topic 842)
as of December 29, 2018, the beginning of our fiscal year 2019. Using the modified retrospective approach with transition relief, we recorded operating lease assets and liabilities of approximately
$35 million
as of December 29, 2018, and made no adjustments to retained earnings. Adoption of the new standard did not materially impact our consolidated net earnings and cash flows.
Practical Expedients and Exemptions
Electing the package of practical expedients permitted under transition guidance, we did not reassess previous conclusions about whether existing contracts contained a lease, historical lease classification, or initial direct costs. Electing the hindsight practical expedient to determine the lease term for existing leases did not result in any changes to existing lease terms. We elected not to apply recognition requirements to short term leases with terms of twelve months or less across all asset classes. We elected to analyze vehicle assets using the portfolio approach. Lastly, we elected as an accounting policy not to separate the lease and non-lease components in the lease payments across all asset classes.
Accounting Policy
The Company owns most of the assets used in its operations, but leases certain buildings and land, vehicles, office equipment and other rental assets. The Company determines if an arrangement is a lease at inception. All of the Company's current lease arrangements are classified as operating leases. The Company historically has not entered into financing leases. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease expense is recognized by amortizing the amount recorded as an asset on a straight-line basis over the lease term.
In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments.
As of
June 28, 2019
, the weighted average remaining lease term was
6.0
years and the weighted average discount rate used to determine the operating lease liability was
4.1%
. For the six months ended
June 28, 2019
, expense related to operating leases was
$5.8 million
, operating lease payments included in operating cash flows totaled
$5.7 million
and non-cash additions to operating lease assets totaled
$2.0 million
.
As of
June 28, 2019
, future maturities of operating lease liabilities were as follows (in thousands):
|
|
|
|
|
|
Operating Leases
|
2019
|
$
|
4,755
|
|
2020
|
8,581
|
|
2021
|
6,473
|
|
2022
|
5,320
|
|
2023
|
3,947
|
|
2024
|
1,825
|
|
Thereafter
|
7,507
|
|
Total lease payments
|
$
|
38,408
|
|
Present value adjustment
|
(4,258
|
)
|
Operating lease liabilities
|
$
|
34,150
|
|
Aggregate annual rental commitments under operating leases with noncancelable terms of more than one year at
December 28, 2018
were reported under previous lease accounting standards as follows (in thousands):
|
|
|
|
|
|
Total
|
2019
|
$
|
11,613
|
|
2020
|
8,759
|
|
2021
|
6,745
|
|
2022
|
5,102
|
|
2023
|
3,721
|
|
Thereafter
|
2,340
|
|
Total
|
$
|
38,280
|
|
Credit Losses
In June 2016, the FASB issued a final standard on accounting for credit losses. The new standard is effective for the Company in fiscal 2020 and requires a change in credit loss calculations using the expected loss method. The Company expects no significant impact on earnings or financial condition from the adoption of the new standard. The Company is continuing to evaluate the effects of the new standard on related disclosures and accounting systems.
Item 2. GRACO INC. AND SUBSIDIARIES