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YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
to consolidated financial statements.
36
Table of Contents
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 30,2022
December 31,2021
ASSETS
Current Assets
Cash and cash equivalents
339,196
624,302
Accounts receivable, less allowances of $7,000 and $3,900
346,010
325,132
Inventories
476,790
382,301
Other current assets
43,624
31,886
Total current assets
1,205,620
1,363,621
Property, Plant and Equipment, net
607,609
451,061
Goodwill
368,171
356,255
Other Intangible Assets, net
137,507
149,740
Operating Lease Assets
29,785
30,046
Deferred Income Taxes
57,090
55,786
Other Assets
33,118
36,689
Total Assets
2,438,900
2,443,198
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable to banks
20,974
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
will
368,171
356,255
Other Intangible Assets, net
137,507
149,740
Operating Lease Assets
29,785
30,046
Deferred Income Taxes
57,090
55,786
Other Assets
33,118
36,689
Total Assets
2,438,900
2,443,198
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable to banks
20,974
43,489
Current portion of long term debt
75,000
Trade accounts payable
84,218
78,432
Salaries and incentives
63,969
82,941
Dividends payable
39,963
35,771
Other current liabilities
190,793
191,159
Total current liabilities
399,917
506,792
Long-term Debt
75,000
75,000
Retirement Benefits and Deferred Compensation
61,672
106,897
Operating Lease Liabilities
21,057
23,527
Deferred Income Taxes
9,443
10,661
Other Non-current Liabilities
12,159
10,978
Commitments and Contingencies (Note K)
Shareholders
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
liabilities
190,793
191,159
Total current liabilities
399,917
506,792
Long-term Debt
75,000
75,000
Retirement Benefits and Deferred Compensation
61,672
106,897
Operating Lease Liabilities
21,057
23,527
Deferred Income Taxes
9,443
10,661
Other Non-current Liabilities
12,159
10,978
Commitments and Contingencies (Note K)
Shareholders’ Equity
Common stock, $1 par value; 291,000,000 shares authorized; 167,702,130 and 170,307,412 shares outstanding in 2022 and 2021
167,702
170,308
Additional paid-in-capital
784,477
742,288
Retained earnings
976,851
876,916
Accumulated other comprehensive income (loss)
(69,378)
(80,169)
Total shareholders’ equity
1,859,652
1,709,343
Total Liabilities and Shareholders’ Equity
2,438,900
2,443,198
See notes to consolidated financial statements.
37
Table of Contents
GRACO INC. AND SUBSIDI
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
784,477
742,288
Retained earnings
976,851
876,916
Accumulated other comprehensive income (loss)
(69,378)
(80,169)
Total shareholders’ equity
1,859,652
1,709,343
Total Liabilities and Shareholders’ Equity
2,438,900
2,443,198
See notes to consolidated financial statements.
37
Table of Contents
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended
December 30,2022
December 31,2021
December 25,2020
Cash Flows From Operating Activities
Net Earnings
460,645
439,866
330,456
Adjustments to reconcile net earnings to net cashprovided by operating activities
Depreciation and amortization
65,997
59,325
55,329
Deferred income taxes
(9,997)
(46,572)
10,747
Share-based compensation
24,695
24,931
25,153
Impairment
35,229
Change in
Accounts receivable
(29,944)
(13,801
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
439,866
330,456
Adjustments to reconcile net earnings to net cashprovided by operating activities
Depreciation and amortization
65,997
59,325
55,329
Deferred income taxes
(9,997)
(46,572)
10,747
Share-based compensation
24,695
24,931
25,153
Impairment
35,229
Change in
Accounts receivable
(29,944)
(13,801)
(43,122)
Inventories
(95,691)
(97,780)
(13,086)
Trade accounts payable
4,195
12,397
6,820
Salaries and incentives
(18,442)
29,089
(2,622)
Retirement benefits and deferred compensation
(18,674)
1,219
(6,703)
Other accrued liabilities
(4,191)
51,342
(3,772)
Other
(1,199)
(3,120)
(394)
Net cash provided by operating activities
377,394
456,896
394,035
Cash Flows From Investing Activities
Property, plant and equipment additions
(201,161)
(133,566
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2,622)
Retirement benefits and deferred compensation
(18,674)
1,219
(6,703)
Other accrued liabilities
(4,191)
51,342
(3,772)
Other
(1,199)
(3,120)
(394)
Net cash provided by operating activities
377,394
456,896
394,035
Cash Flows From Investing Activities
Property, plant and equipment additions
(201,161)
(133,566)
(71,338)
Acquisition of businesses, net of cash acquired
(25,296)
(19,386)
(27,557)
Other
(362)
(347)
(143)
Net cash used in investing activities
(226,819)
(153,299)
(99,038)
Cash Flows From Financing Activities
Borrowings on short-term lines of credit, net
(18,252)
20,497
(1,986)
Borrowings on long-term lines of credit
250,000
Payments on long-term debt
(75,000)
(70)
(250,000)
Payments of debt issuance costs
(1,422)
Common stock issued
35,619
50,963
83,438
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,299)
(99,038)
Cash Flows From Financing Activities
Borrowings on short-term lines of credit, net
(18,252)
20,497
(1,986)
Borrowings on long-term lines of credit
250,000
Payments on long-term debt
(75,000)
(70)
(250,000)
Payments of debt issuance costs
(1,422)
Common stock issued
35,619
50,963
83,438
Common stock repurchased
(233,426)
(102,143)
Taxes paid related to net share settlement of equity awards
(1,219)
(1,797)
Cash dividends paid
(142,125)
(127,110)
(116,983)
Net cash used in financing activities
(434,403)
(57,142)
(139,471)
Effect of exchange rate changes on cash
(1,278)
(1,062)
2,410
Net increase (decrease) in cash and cash equivalents
(285,106)
245,393
157,936
Cash and Cash Equivalents
Beginning of year
624,302
378,909
220,973
End of year
339,196
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
)
Net cash used in financing activities
(434,403)
(57,142)
(139,471)
Effect of exchange rate changes on cash
(1,278)
(1,062)
2,410
Net increase (decrease) in cash and cash equivalents
(285,106)
245,393
157,936
Cash and Cash Equivalents
Beginning of year
624,302
378,909
220,973
End of year
339,196
624,302
378,909
See notes to consolidated financial statements.
38
Table of Contents
GRACO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
CommonStock
AdditionalPaid-InCapital
RetainedEarnings
AccumulatedOther ComprehensiveIncome (Loss)
Total
Balance December 27, 2019
167,287
578,440
448,991
(169,787)
1,024,931
Shares issued
3,608
78,789
82,397
Shares repurchased
(2,327)
(8,047)
(91,768)
(102,142)
Stock compensation cost
22,024
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Paid-InCapital
RetainedEarnings
AccumulatedOther ComprehensiveIncome (Loss)
Total
Balance December 27, 2019
167,287
578,440
448,991
(169,787)
1,024,931
Shares issued
3,608
78,789
82,397
Shares repurchased
(2,327)
(8,047)
(91,768)
(102,142)
Stock compensation cost
22,024
22,024
Net earnings
330,456
330,456
Dividends declared ($0.7125 per share)
(119,384)
(119,384)
Other comprehensive income (loss)
45,622
45,622
Balance December 25, 2020
168,568
671,206
568,295
(124,165)
1,283,904
Shares issued
1,740
51,560
53,300
Stock compensation cost
21,859
21,859
Restricted stock canceled (issued)
(2,337)
(2,337)
Net earnings
439,866
439,866
Dividends declared $0.7725 per share)
(131,245)
(131
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2020
168,568
671,206
568,295
(124,165)
1,283,904
Shares issued
1,740
51,560
53,300
Stock compensation cost
21,859
21,859
Restricted stock canceled (issued)
(2,337)
(2,337)
Net earnings
439,866
439,866
Dividends declared $0.7725 per share)
(131,245)
(131,245)
Other comprehensive income (loss)
43,996
43,996
Balance December 31, 2021
170,308
742,288
876,916
(80,169)
1,709,343
Shares issued
946
33,454
34,400
Shares repurchased
(3,552)
(15,481)
(214,393)
(233,426)
Stock compensation cost
24,216
24,216
Net earnings
460,645
460,645
Dividends declared ($0.8650 per share)
(146,317)
(146,317)
Other comprehensive income (loss)
10,791
10,791
Balance December 30, 2022
167,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
454
34,400
Shares repurchased
(3,552)
(15,481)
(214,393)
(233,426)
Stock compensation cost
24,216
24,216
Net earnings
460,645
460,645
Dividends declared ($0.8650 per share)
(146,317)
(146,317)
Other comprehensive income (loss)
10,791
10,791
Balance December 30, 2022
167,702
784,477
976,851
(69,378)
1,859,652
See notes to consolidated financial statements.
39
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Graco Inc. and Subsidiaries
Years Ended December 30, 2022, December 31, 2021 and December 25, 2020
A. Summary of Significant Accounting Policies
Fiscal Year
The fiscal year of Graco Inc. and Subsidiaries (the “Company”) is 52 or 53 weeks, ending on the last Friday in December. The year ended December 31, 2021 was a 53-week year whereas the years ended December 30, 2022
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Years Ended December 30, 2022, December 31, 2021 and December 25, 2020
A. Summary of Significant Accounting Policies
Fiscal Year
The fiscal year of Graco Inc. and Subsidiaries (the “Company”) is 52 or 53 weeks, ending on the last Friday in December. The year ended December 31, 2021 was a 53-week year whereas the years ended December 30, 2022 and December 25, 2020 were 52-week years.
Basis of Statement Presentation
The consolidated financial statements include the accounts of the parent company and its subsidiaries after elimination of intercompany balances and transactions. As of December 30, 2022, all subsidiaries are 100 percent controlled by the Company.
Foreign Currency Translation
The functional currency of certain subsidiaries is the local currency. Accordingly, adjustments resulting from the translation of those subsidiaries’ financial statements into U.S. dollars are charged or credited to accumulated other comprehensive income (loss). The U.S. dollar is the functional currency for all other foreign subsidiaries. Accordingly, gains and losses from the translation of foreign currency balances and transactions of those subsidiaries are included in other expense, net.
Accounting Estimates
The preparation
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
are 100 percent controlled by the Company.
Foreign Currency Translation
The functional currency of certain subsidiaries is the local currency. Accordingly, adjustments resulting from the translation of those subsidiaries’ financial statements into U.S. dollars are charged or credited to accumulated other comprehensive income (loss). The U.S. dollar is the functional currency for all other foreign subsidiaries. Accordingly, gains and losses from the translation of foreign currency balances and transactions of those subsidiaries are included in other expense, net.
Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value Measurements.
The three levels of inputs in the fair value measurement hierarchy are as follows:
Level 1 – based on quoted prices in active markets for identical assets
Level 2 – based on significant observable inputs
Level 3 – based on significant unobservable inputs
Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
Level
2022
2021
Assets
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
the reporting period. Actual results could differ from those estimates.
Fair Value Measurements.
The three levels of inputs in the fair value measurement hierarchy are as follows:
Level 1 – based on quoted prices in active markets for identical assets
Level 2 – based on significant observable inputs
Level 3 – based on significant unobservable inputs
Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
Level
2022
2021
Assets
Cash surrender value of life insurance
19,192
23,147
Liabilities
Contingent consideration
14,914
12,274
Deferred compensation
5,842
5,962
Forward exchange contracts
520
111
Total liabilities at fair value
21,276
18,347
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.
GRACO INC’s policy and accounting for forward exchange contracts are described below, in Der
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
21,276
18,347
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.
GRACO INC’s policy and accounting for forward exchange contracts are described below, in Derivative Instruments and Hedging Activities.
Contingent consideration liability represents the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of certain acquired businesses based on future revenues.
Disclosures related to other fair value measurements are included below in Impairment of Long-Lived Assets, in
Note F
(Debt) and in
Note J
(Retirement Benefits).
40
Table of Contents
Cash Equivalents
All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents.
Accounts Receivable.
Accounts receivable includes trade receivables of $334 million in 2022 and $315 million in 2021. Other receivables totaled $12
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Impairment of Long-Lived Assets, in
Note F
(Debt) and in
Note J
(Retirement Benefits).
40
Table of Contents
Cash Equivalents
All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents.
Accounts Receivable.
Accounts receivable includes trade receivables of $334 million in 2022 and $315 million in 2021. Other receivables totaled $12 million in 2022 and $10 million in 2021.
Allowance for Credit Losses.
Receivables reflected in the financial statements represent the net amount expected to be collected. An allowance for credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecast economic conditions and other relevant factors.
Following is a summary of activity in the allowance for credit losses (in thousands):
2022
2021
2020
Balance, beginning
3,254
3,745
4,828
Additions (reversals) charged to costs and expenses
3,567
(27)
647
Deductions from reserves (1)
(633
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecast economic conditions and other relevant factors.
Following is a summary of activity in the allowance for credit losses (in thousands):
2022
2021
2020
Balance, beginning
3,254
3,745
4,828
Additions (reversals) charged to costs and expenses
3,567
(27)
647
Deductions from reserves (1)
(633)
(676)
(2,732)
Other additions (deductions) (2)
(58)
212
1,002
Balance, ending
6,130
3,254
3,745
(1) Represents amounts determined to be uncollectible and charged against reserves, net of collections on accounts previously charged against reserves.
(2) Includes effects of foreign currency translation.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. The last-in, first-out (LIFO) cost method is used for valuing most U.S. inventories. Inventories of foreign subsidiaries are valued using the first-in, first-out (FIFO) cost method.
Other Current Assets.
Amounts
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
ible and charged against reserves, net of collections on accounts previously charged against reserves.
(2) Includes effects of foreign currency translation.
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value. The last-in, first-out (LIFO) cost method is used for valuing most U.S. inventories. Inventories of foreign subsidiaries are valued using the first-in, first-out (FIFO) cost method.
Other Current Assets.
Amounts included in other current assets were (in thousands):
2022
2021
Prepaid income taxes
18,702
10,485
Prepaid expenses and other
24,922
21,401
Total
43,624
31,886
Impairment of Long-Lived Assets.
GRACO INC evaluates long-lived assets (including property and equipment, goodwill and other intangible assets) for impairment annually in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
We completed our annual impairment test of all long-lived assets in the fourth quarter of 2022. No impairment charges were recorded as a result of that review. In connection with the Company's sale of its U.K.-based valve business in
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
of Long-Lived Assets.
GRACO INC evaluates long-lived assets (including property and equipment, goodwill and other intangible assets) for impairment annually in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
We completed our annual impairment test of all long-lived assets in the fourth quarter of 2022. No impairment charges were recorded as a result of that review. In connection with the Company's sale of its U.K.-based valve business in 2020, impairment charges of $35 million were recorded. There were no additional impairment charges in 2021 or 2020.
Property, Plant and Equipment
For financial reporting purposes, plant and equipment are depreciated over their estimated useful lives, primarily by using the straight-line method as follows:
Buildings and improvements
10 to 30 years
Leasehold improvements
lesser of 5 to 10 years or life of lease
Manufacturing equipment
lesser of 5 to 10 years or life of equipment
Office, warehouse and automotive equipment
3 to 10 years
41
Table of Contents
Goodwill and Other Intangible Assets.
Goodwill has been assigned to reporting units. Changes in the carrying amounts of goodwill for each reportable
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
-line method as follows:
Buildings and improvements
10 to 30 years
Leasehold improvements
lesser of 5 to 10 years or life of lease
Manufacturing equipment
lesser of 5 to 10 years or life of equipment
Office, warehouse and automotive equipment
3 to 10 years
41
Table of Contents
Goodwill and Other Intangible Assets.
Goodwill has been assigned to reporting units. Changes in the carrying amounts of goodwill for each reportable segment were (in thousands):
Industrial
Process
Contractor
Total
Balance, December 25, 2020
140,997
141,513
65,093
347,603
Additions, adjustments from business acquisitions
13,321
13,321
Foreign currency translation
(3,842)
(209)
(618)
(4,669)
Balance, December 31, 2021
137,155
141,304
77,796
356,255
Additions, adjustments from business acquisitions
16,994
16,994
Foreign currency translation
(2,384)
(1,932)
(762)
(5,078)
Balance, December 30, 2022
134,771
156
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Foreign currency translation
(3,842)
(209)
(618)
(4,669)
Balance, December 31, 2021
137,155
141,304
77,796
356,255
Additions, adjustments from business acquisitions
16,994
16,994
Foreign currency translation
(2,384)
(1,932)
(762)
(5,078)
Balance, December 30, 2022
134,771
156,366
77,034
368,171
Components of other intangible assets were (dollars in thousands):
Finite Life
Indefinite Life
CustomerRelationships
Patents andProprietaryTechnology
Trademarks,Trade Namesand Other
Trade Names
Total
As of December 30, 2022
Cost
202,103
26,374
1,300
62,633
292,410
Accumulated amortization
(123,603)
(18,027)
(330)
(141,960)
Foreign currency translation
(10,060)
(894)
(1,989)
(12,943)
Book value
68,440
7,453
970
60,644
137,507
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
As of December 30, 2022
Cost
202,103
26,374
1,300
62,633
292,410
Accumulated amortization
(123,603)
(18,027)
(330)
(141,960)
Foreign currency translation
(10,060)
(894)
(1,989)
(12,943)
Book value
68,440
7,453
970
60,644
137,507
Weighted average life in years
13
10
N/A
As of December 31, 2021
Cost
194,505
26,074
900
62,633
284,112
Accumulated amortization
(108,657)
(15,734)
(452)
(124,843)
Foreign currency translation
(7,710)
(707)
(1,112)
(9,529)
Book value
78,138
9,633
448
61,521
149,740
Weighted average life in years
13
10
N/A
Amortization of intangibles was $18.9 million in 2022, $17.9 million in 2021 and $16.
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
15,734)
(452)
(124,843)
Foreign currency translation
(7,710)
(707)
(1,112)
(9,529)
Book value
78,138
9,633
448
61,521
149,740
Weighted average life in years
13
10
N/A
Amortization of intangibles was $18.9 million in 2022, $17.9 million in 2021 and $16.7 million in 2020. Estimated future annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Estimated Amortization Expense
17,397
16,169
15,704
8,972
6,291
12,330
GRACO INC completed business acquisitions in 2022, 2021 and 2020 that were not material to the consolidated financial statements.
42
Table of Contents
Other Assets.
Components of other assets were (in thousands):
2022
2021
Cash surrender value of life insurance
19,192
23,147
Capitalized software
2,189
2,394
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,397
16,169
15,704
8,972
6,291
12,330
GRACO INC completed business acquisitions in 2022, 2021 and 2020 that were not material to the consolidated financial statements.
42
Table of Contents
Other Assets.
Components of other assets were (in thousands):
2022
2021
Cash surrender value of life insurance
19,192
23,147
Capitalized software
2,189
2,394
Equity method investment
8,767
7,541
Deposits and other
2,970
3,607
Total
33,118
36,689
GRACO INC has entered into contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans. These insurance contracts are 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 Company’s insolvency. Changes in cash surrender value are recorded in other expense, net. The cash surrender value decreased $4.0 million in 2022, and increased $3.3 million in 2021 and $2.2 million in 202
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
in certain non-qualified pension and deferred compensation plans. These insurance contracts are 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 Company’s insolvency. Changes in cash surrender value are recorded in other expense, net. The cash surrender value decreased $4.0 million in 2022, and increased $3.3 million in 2021 and $2.2 million in 2020.
Capitalized software is amortized over its estimated useful life (generally 2 to 5 years) beginning at date of implementation.
Other Current Liabilities.
Components of other current liabilities were (in thousands):
2022
2021
Accrued self-insurance retentions
9,338
9,303
Accrued warranty and service liabilities
14,674
14,463
Accrued trade promotions
13,799
15,872
Payable for employee stock purchases
16,497
15,746
Customer advances and deferred revenue
50,747
60,554
Income taxes payable
15,987
5,200
Tax payable, other
9,614
8,295
Operating lease liabilities, current
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
retentions
9,338
9,303
Accrued warranty and service liabilities
14,674
14,463
Accrued trade promotions
13,799
15,872
Payable for employee stock purchases
16,497
15,746
Customer advances and deferred revenue
50,747
60,554
Income taxes payable
15,987
5,200
Tax payable, other
9,614
8,295
Operating lease liabilities, current
9,555
9,096
Right of return refund liability
18,449
18,614
Other
32,133
34,016
Total
190,793
191,159
Self-Insurance.
GRACO INC is self-insured for certain losses and costs relating to product liability, workers’ compensation, and employee medical benefit claims. GRACO INC has stop-loss coverage in order to limit its exposure to significant claims. Accrued self-insurance retentions are based on claims filed, estimates of claims incurred but not reported, and other actuarial assumptions. Self-insured reserves totaled $9.3 million as of December 30, 2022 and December 31, 2021.
Product Warranties.
A liability is established for
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
and costs relating to product liability, workers’ compensation, and employee medical benefit claims. GRACO INC has stop-loss coverage in order to limit its exposure to significant claims. Accrued self-insurance retentions are based on claims filed, estimates of claims incurred but not reported, and other actuarial assumptions. Self-insured reserves totaled $9.3 million as of December 30, 2022 and December 31, 2021.
Product Warranties.
A liability is established for estimated future warranty and service claims that relate to current and prior period sales. GRACO INC 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):
2022
2021
Balance, beginning of year
14,463
13,082
Assumed in business acquisition
38
23
Charged to expense
8,946
10,764
Margin on parts sales reversed
3,292
3,475
Reductions for claims settled
(12,065)
(12,881)
Balance, end of year
14,674
14,463
43
Table of Contents
Revenue Recognition
Revenue is recognized at a single point in time
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Balance, beginning of year
14,463
13,082
Assumed in business acquisition
38
23
Charged to expense
8,946
10,764
Margin on parts sales reversed
3,292
3,475
Reductions for claims settled
(12,065)
(12,881)
Balance, end of year
14,674
14,463
43
Table of Contents
Revenue Recognition
Revenue is recognized at a single point in time upon the satisfaction of performance obligations, which occurs when control of the good or service transfers to the customer. This is generally on the date of shipment; however certain sales have terms requiring recognition when received by the customer. In cases where there are specific customer acceptance provisions, revenue is recognized at the later of customer acceptance or shipment (subject to shipping terms). Payment terms are established based on the type of product, distributor capabilities and competitive market conditions, and do not exceed one year. Standalone selling prices are determined based on the prices charged to customers for all material performance obligations.
Variable consideration is accounted for as a price adjustment (sales adjustment). Following are examples of variable consideration that affect the Company’s reported revenue. Early payment discounts are provided to certain customers and within certain regions. Rights of
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
at the later of customer acceptance or shipment (subject to shipping terms). Payment terms are established based on the type of product, distributor capabilities and competitive market conditions, and do not exceed one year. Standalone selling prices are determined based on the prices charged to customers for all material performance obligations.
Variable consideration is accounted for as a price adjustment (sales adjustment). Following are examples of variable consideration that affect the Company’s reported revenue. Early payment discounts are provided to certain customers and within certain regions. Rights of return are typically contractually limited and amounts are estimable. GRACO INC records a refund liability and establishes a recovery asset for the value of product expected to be returned at the time revenue is recognized. This includes promotions when, from time to time, the Company may promote the sale of new products by agreeing to accept returns of superseded products. Provisions for sales returns are recorded as a reduction of net sales, and provisions for warranty claims are recorded in selling, marketing and distribution expenses. Historically, sales returns have been approximately 3 percent of sales. Trade promotions are offered to distributors and end users through various programs, generally with terms of one year or less. Such promotions include rebates based on annual purchases and sales growth, coupons and reimbursement for competitive products. Payment of incentives
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
new products by agreeing to accept returns of superseded products. Provisions for sales returns are recorded as a reduction of net sales, and provisions for warranty claims are recorded in selling, marketing and distribution expenses. Historically, sales returns have been approximately 3 percent of sales. Trade promotions are offered to distributors and end users through various programs, generally with terms of one year or less. Such promotions include rebates based on annual purchases and sales growth, coupons and reimbursement for competitive products. Payment of incentives may take the form of cash, trade credit, promotional merchandise or free product. Rebates are accrued based on the program rates and progress toward the probability weighted estimate of annual sales amount and sales growth.
Additional promotions include cooperative advertising arrangements. Under cooperative advertising arrangements, the Company reimburses the distributor for a portion of its advertising costs related to the Company’s products. Estimated costs are accrued at the time of sale and classified as selling, marketing and distribution expense. The estimated costs related to coupon programs are accrued at the time of sale and classified as selling, marketing and distribution expense or cost of products sold, depending on the type of incentive offered. The considerations payable to customers are deemed as broad based and are not recorded against net sales.
Shipping and handling costs incurred for the delivery of goods
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
the distributor for a portion of its advertising costs related to the Company’s products. Estimated costs are accrued at the time of sale and classified as selling, marketing and distribution expense. The estimated costs related to coupon programs are accrued at the time of sale and classified as selling, marketing and distribution expense or cost of products sold, depending on the type of incentive offered. The considerations payable to customers are deemed as broad based and are not recorded against net sales.
Shipping and handling costs incurred for the delivery of goods to customers are included in cost of goods sold. Amounts billed to customers for shipping and handling are included in net sales.
Revenue is deferred when cash payments are received or due in advance of 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 $50.7 million as of December 30, 2022 and $60.6 million as of December 31, 2021. Net sales for 2022 included $60.4 million that was in deferred revenue and customer advances as of December 31, 2021. Net sales for 2021 included $40.9 million that was in deferred revenue and customer advances as of December 25,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
certain product sales. The balance in the deferred revenue and customer advances was $50.7 million as of December 30, 2022 and $60.6 million as of December 31, 2021. Net sales for 2022 included $60.4 million that was in deferred revenue and customer advances as of December 31, 2021. Net sales for 2021 included $40.9 million that was in deferred revenue and customer advances as of December 25, 2020.
Shipping and handling activities that occur after control of the related good transfers are accounted for as fulfillment activities instead of assessing such activities as performance obligations.
Sales taxes related to revenue producing transactions collected from the customer for a governmental authority are excluded from the transaction price.
Revenue standard requirements are applied to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio.
Promised goods or services are not assessed as performance obligations if they are immaterial in the context of the contract with the customer. If the revenue related to a performance obligation that includes goods or services that are
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
requirements are applied to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio.
Promised goods or services are not assessed as performance obligations if they are immaterial in the context of the contract with the customer. If the revenue related to a performance obligation that includes goods or services that are immaterial in the context of the contract is recognized before those immaterial goods or services are transferred to the customer, then the related costs to transfer those goods or services are accrued.
Incremental costs of obtaining a contract are generally expensed when incurred because the amortization period would be less than one year. Such costs primarily relate to sales commissions and are recorded in selling, marketing and distribution expense.
44
Table of Contents
Earnings Per Common Share
Basic net earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the year. Diluted net earnings per share is computed after giving effect to the exercise of all dilutive outstanding option grants.
Comprehensive Income.
Comprehensive income is a measure of all changes in shareholders’ equity
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
less than one year. Such costs primarily relate to sales commissions and are recorded in selling, marketing and distribution expense.
44
Table of Contents
Earnings Per Common Share
Basic net earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the year. Diluted net earnings per share is computed after giving effect to the exercise of all dilutive outstanding option grants.
Comprehensive Income.
Comprehensive income is a measure of all changes in shareholders’ equity except those resulting from investments by and distributions to owners, and includes such items as net earnings, certain foreign currency translation items, changes in the value of qualifying hedges and pension liability adjustments.
Derivative Instruments and Hedging Activities
GRACO INC 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 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. GRACO INC does not hold or issue derivative financial instruments for trading purposes. All other contracts that contain provisions
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
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 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. GRACO INC 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 been designated as, normal purchases or sales. GRACO INC’s policy is to not enter into contracts with terms that cannot be designated as normal purchases or sales.
GRACO INC periodically evaluates its monetary asset and liability positions denominated in foreign currencies. GRACO INC enters into forward contracts or options, or borrows in various currencies, in order to hedge its net monetary positions. These instruments are recorded at fair value and the gains and losses are included in other expense, net. The notional amounts of contracts outstanding as of December 30, 2022, totaled $48 million. GRACO INC believes it uses strong financial counterparties in these transactions and that the resulting credit risk under these hedging strategies is not significant.
The
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
ominated in foreign currencies. GRACO INC enters into forward contracts or options, or borrows in various currencies, in order to hedge its net monetary positions. These instruments are recorded at fair value and the gains and losses are included in other expense, net. The notional amounts of contracts outstanding as of December 30, 2022, totaled $48 million. GRACO INC believes it uses strong financial counterparties in these transactions and that the resulting credit risk under these hedging strategies is not significant.
GRACO INC uses significant other observable inputs (level 2 in the fair value hierarchy) to value the derivative instruments used to hedge net monetary positions, including reference to market prices and financial models that incorporate relevant market assumptions. Net derivative assets are reported on the balance sheet in accounts receivable and net derivative liabilities are reported as other current liabilities. The fair market value of such instruments follows (in thousands):
2022
2021
Foreign Currency Contracts
Assets
157
239
Liabilities
(677)
(350)
Net Assets (Liabilities)
(520)
(111)
B. Segment Information
GRACO INC has five operating segments which are aggregated into three reportable segments: Contractor, Industrial and Process.
Beginning with the first quarter of 2022, our high performance coatings and
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
net derivative liabilities are reported as other current liabilities. The fair market value of such instruments follows (in thousands):
2022
2021
Foreign Currency Contracts
Assets
157
239
Liabilities
(677)
(350)
Net Assets (Liabilities)
(520)
(111)
B. Segment Information
GRACO INC has five operating segments which are aggregated into three reportable segments: Contractor, Industrial and Process.
Beginning with the first quarter of 2022, our high performance coatings and foam product offerings previously included within the Applied Fluid Technologies division of the Industrial segment were realigned and are now managed under the Contractor segment. This change aligns the types of products offered and markets served within the segments. Prior year segment information has been restated to conform to the current organizational structure.
The Contractor segment markets sprayers and equipment that apply paint to walls and other structures, texture to walls and ceilings, insulation to building walls and other items, highly viscous coatings to roofs, and markings on roads, parking lots, athletic fields and floors.
The Industrial segment includes our Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, coatings, sealants, adhesives and other fluids. Markets served include automotive and vehicle assembly and components production,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
organizational structure.
The Contractor segment markets sprayers and equipment that apply paint to walls and other structures, texture to walls and ceilings, insulation to building walls and other items, highly viscous coatings to roofs, and markings on roads, parking lots, athletic fields and floors.
The Industrial segment includes our Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, coatings, sealants, adhesives and other fluids. Markets served include automotive and vehicle assembly and components production, wood and metal products, rail, marine, aerospace, farm, construction, bus, recreational vehicles and various other industries.
The Process segment includes our Process and Lubrication divisions. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food,
45
Table of Contents
lubricants and other fluids. Markets served include food and beverage, dairy, oil and natural gas, pharmaceutical, cosmetics, electronics, semiconductor fabrication, wastewater, mining, fast oil change facilities, service garages, fleet service centers, automobile dealerships and industrial lubrication applications.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The cost of manufacturing for each
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
natural gas, water, wastewater, petroleum, food,
45
Table of Contents
lubricants and other fluids. Markets served include food and beverage, dairy, oil and natural gas, pharmaceutical, cosmetics, electronics, semiconductor fabrication, wastewater, mining, fast oil change facilities, service garages, fleet service centers, automobile dealerships and industrial lubrication applications.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The cost of manufacturing for each segment is based on product cost, and expenses are based on actual costs incurred along with cost allocations of shared and centralized functions based on activities performed, sales or space utilization. Depreciation expense is charged to the manufacturing or operating cost center that utilizes the asset, and is then allocated to segments on the same basis as other expenses within that cost center. Reportable segments are defined by product. Segments are responsible for development, manufacturing, marketing and sales of their products. This allows for focused marketing and efficient product development. The segments share common purchasing, certain manufacturing, distribution and administration functions.
Segment information follows (in thousands):
2022
2021
2020
Net Sales
Contractor
999,060
987,606
842,525
Industrial
649,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
to segments on the same basis as other expenses within that cost center. Reportable segments are defined by product. Segments are responsible for development, manufacturing, marketing and sales of their products. This allows for focused marketing and efficient product development. The segments share common purchasing, certain manufacturing, distribution and administration functions.
Segment information follows (in thousands):
2022
2021
2020
Net Sales
Contractor
999,060
987,606
842,525
Industrial
649,347
602,376
481,485
Process
495,114
397,626
326,105
Total
2,143,521
1,987,608
1,650,115
Operating Earnings
Contractor
249,833
266,204
243,185
Industrial
231,298
199,856
147,939
Process
122,344
91,037
64,498
Unallocated corporate (expense)
(30,775)
(25,774)
(28,675)
Impairment
(35,229)
Total
572,700
531,323
391,718
Assets
Contractor
752,729
656,998
Industrial
578,302
544,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,204
243,185
Industrial
231,298
199,856
147,939
Process
122,344
91,037
64,498
Unallocated corporate (expense)
(30,775)
(25,774)
(28,675)
Impairment
(35,229)
Total
572,700
531,323
391,718
Assets
Contractor
752,729
656,998
Industrial
578,302
544,585
Process
564,539
436,189
Unallocated corporate
543,330
805,426
Total
2,438,900
2,443,198
Management assesses performance of segments by reference to operating earnings excluding unallocated corporate expenses and asset impairments. Unallocated corporate (expense) includes such items as stock compensation, certain acquisition transaction costs, bad debt expense, charitable contributions and certain facility expenses. Unallocated assets include cash, allowances and valuation reserves, deferred income taxes, certain capital and other assets.
Geographic information follows (in thousands):
2022
2021
2020
Net Sales (based on customer location)
United States
1,116,012
1,004,318
883,451
Other countries
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
impairments. Unallocated corporate (expense) includes such items as stock compensation, certain acquisition transaction costs, bad debt expense, charitable contributions and certain facility expenses. Unallocated assets include cash, allowances and valuation reserves, deferred income taxes, certain capital and other assets.
Geographic information follows (in thousands):
2022
2021
2020
Net Sales (based on customer location)
United States
1,116,012
1,004,318
883,451
Other countries
1,027,509
983,290
766,664
Total
2,143,521
1,987,608
1,650,115
Long-lived Assets
United States
532,401
388,835
Other countries
75,208
62,226
Total
607,609
451,061
46
Table of Contents
Sales to Major Customers.
Worldwide sales to one customer in the Contractor and Industrial segments individually represented over 10 percent of the Company’s consolidated sales in 2022, 2021 and 2020.
C. Inventories
Major components of inventories were as follows (in thousands):
2022
2021
Finished products and components
222,326
166,922
Products and
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
62,226
Total
607,609
451,061
46
Table of Contents
Sales to Major Customers.
Worldwide sales to one customer in the Contractor and Industrial segments individually represented over 10 percent of the Company’s consolidated sales in 2022, 2021 and 2020.
C. Inventories
Major components of inventories were as follows (in thousands):
2022
2021
Finished products and components
222,326
166,922
Products and components in various stages of completion
138,957
117,063
Raw materials and purchased components
248,636
185,291
Subtotal
609,919
469,276
Reduction to LIFO cost
(133,129)
(86,975)
Total
476,790
382,301
Inventories valued under the LIFO method were $253.6 million in 2022 and $211.1 million in 2021. All other inventory was valued on the FIFO method.
D. Property, Plant and Equipment
Property, plant and equipment were as follows (in thousands):
2022
2021
Land and improvements
65,066
42,195
Buildings and improvements
376,115
280,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
)
Total
476,790
382,301
Inventories valued under the LIFO method were $253.6 million in 2022 and $211.1 million in 2021. All other inventory was valued on the FIFO method.
D. Property, Plant and Equipment
Property, plant and equipment were as follows (in thousands):
2022
2021
Land and improvements
65,066
42,195
Buildings and improvements
376,115
280,947
Manufacturing equipment
439,109
384,617
Office, warehouse and automotive equipment
59,988
61,994
Additions in progress
126,198
105,520
Total property, plant and equipment
1,066,476
875,273
Accumulated depreciation
(458,867)
(424,212)
Net property, plant and equipment
607,609
451,061
Depreciation expense was $46.0 million in 2022, $40.0 million in 2021 and $38.0 million in 2020.
E. Income Taxes
Earnings before income tax expense consist of (in thousands):
2022
2021
2020
Domestic
401,405
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,273
Accumulated depreciation
(458,867)
(424,212)
Net property, plant and equipment
607,609
451,061
Depreciation expense was $46.0 million in 2022, $40.0 million in 2021 and $38.0 million in 2020.
E. Income Taxes
Earnings before income tax expense consist of (in thousands):
2022
2021
2020
Domestic
401,405
370,903
289,708
Foreign
164,319
137,562
84,943
Total
565,724
508,465
374,651
47
Table of Contents
Income tax expense consists of (in thousands):
2022
2021
2020
Current
Federal
70,976
77,703
11,509
State and local
5,948
7,493
3,217
Foreign
38,152
29,975
18,722
Current income tax expense
115,076
115,171
33,448
Deferred
Domestic
(8,733)
(42,413)
12,856
Foreign
(1,264)
(4,159)
(
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
1
2020
Current
Federal
70,976
77,703
11,509
State and local
5,948
7,493
3,217
Foreign
38,152
29,975
18,722
Current income tax expense
115,076
115,171
33,448
Deferred
Domestic
(8,733)
(42,413)
12,856
Foreign
(1,264)
(4,159)
(2,109)
Deferred income tax expense (benefit)
(9,997)
(46,572)
10,747
Total
105,079
68,599
44,195
Income taxes paid were $112.3 million in 2022, $111.8 million in 2021 and $44.0 million in 2020.
A reconciliation between the U.S. federal statutory tax rate and the effective tax rate follows:
2022
2021
2020
Statutory tax rate
21
21
21
Tax effect of international operations
(1)
(2)
State taxes, net of federal effect
U.S. general business tax credits
(1)
(1)
(1)
Loss on sale of business
Stock
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
.8 million in 2021 and $44.0 million in 2020.
A reconciliation between the U.S. federal statutory tax rate and the effective tax rate follows:
2022
2021
2020
Statutory tax rate
21
21
21
Tax effect of international operations
(1)
(2)
State taxes, net of federal effect
U.S. general business tax credits
(1)
(1)
(1)
Loss on sale of business
Stock compensation excess tax benefit
(1)
(2)
(6)
Foreign Derived Intangible Income (FDII)
(2)
(5)
(3)
Effective tax rate
19
13
12
Deferred income taxes are provided for temporary differences between the financial reporting and the tax basis of assets and liabilities. The deferred tax assets (liabilities) resulting from these differences were as follows (in thousands):
2022
2021
Inventory valuations
678
1,181
Accrued self-insurance retentions
1,626
1,534
Accrued warranty and service liabilities
2,279
2,285
Vacation accruals
3,409
3,261
Customer allowances
4,143
4,028
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
tax basis of assets and liabilities. The deferred tax assets (liabilities) resulting from these differences were as follows (in thousands):
2022
2021
Inventory valuations
678
1,181
Accrued self-insurance retentions
1,626
1,534
Accrued warranty and service liabilities
2,279
2,285
Vacation accruals
3,409
3,261
Customer allowances
4,143
4,028
Excess of tax over book depreciation and amortization
(42,322)
(39,785)
Pension benefit obligation
6,375
16,022
Postretirement medical benefit obligation
5,072
5,028
Stock compensation
12,390
11,442
Deferred compensation
2,283
2,595
Deferred revenue
2,160
2,427
Research and Development
11,370
Prepayments from foreign subsidiaries
36,070
32,969
Other
2,114
2,138
Net deferred tax assets
47,647
45,125
Total deferred tax assets were $57.1 million and $55.8 million, and total deferred tax liabilities were $9.4 million and
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
11,442
Deferred compensation
2,283
2,595
Deferred revenue
2,160
2,427
Research and Development
11,370
Prepayments from foreign subsidiaries
36,070
32,969
Other
2,114
2,138
Net deferred tax assets
47,647
45,125
Total deferred tax assets were $57.1 million and $55.8 million, and total deferred tax liabilities were $9.4 million and $10.7 million on December 30, 2022 and December 31, 2021, respectively. The difference between the deferred income tax provision and the change in net deferred income taxes is due to the changes in other comprehensive income (loss) items and acquisition purchase accounting.
48
Table of Contents
GRACO INC files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016.
GRACO INC continues to assert that it will indefinitely reinvest earnings of foreign subsidiaries to support expansion of its international business. No additional income or withholding taxes have been provided for
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
accounting.
48
Table of Contents
GRACO INC files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2016.
GRACO INC continues to assert that it will indefinitely reinvest earnings of foreign subsidiaries to support expansion of its international business. No additional income or withholding taxes have been provided for any remaining undistributed foreign earnings, as these amounts continue to be indefinitely reinvested in foreign operations. As of December 30, 2022, the amount of cash held outside the U.S. was not significant to the Company’s liquidity and was available to fund investments abroad.
GRACO INC records penalties and accrued interest related to uncertain tax positions in income tax expense. Total reserves for uncertain tax positions were not material.
F. Debt
A summary of debt follows (dollars in thousands):
Average Interest Rate
December 30, 2022
Maturity
2022
2021
Private placement unsecured fixed-rate notes
Series B
5.01%
January 2022
75,000
Series D
5.35%
July 2026
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
.
GRACO INC records penalties and accrued interest related to uncertain tax positions in income tax expense. Total reserves for uncertain tax positions were not material.
F. Debt
A summary of debt follows (dollars in thousands):
Average Interest Rate
December 30, 2022
Maturity
2022
2021
Private placement unsecured fixed-rate notes
Series B
5.01%
January 2022
75,000
Series D
5.35%
July 2026
75,000
75,000
Unsecured revolving credit facility
N/A
March 2026
Unsecured revolving credit facility - offshore renminbi denominated
3.34%
N/A
14,327
39,222
Notes payable to banks
2.80%
2023
6,647
4,267
Total debt
95,974
193,489
The estimated fair value of the fixed interest rate private placement debt was $75 million on December 30, 2022 and $165 million on December 31, 2021. The fair value of variable rate borrowings approximates carrying value. GRACO INC uses significant other observable inputs to estimate fair value (level 2 of the fair value hierarchy) based on the present
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
.80%
2023
6,647
4,267
Total debt
95,974
193,489
The estimated fair value of the fixed interest rate private placement debt was $75 million on December 30, 2022 and $165 million on December 31, 2021. The fair value of variable rate borrowings approximates carrying value. GRACO INC 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.
On March 25, 2021, the Company entered into an amended and restated credit agreement that amends, supersedes and restates in its entirety the Company's prior credit agreement with U.S. Bank National Association, as administrative agent (the “Agent”) and a lender, and the other lenders that are parties thereto. The amended and restated credit agreement extends the maturity of the Company’s $500 million unsecured revolving credit facility from December 15, 2021 to March 25, 2026; includes a $250 million accordion feature; and provides mechanisms for two further one-year extensions of the maturity, subject
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
entirety the Company's prior credit agreement with U.S. Bank National Association, as administrative agent (the “Agent”) and a lender, and the other lenders that are parties thereto. The amended and restated credit agreement extends the maturity of the Company’s $500 million unsecured revolving credit facility from December 15, 2021 to March 25, 2026; includes a $250 million accordion feature; and provides mechanisms for two further one-year extensions of the maturity, subject to the consent of the extending banks.
The amended and restated credit agreement contains customary representations, warranties, covenants and events of default, including but not limited to covenants restricting the Company’s and its subsidiaries’ ability to (i) merge or
49
Table of Contents
GRACO INC maintains a revolving credit agreement with a sole lender that provides up to $50 million of committed credit, available for general corporate purposes, working capital needs, share repurchases and acquisitions. Under the terms of the agreement, loans may be denominated in U.S. dollars or Chinese renminbi (offshore). Loans denominated in U.S. dollars bear interest, at the Company’s option, at either a base rate or a LIBOR-based rate. Loans denominated in
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
of Contents
GRACO INC maintains a revolving credit agreement with a sole lender that provides up to $50 million of committed credit, available for general corporate purposes, working capital needs, share repurchases and acquisitions. Under the terms of the agreement, loans may be denominated in U.S. dollars or Chinese renminbi (offshore). Loans denominated in U.S. dollars bear interest, at the Company’s option, at either a base rate or a LIBOR-based rate. Loans denominated in Chinese renminbi (offshore) bear interest at a LIBOR-based rate based on the Chinese offshore rate. Other terms of this revolving credit agreement are substantially similar to those of the Company’s amended and restated credit agreement that expires in March 2026.
On December 16, 2022, the Company entered into an amendment to its master note agreement that extends the period in which the Company may issue, and affiliates of the lender may purchase, the Company’s senior notes from January 29, 2023 to December 16, 2027. The amendment also increases the maximum aggregate principal amount of senior notes the Company may issue under the master note agreement from $200 million to $250 million, although the maximum aggregate amount of senior notes bearing interest at a
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
16, 2022, the Company entered into an amendment to its master note agreement that extends the period in which the Company may issue, and affiliates of the lender may purchase, the Company’s senior notes from January 29, 2023 to December 16, 2027. The amendment also increases the maximum aggregate principal amount of senior notes the Company may issue under the master note agreement from $200 million to $250 million, although the maximum aggregate amount of senior notes bearing interest at a floating rate that may be outstanding at any one time will continue to be $100 million. The amendment also extends the maturity and average life of each senior note bearing interest at a fixed rate that may be issued under the master note agreement from no more than 12 years after the date of issuance to no more than 15 years after the date of issuance, and includes customary provisions for the replacement of LIBOR with SOFR and customary benchmark replacement provisions with respect to senior notes bearing interest at a floating rate. All other material items of the master note agreement remain unchanged. Under the terms of the master note agreement, the Company is required to maintain certain financial ratios as to cash flow leverage and interest coverage similar to the requirements of its other debt agreements.
Various debt agreements require the Company to
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
of issuance to no more than 15 years after the date of issuance, and includes customary provisions for the replacement of LIBOR with SOFR and customary benchmark replacement provisions with respect to senior notes bearing interest at a floating rate. All other material items of the master note agreement remain unchanged. Under the terms of the master note agreement, the Company is required to maintain certain financial ratios as to cash flow leverage and interest coverage similar to the requirements of its other debt agreements.
Various debt agreements require the Company to maintain certain financial ratios as to cash flow leverage and interest coverage. GRACO INC is in compliance with all financial covenants of its debt agreements as of December 30, 2022.
Annual maturities of debt are as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Maturities of debt
20,974
75,000
Interest paid on debt was $10.0 million in 2022, $9.8 million in 2021 and $11.3 million in 2020.
In January 2022, we repaid $75 million of our Series B private placement note in addition to a $3.5 million prepayment fee, which was recognized as interest
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2025
2026
2027
Thereafter
Maturities of debt
20,974
75,000
Interest paid on debt was $10.0 million in 2022, $9.8 million in 2021 and $11.3 million in 2020.
In January 2022, we repaid $75 million of our Series B private placement note in addition to a $3.5 million prepayment fee, which was recognized as interest expense.
G. Shareholders’ Equity
At December 30, 2022, the Company had 22,549 authorized, but not issued, cumulative preferred shares, $100 par value. GRACO INC also has authorized, but not issued, a separate class of 3 million shares of preferred stock, $1 par value.
50
Table of Contents
Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
Pension andPostretirementMedical
CumulativeTranslationAdjustment
Total
Balance, December 27, 2019
(113,721)
(56,066)
(169,787)
Other comprehensive income (loss) before reclassifications
(7,852)
46,030
38,178
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
million shares of preferred stock, $1 par value.
50
Table of Contents
Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
Pension andPostretirementMedical
CumulativeTranslationAdjustment
Total
Balance, December 27, 2019
(113,721)
(56,066)
(169,787)
Other comprehensive income (loss) before reclassifications
(7,852)
46,030
38,178
Amounts reclassified from accumulated other comprehensive income
7,444
7,444
Balance, December 25, 2020
(114,129)
(10,036)
(124,165)
Other comprehensive income (loss) before reclassifications
34,953
(10,026)
24,927
Amounts reclassified from accumulated other comprehensive income
19,069
19,069
Balance, December 31, 2021
(60,107)
(20,062)
(80,169)
Other comprehensive income (loss) before reclassifications
16,083
(9,582)
6,501
Amounts reclassified from accumulated other comprehensive income
4,290
4,290
Balance, December
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,953
(10,026)
24,927
Amounts reclassified from accumulated other comprehensive income
19,069
19,069
Balance, December 31, 2021
(60,107)
(20,062)
(80,169)
Other comprehensive income (loss) before reclassifications
16,083
(9,582)
6,501
Amounts reclassified from accumulated other comprehensive income
4,290
4,290
Balance, December 30, 2022
(39,734)
(29,644)
(69,378)
In connection with the Company's sale of its U.K.-based valve business in 2020, $24 million of unrealized foreign currency translation losses recorded in accumulated other comprehensive income were reclassified to net earnings.
Amounts related to pension and postretirement medical adjustments are classified to non-service components of pension cost that are included within other non-operating expenses. Included in the 2021 reclassification is $12 million related to a pension settlement loss. See
Note J
for additional details regarding pension and postretirement medical plans.
H. Share-Based Awards, Purchase Plans and Compensation Cost
Stock Option and Award Plan.
GRACO INC has a stock incentive plan
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
comprehensive income were reclassified to net earnings.
Amounts related to pension and postretirement medical adjustments are classified to non-service components of pension cost that are included within other non-operating expenses. Included in the 2021 reclassification is $12 million related to a pension settlement loss. See
Note J
for additional details regarding pension and postretirement medical plans.
H. Share-Based Awards, Purchase Plans and Compensation Cost
Stock Option and Award Plan.
GRACO INC has a stock incentive plan under which it grants stock options and share awards to directors, officers and other employees. Option price is the market price on the date of grant. Options become exercisable at such time, generally over 3 years or 4 years, and in such installments as set by the Company, and expire 10 years from the date of grant.
Restricted share awards have been made to certain key employees under the plan. The market value of restricted stock at the date of grant is charged to operations over the vesting period. Compensation cost related to restricted shares is not significant.
GRACO INC has a stock appreciation plan that provides for payments of cash to eligible foreign employees based on the change in the market price of the Company’s common stock over a period of time. Compensation cost related to the
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Company, and expire 10 years from the date of grant.
Restricted share awards have been made to certain key employees under the plan. The market value of restricted stock at the date of grant is charged to operations over the vesting period. Compensation cost related to restricted shares is not significant.
GRACO INC has a stock appreciation plan that provides for payments of cash to eligible foreign employees based on the change in the market price of the Company’s common stock over a period of time. Compensation cost related to the stock appreciation plan was a benefit of $0.2 million in 2022, and expense of $3.1 million in 2021 and $2.4 million in 2020.
Individual nonemployee directors of the Company may elect to receive, either currently or deferred, all or part of their retainer in the form of shares of the Company’s common stock instead of cash. Under this arrangement, the Company issued 12,055 shares in 2022, 12,070 shares in 2021 and 15,243 shares in 2020. The expense related to this arrangement is not significant.
51
Table of Contents
Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
deferred, all or part of their retainer in the form of shares of the Company’s common stock instead of cash. Under this arrangement, the Company issued 12,055 shares in 2022, 12,070 shares in 2021 and 15,243 shares in 2020. The expense related to this arrangement is not significant.
51
Table of Contents
Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
OptionShares
Weighted AverageExercise Price
OptionsExercisable
Weighted AverageExercise Price
Outstanding, December 27, 2019
12,112
28.91
8,231
23.75
Granted
1,400
55.26
Exercised
(3,238)
20.81
Canceled
(66)
41.24
Outstanding, December 25, 2020
10,208
35.02
6,553
28.02
Granted
843
72.22
Exercised
(1,309)
24.91
Canceled
(167)
55.59
Outstanding, December 31, 2021
9,575
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
400
55.26
Exercised
(3,238)
20.81
Canceled
(66)
41.24
Outstanding, December 25, 2020
10,208
35.02
6,553
28.02
Granted
843
72.22
Exercised
(1,309)
24.91
Canceled
(167)
55.59
Outstanding, December 31, 2021
9,575
39.31
7,296
33.75
Granted
1,381
71.03
Exercised
(645)
25.58
Canceled
(46)
49.42
Outstanding, December 30, 2022
10,265
44.40
7,793
37.22
The following table summarizes information for options outstanding and exercisable at December 30, 2022 (in thousands, except exercise prices and contractual term amounts):
Options Outstanding
Options Exercisable
Range of Prices
OptionsOutstanding
Weighted AverageRemainingContractual Termin Years
Weighted AverageExercise Price
OptionsExercisable
Weighted AverageExercise Price
$10 - $30
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
44.40
7,793
37.22
The following table summarizes information for options outstanding and exercisable at December 30, 2022 (in thousands, except exercise prices and contractual term amounts):
Options Outstanding
Options Exercisable
Range of Prices
OptionsOutstanding
Weighted AverageRemainingContractual Termin Years
Weighted AverageExercise Price
OptionsExercisable
Weighted AverageExercise Price
$10 - $30
2,971
2.4
24.76
2,971
24.76
$30 - $45
2,317
4.7
36.88
2,255
36.67
$45 - $60
2,813
6.6
50.50
2,325
50.02
$60 - $75
2,164
9.0
71.47
242
72.15
$10 - $75
10,265
5.5
44.40
7,793
37.22
Information related to options exercised follows (in thousands):
2022
2021
2020
Cash received
15,739
32,610
66,625
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
6.6
50.50
2,325
50.02
$60 - $75
2,164
9.0
71.47
242
72.15
$10 - $75
10,265
5.5
44.40
7,793
37.22
Information related to options exercised follows (in thousands):
2022
2021
2020
Cash received
15,739
32,610
66,625
Aggregate intrinsic value
28,193
65,319
120,395
Tax benefit realized
6,020
13,329
25,000
Employee Stock Purchase Plan.
Under the Company’s Employee Stock Purchase Plan, the purchase price of the shares is the lesser of 85 percent of the fair market value on the first day or the last day of the plan year. Under this plan, the Company issued 316,250 shares in 2022, 415,995 shares in 2021 and 399,567 shares in 2020.
Authorized Shares.
In April 2019, shareholders of the Company approved the Graco Inc. 2019 Stock Incentive Plan. The Plan provides for issuance of up to 10 million shares of Gr
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
85 percent of the fair market value on the first day or the last day of the plan year. Under this plan, the Company issued 316,250 shares in 2022, 415,995 shares in 2021 and 399,567 shares in 2020.
Authorized Shares.
In April 2019, shareholders of the Company approved the Graco Inc. 2019 Stock Incentive Plan. The Plan provides for issuance of up to 10 million shares of Graco common stock. Shares authorized for issuance under the stock option and purchase plans are shown below (in thousands):
52
Table of Contents
Total SharesAuthorized
Available for Future Issuance as of December 30, 2022
Stock Incentive Plan (2019)
10,000
5,790
Employee Stock Purchase Plan (2006)
21,000
11,763
Total
31,000
17,553
Amounts available for future issuance exclude outstanding options. Options outstanding as of December 30, 2022, include options granted under two plans that were replaced by subsequent plans. No shares are available for future grants under those plans.
Share-based Compensation.
GRACO INC recognized share-based compensation cost as follows (in thousands):
202
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
9)
10,000
5,790
Employee Stock Purchase Plan (2006)
21,000
11,763
Total
31,000
17,553
Amounts available for future issuance exclude outstanding options. Options outstanding as of December 30, 2022, include options granted under two plans that were replaced by subsequent plans. No shares are available for future grants under those plans.
Share-based Compensation.
GRACO INC recognized share-based compensation cost as follows (in thousands):
2022
2021
2020
Share-based compensation
24,695
24,931
25,153
Tax benefit
2,319
1,705
1,700
Share-based compensation, net of tax
22,376
23,226
23,453
As of December 30, 2022, there was $17.4 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of approximately 2.7 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:
2022
2021
2020
Expected life in years
6.4
7
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
,453
As of December 30, 2022, there was $17.4 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of approximately 2.7 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:
2022
2021
2020
Expected life in years
6.4
7.5
7.5
Interest rate
2.7
0.9
1.4
Volatility
26.2
25.2
22.0
Dividend yield
1.2
1.0
1.3
Weighted average fair value per share
19.10
17.87
12.18
Expected life is estimated based on vesting terms and exercise and termination history. Interest rate is based on the U.S. Treasury rate on zero-coupon issues with a remaining term equal to the expected life of the option. Expected volatility is based on historical volatility over a period commensurate with the expected life of options.
The fair value of employees’ purchase rights under the Employee Stock Purchase Plan was estimated on the date
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
fair value per share
19.10
17.87
12.18
Expected life is estimated based on vesting terms and exercise and termination history. Interest rate is based on the U.S. Treasury rate on zero-coupon issues with a remaining term equal to the expected life of the option. Expected volatility is based on historical volatility over a period commensurate with the expected life of options.
The fair value of employees’ purchase rights under the Employee Stock Purchase 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:
2022
2021
2020
Expected life in years
1.0
1.0
1.0
Interest rate
0.9
0.1
1.5
Volatility
20.5
40.1
21.9
Dividend yield
1.2
1.1
1.4
Weighted average fair value per share
16.01
21.50
11.55
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
model with the following assumptions and results:
2022
2021
2020
Expected life in years
1.0
1.0
1.0
Interest rate
0.9
0.1
1.5
Volatility
20.5
40.1
21.9
Dividend yield
1.2
1.1
1.4
Weighted average fair value per share
16.01
21.50
11.55
53
Table of Contents
I. Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
2022
2021
2020
Net earnings available to common shareholders
460,645
439,866
330,456
Weighted average shares outstanding for basic earnings per share
168,952
169,635
167,462
Dilutive effect of stock options computed based on the treasury stock method using the average market price
3,941
4,891
4,546
Weighted average shares outstanding for diluted earnings per share
172,893
174,526
172,008
Basic earnings per share
2.73
2.59
1
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
439,866
330,456
Weighted average shares outstanding for basic earnings per share
168,952
169,635
167,462
Dilutive effect of stock options computed based on the treasury stock method using the average market price
3,941
4,891
4,546
Weighted average shares outstanding for diluted earnings per share
172,893
174,526
172,008
Basic earnings per share
2.73
2.59
1.97
Diluted earnings per share
2.66
2.52
1.92
Anti-dilutive stock options excluded from computations of diluted earnings per share totaled 2.2 million shares in 2022, 0.4 million shares in 2021 and 0.3 million 2020.
J. Retirement Benefits
GRACO INC’s postretirement medical plan provides certain medical benefits for retired U.S. employees. Employees hired before January 1, 2005, are eligible for these benefits upon retirement and fulfillment of other eligibility requirements as specified by the plan.
GRACO INC has both funded and unfunded noncontributory defined benefit pension plans that together cover most U.S. employees hired before January 1, 2006, certain
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2021 and 0.3 million 2020.
J. Retirement Benefits
GRACO INC’s postretirement medical plan provides certain medical benefits for retired U.S. employees. Employees hired before January 1, 2005, are eligible for these benefits upon retirement and fulfillment of other eligibility requirements as specified by the plan.
GRACO INC has both funded and unfunded noncontributory defined benefit pension plans that together cover most U.S. employees hired before January 1, 2006, certain directors and some of the employees of the Company’s non-U.S. subsidiaries. GRACO INC restructured one of its U.S. qualified defined benefit plans in 2021. Under the restructuring, the plan transferred $63 million of liabilities and assets associated with certain plan participants to an insurance company via the purchase of a group annuity contract, and the Company recognized a $12 million settlement loss, included in 2021 other expense, net. This charge represents the acceleration of deferred charges previously accrued in accumulated other comprehensive income. Subsequent to the transfer of pension obligations, the smaller of the two pension plans was merged into the larger plan in December of 2021, with the larger plan being the surviving funded pension plan. The benefits offered to the plans’ participants were unchanged.
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
insurance company via the purchase of a group annuity contract, and the Company recognized a $12 million settlement loss, included in 2021 other expense, net. This charge represents the acceleration of deferred charges previously accrued in accumulated other comprehensive income. Subsequent to the transfer of pension obligations, the smaller of the two pension plans was merged into the larger plan in December of 2021, with the larger plan being the surviving funded pension plan. The benefits offered to the plans’ participants were unchanged.
For U.S. plans, benefits are based on years of service and the highest 5 consecutive years’ earnings in the 10 years preceding retirement. Plans are funded annually in amounts consistent with minimum funding levels and maximum tax deduction limits, although the Company may make additional voluntary contributions from time to time to improve the funded status of its plans.
Investment policies and strategies of the U.S. funded pension plan are based on participant demographics. As the plan covers active participants and retirees with higher benefit amounts, investments are based on a long-term view of economic growth and weighted toward equity securities. The primary goal of the plan’s investments is to ensure that the plan’s liabilities are met over time. In developing strategic asset allocation guidelines, an emphasis is placed on the long-term characteristics of individual
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
time to time to improve the funded status of its plans.
Investment policies and strategies of the U.S. funded pension plan are based on participant demographics. As the plan covers active participants and retirees with higher benefit amounts, investments are based on a long-term view of economic growth and weighted toward equity securities. The primary goal of the plan’s investments is to ensure that the plan’s liabilities are met over time. In developing strategic asset allocation guidelines, an emphasis is placed on the long-term characteristics of individual asset classes, and the benefits of diversification among multiple asset classes. The plan invests primarily in domestic and international equities, fixed income securities, which include treasuries, highly-rated corporate bonds and high-yield bonds and real estate. Strategic target allocations for plan assets are 53 percent equity securities, 42 percent fixed income securities and 5 percent real estate and alternative investments.
Plan assets are held in a trust for the benefit of plan participants and are invested in various commingled funds, most of which are sponsored by the trustee. The fair values for commingled equity, fixed-income and real estate investments are measured using net asset values, which take into consideration the value of underlying fund investments, as well as the other accrued assets and liabilities of a fund,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
53 percent equity securities, 42 percent fixed income securities and 5 percent real estate and alternative investments.
Plan assets are held in a trust for the benefit of plan participants and are invested in various commingled funds, most of which are sponsored by the trustee. The fair values for commingled equity, fixed-income and real estate investments are measured using net asset values, which take into consideration the value of underlying fund investments, as well as the other accrued assets and liabilities of a fund, in order to determine a per share market value. Certain trustee-sponsored
54
Table of Contents
GRACO INC maintains a defined contribution plan covering employees of a Swiss subsidiary, funded by Company and employee contributions. Responsibility for pension coverage under Swiss law has been transferred to a Swiss insurance company. Plan assets are invested in an insurance contract that guarantees a federally mandated annual rate of return. The value of the plan assets is effectively the value of the insurance contract. The performance of the underlying assets held by the insurance company has no direct impact on the surrender value of the insurance contract. The insurance backed assets have no active market and are classified as level 3 in the fair value hierarchy.
Assets of all plans by category and fair value measurement level were as follows (in thousands):
Level
202
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
. Plan assets are invested in an insurance contract that guarantees a federally mandated annual rate of return. The value of the plan assets is effectively the value of the insurance contract. The performance of the underlying assets held by the insurance company has no direct impact on the surrender value of the insurance contract. The insurance backed assets have no active market and are classified as level 3 in the fair value hierarchy.
Assets of all plans by category and fair value measurement level were as follows (in thousands):
Level
2022
2021
Cash and cash equivalents
351
303
Insurance contract
32,163
30,926
Investments categorized in fair value hierarchy
32,514
31,229
Equity
U.S. Large Cap
N/A
74,838
110,569
U.S. Small/Mid Cap
N/A
5,191
11,338
International
N/A
37,862
56,128
Total equity
117,891
178,035
Fixed income
N/A
93,262
130,774
Real estate and other
N/A
37,508
7,862
Investments measured at net asset value
248,661
316,671
Total
281,175
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
110,569
U.S. Small/Mid Cap
N/A
5,191
11,338
International
N/A
37,862
56,128
Total equity
117,891
178,035
Fixed income
N/A
93,262
130,774
Real estate and other
N/A
37,508
7,862
Investments measured at net asset value
248,661
316,671
Total
281,175
347,900
The following table is a reconciliation of pension assets measured at fair value using level 3 inputs (in thousands):
2022
2021
Balance, beginning of year
30,926
31,877
Purchases
2,431
2,430
Redemptions
(669)
(2,556)
Unrealized losses
(525)
(825)
Balance, end of year
32,163
30,926
55
Table of Contents
The following provides a reconciliation of the changes in the plans’ benefit obligations and fair value of assets over the periods ending December 30, 2022, and December 31, 2021, and a statement of the funded status as of the same dates (in thousands):
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Redemptions
(669)
(2,556)
Unrealized losses
(525)
(825)
Balance, end of year
32,163
30,926
55
Table of Contents
The following provides a reconciliation of the changes in the plans’ benefit obligations and fair value of assets over the periods ending December 30, 2022, and December 31, 2021, and a statement of the funded status as of the same dates (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2022
2021
Change in benefit obligation
Obligation, beginning of year
418,051
510,652
32,122
34,458
Service cost
8,242
9,355
516
670
Interest cost
10,996
11,409
839
832
Actuarial (gain) loss
(110,467)
(31,093)
(9,044)
(2,391)
Benefit payments
(9,122)
(13,360)
(1,503)
(1,447)
Plan amendments
(267)
(1,458)
Settlements
(64,886)
Exchange
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
8,242
9,355
516
670
Interest cost
10,996
11,409
839
832
Actuarial (gain) loss
(110,467)
(31,093)
(9,044)
(2,391)
Benefit payments
(9,122)
(13,360)
(1,503)
(1,447)
Plan amendments
(267)
(1,458)
Settlements
(64,886)
Exchange rate changes
(1,626)
(2,568)
Obligation, end of year
315,807
418,051
22,930
32,122
Change in plan assets
Fair value, beginning of year
347,900
373,565
Actual return on assets
(80,078)
30,984
Employer contributions
22,756
22,493
1,503
1,447
Benefit payments
(9,122)
(13,360)
(1,503)
(1,447)
Settlements
(64,886)
Exchange rate changes
(281)
(896)
Fair value, end of year
281,175
347,900
Unfunded status
(34
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Actual return on assets
(80,078)
30,984
Employer contributions
22,756
22,493
1,503
1,447
Benefit payments
(9,122)
(13,360)
(1,503)
(1,447)
Settlements
(64,886)
Exchange rate changes
(281)
(896)
Fair value, end of year
281,175
347,900
Unfunded status
(34,632)
(70,151)
(22,930)
(32,122)
Amounts recognized in consolidated balance sheets
Non-current assets
5,398
Current liabilities
1,860
1,769
1,763
1,768
Non-current liabilities
38,170
68,382
21,167
30,354
Net
34,632
70,151
22,930
32,122
Changes in discount rates used to value pension obligations were the main drivers of actuarial gains in 2022 and 2021. In 2022 and 2021, the Company made a $20 million voluntary contribution each year to one of its U.S. qualified defined benefit plans.
The accumulated benefit obligation as of
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
38,170
68,382
21,167
30,354
Net
34,632
70,151
22,930
32,122
Changes in discount rates used to value pension obligations were the main drivers of actuarial gains in 2022 and 2021. In 2022 and 2021, the Company made a $20 million voluntary contribution each year to one of its U.S. qualified defined benefit plans.
The accumulated benefit obligation as of year-end for all defined benefit pension plans was $297 million for 2022 and $388 million for 2021. Information for plans with an accumulated benefit obligation in excess of plan assets follows (in thousands):
2022
2021
Projected benefit obligation
72,190
91,678
Accumulated benefit obligation
69,395
88,927
Fair value of plan assets
32,164
30,926
56
Table of Contents
The components of net periodic benefit cost for the plans for 2022, 2021 and 2020 were as follows (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2020
2022
2021
2020
Service cost
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
91,678
Accumulated benefit obligation
69,395
88,927
Fair value of plan assets
32,164
30,926
56
Table of Contents
The components of net periodic benefit cost for the plans for 2022, 2021 and 2020 were as follows (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2020
2022
2021
2020
Service cost-benefits earned during the period
8,242
9,355
9,361
516
670
609
Interest cost on projected benefit obligation
10,996
11,409
13,313
839
832
1,016
Expected return on assets
(19,754)
(20,767)
(18,814)
Amortization of prior service cost
84
246
294
Amortization of net loss
4,701
9,248
10,243
345
1,002
733
Settlement loss
12,285
Cost of pension plans which are not significant and have not adopted ASC 715
284
368
168
N/A
N/A
N/A
Net periodic benefit
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
assets
(19,754)
(20,767)
(18,814)
Amortization of prior service cost
84
246
294
Amortization of net loss
4,701
9,248
10,243
345
1,002
733
Settlement loss
12,285
Cost of pension plans which are not significant and have not adopted ASC 715
284
368
168
N/A
N/A
N/A
Net periodic benefit cost
4,553
22,144
14,565
1,700
2,504
2,358
Net periodic benefit cost is disaggregated between service cost presented as operating expense and other components of pension cost presented as non-operating expense. Other components of pension cost and changes in cash surrender value of insurance contracts intended to fund certain non-qualified pension and deferred compensation arrangements included in non-operating expenses totaled $1 million in 2022, $12 million in 2021 and $5 million in 2020.
Amounts recognized in other comprehensive income (loss) in 2022 and 2021 were as follows (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2022
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
pension cost and changes in cash surrender value of insurance contracts intended to fund certain non-qualified pension and deferred compensation arrangements included in non-operating expenses totaled $1 million in 2022, $12 million in 2021 and $5 million in 2020.
Amounts recognized in other comprehensive income (loss) in 2022 and 2021 were as follows (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2022
2021
Net gain (loss) arising during the period
11,189
42,039
9,044
2,391
Amortization of net (gain) loss
4,701
9,248
345
1,002
Prior service credit (cost) arising during the period
267
1,458
Settlement (gain) loss
12,285
Amortization of prior service (credit) cost
84
246
Total
16,241
65,276
9,389
3,393
Amounts included in accumulated other comprehensive income (loss) as of December 30, 2022 and December 31, 2021, that had not yet been recognized as components of net periodic benefit
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
credit (cost) arising during the period
267
1,458
Settlement (gain) loss
12,285
Amortization of prior service (credit) cost
84
246
Total
16,241
65,276
9,389
3,393
Amounts included in accumulated other comprehensive income (loss) as of December 30, 2022 and December 31, 2021, that had not yet been recognized as components of net periodic benefit cost, were as follows (in thousands):
Pension Benefits
Postretirement Medical Benefits
2022
2021
2022
2021
Prior service cost
1,668
1,293
Net gain (loss)
(55,084)
(70,995)
1,891
(7,498)
Net gain (loss) before income taxes
(53,416)
(69,702)
1,891
(7,498)
Income taxes
12,207
15,443
(416)
1,650
Net
(41,209)
(54,259)
1,475
(5,848)
57
Table of Contents
Assumptions used to determine the Company’s benefit obligations are shown below
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
70,995)
1,891
(7,498)
Net gain (loss) before income taxes
(53,416)
(69,702)
1,891
(7,498)
Income taxes
12,207
15,443
(416)
1,650
Net
(41,209)
(54,259)
1,475
(5,848)
57
Table of Contents
Assumptions used to determine the Company’s benefit obligations are shown below:
Pension Benefits
Postretirement Medical Benefits
Weighted average assumptions
2022
2021
2022
2021
U.S. Plans
Discount rate
5.6
3.0
5.6
2.9
Rate of compensation increase
2.7
2.7
N/A
N/A
Non-U.S. Plans
Discount rate
2.4
0.4
N/A
N/A
Rate of compensation increase
1.8
1.3
N/A
N/A
Assumptions used to determine the Company’s net periodic benefit cost are shown below:
Pension Benefits
Postretirement Medical Benefits
Weighted average assumptions
2022
2021
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
of compensation increase
2.7
2.7
N/A
N/A
Non-U.S. Plans
Discount rate
2.4
0.4
N/A
N/A
Rate of compensation increase
1.8
1.3
N/A
N/A
Assumptions used to determine the Company’s net periodic benefit cost are shown below:
Pension Benefits
Postretirement Medical Benefits
Weighted average assumptions
2022
2021
2020
2022
2021
2020
U.S. Plans
Discount rate
3.0
2.6
3.5
2.9
2.6
3.4
Rate of compensation increase
2.7
2.7
2.8
N/A
N/A
N/A
Expected return on assets
6.3
6.3
6.8
N/A
N/A
N/A
Non-U.S. Plans
Discount rate
0.4
0.4
0.4
N/A
N/A
N/A
Rate of compensation increase
1.3
1.3
1.3
N/A
N/A
N/A
Expected return on assets
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2.8
N/A
N/A
N/A
Expected return on assets
6.3
6.3
6.8
N/A
N/A
N/A
Non-U.S. Plans
Discount rate
0.4
0.4
0.4
N/A
N/A
N/A
Rate of compensation increase
1.3
1.3
1.3
N/A
N/A
N/A
Expected return on assets
1.0
1.0
1.5
N/A
N/A
N/A
Several sources of information are considered in determining the expected rate of return assumption, including the allocation of plan assets, the input of actuaries and professional investment advisers, and historical long-term returns. In setting the return assumption, the Company recognizes that historical returns are not always indicative of future returns and also considers the long-term nature of its pension obligations.
GRACO INC’s U.S. retirement medical plan limits the annual cost increase that will be paid by the Company to 3 percent. In measuring the accumulated postretirement benefit obligation (APBO), the annual trend rate for health care costs was assumed to be 8.5 percent for 2023, decreasing each year to
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
long-term returns. In setting the return assumption, the Company recognizes that historical returns are not always indicative of future returns and also considers the long-term nature of its pension obligations.
GRACO INC’s U.S. retirement medical plan limits the annual cost increase that will be paid by the Company to 3 percent. In measuring the accumulated postretirement benefit obligation (APBO), the annual trend rate for health care costs was assumed to be 8.5 percent for 2023, decreasing each year to a constant rate of 4.5 percent for 2038 and thereafter, subject to the plan’s annual increase limitation.
GRACO INC expects to contribute $1.9 million to its unfunded pension plans and $1.8 million to the postretirement medical plan in 2023. GRACO INC will not be required to make contributions to the funded pension plan under minimum funding requirements for 2023. Estimated future benefit payments are as follows (in thousands):
PensionBenefits
PostretirementMedical Benefits
2023
15,583
1,763
2024
17,035
1,748
2025
16,406
1,735
2026
18,585
1,715
2027
20,116
1,
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2023. GRACO INC will not be required to make contributions to the funded pension plan under minimum funding requirements for 2023. Estimated future benefit payments are as follows (in thousands):
PensionBenefits
PostretirementMedical Benefits
2023
15,583
1,763
2024
17,035
1,748
2025
16,406
1,735
2026
18,585
1,715
2027
20,116
1,699
Years 2028-2032
107,755
8,136
58
Table of Contents
K. Commitments and Contingencies
Operating Lease Liabilities and Assets
GRACO INC owns most of the assets used in its operations, but leases certain buildings and land, vehicles, office equipment and other rental assets. GRACO INC determines if an arrangement is a lease at inception. All of the Company’s current lease arrangements are classified as operating leases. GRACO INC 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
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
and land, vehicles, office equipment and other rental assets. GRACO INC determines if an arrangement is a lease at inception. All of the Company’s current lease arrangements are classified as operating leases. GRACO INC 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. GRACO INC generally uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments.
Supplemental information related to the Company's lease activities is as follows (in thousands):
2022
2021
Operating lease expense
12,307
11,641
Operating lease payments
11,886
11,564
Non-cash additions to operating lease assets
8,859
1,631
Additional information related to operating leases is as follows:
2022
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments.
Supplemental information related to the Company's lease activities is as follows (in thousands):
2022
2021
Operating lease expense
12,307
11,641
Operating lease payments
11,886
11,564
Non-cash additions to operating lease assets
8,859
1,631
Additional information related to operating leases is as follows:
2022
2021
Weighted average remaining lease term (years)
3.0
5.0
Weighted average discount rate
3.00
2.24
Variable lease costs and short term lease costs were not significant for the twelve months ended December 30, 2022 and December 31, 2021.
As of December 30, 2022, future maturities of operating lease liabilities were as follows (in thousands):
2023
9,555
2024
7,931
2025
5,462
2026
4,118
2027
2,514
Thereafter
2,928
Total lease payments
32,508
Present value adjustment
(1,896)
Operating lease liabilities
30
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
2022 and December 31, 2021.
As of December 30, 2022, future maturities of operating lease liabilities were as follows (in thousands):
2023
9,555
2024
7,931
2025
5,462
2026
4,118
2027
2,514
Thereafter
2,928
Total lease payments
32,508
Present value adjustment
(1,896)
Operating lease liabilities
30,612
Other Commitments.
GRACO INC is committed to pay suppliers under the terms of open purchase orders issued in the normal course of business totaling approximately $230 million at December 30, 2022. GRACO INC also has commitments with certain suppliers to purchase minimum quantities, and under the terms of certain agreements, the Company is committed for certain portions of the supplier’s inventory. GRACO INC does not purchase, or commit to purchase, quantities in excess of normal usage or amounts that cannot be used within one year. GRACO INC estimates that the maximum commitment amount under such agreements does not exceed $59 million.
GRACO INC enters into contracts with vendors to receive services. Commitments under these service contracts with non-cancelable terms of more than one year totaled $4 million in 2023
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
under the terms of certain agreements, the Company is committed for certain portions of the supplier’s inventory. GRACO INC does not purchase, or commit to purchase, quantities in excess of normal usage or amounts that cannot be used within one year. GRACO INC estimates that the maximum commitment amount under such agreements does not exceed $59 million.
GRACO INC enters into contracts with vendors to receive services. Commitments under these service contracts with non-cancelable terms of more than one year totaled $4 million in 2023, $3 million in 2024, $3 million in 2025 and $2 million thereafter.
59
Table of Contents
In addition, the Company could be obligated to perform under standby letters of credit totaling $6 million at December 30, 2022. GRACO INC has also guaranteed the debt of its subsidiaries for up to $8 million. All debt of subsidiaries is reflected in the consolidated balance sheets.
Contingencies.
GRACO INC is party to various legal proceedings arising in the normal course of business. GRACO INC is actively pursuing and defending these matters and has recorded an estimate of the probable costs where appropriate. Management does not expect that resolution of these matters will have a material adverse effect on the Company, although the ultimate outcome cannot be determined based on available information
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
GRACO INC has also guaranteed the debt of its subsidiaries for up to $8 million. All debt of subsidiaries is reflected in the consolidated balance sheets.
Contingencies.
GRACO INC is party to various legal proceedings arising in the normal course of business. GRACO INC is actively pursuing and defending these matters and has recorded an estimate of the probable costs where appropriate. Management does not expect that resolution of these matters will have a material adverse effect on the Company, although the ultimate outcome cannot be determined based on available information.
60
Table of Contents
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the fiscal year covered by this Annual Report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. This evaluation was done under the supervision and with the participation of the Company’s President and Chief Executive Officer, the Chief Financial Officer and Treasurer, and the Executive Vice President, Corporate Controller and Information Systems. Based upon that
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Report, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. This evaluation was done under the supervision and with the participation of the Company’s President and Chief Executive Officer, the Chief Financial Officer and Treasurer, and the Executive Vice President, Corporate Controller and Information Systems. Based upon that evaluation, they concluded that the Company’s disclosure controls and procedures are effective.
Management’s Annual Report on Internal Control Over Financial Reporting
The information under the heading “Management’s Report on Internal Control Over Financial Reporting” in Part II, Item 8, of this 2022 Annual Report on Form 10-K is incorporated herein by reference.
Reports of Independent Registered Public Accounting Firm
The information under the headings “Reports of Independent Registered Public Accounting Firm” and “Opinion on Internal Control Over Financial Reporting” in Part II, Item 8, of this 2022 Annual Report on Form 10-K is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
During the fourth quarter, there was no change in the Company’s internal control over financial reporting that has materially
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
Report on Form 10-K is incorporated herein by reference.
Reports of Independent Registered Public Accounting Firm
The information under the headings “Reports of Independent Registered Public Accounting Firm” and “Opinion on Internal Control Over Financial Reporting” in Part II, Item 8, of this 2022 Annual Report on Form 10-K is incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
During the fourth quarter, there was no change in the Company’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Item 9B. Other Information
On February 17, 2023, upon recommendation of the Governance Committee, the Board of Directors (the “Board”) of our Company approved an amendment and restatement of our Company’s Restated Bylaws (the “Bylaws”), effective immediately, to implement proxy access, make changes in connection with the new Securities and Exchange Commission rules regarding universal proxy cards (the “Universal Proxy Rules”), and to make certain other changes.
The amendments include the following, among others: (i) adding provisions to allow a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common stock continuously for at
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
and restatement of our Company’s Restated Bylaws (the “Bylaws”), effective immediately, to implement proxy access, make changes in connection with the new Securities and Exchange Commission rules regarding universal proxy cards (the “Universal Proxy Rules”), and to make certain other changes.
The amendments include the following, among others: (i) adding provisions to allow a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials director-nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the shareholder(s) and the director-nominee(s) satisfy the requirements specified in the Bylaws; (ii) adding a requirement that any director nominee proposed by a shareholder furnish to the Company, if requested, a completed and signed questionnaire required of the Company’s directors; (iii) adding a requirement that any shareholder who intends to solicit proxies in support of a director nominee certify to the Company that such shareholder has complied with or will comply with the requirements of the Universal Proxy Rules and, if requested by the Company, will provide reasonable evidence of such compliance no later than five business days
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
the Bylaws; (ii) adding a requirement that any director nominee proposed by a shareholder furnish to the Company, if requested, a completed and signed questionnaire required of the Company’s directors; (iii) adding a requirement that any shareholder who intends to solicit proxies in support of a director nominee certify to the Company that such shareholder has complied with or will comply with the requirements of the Universal Proxy Rules and, if requested by the Company, will provide reasonable evidence of such compliance no later than five business days prior to the date of the applicable meeting of shareholders; (iv) clarifying that the Company is allowed to consider certain shareholder nominations of director candidates to be null and void where any shareholder fails to comply with the Universal Proxy Rules; (v) adding a provision that any shareholder soliciting proxies from other shareholders must use a proxy card color other than white, which is reserved for exclusive use by the Board; (vi) clarifying that any meeting of shareholders may be adjourned exclusively by the chairperson of the meeting; and (vii) clarifying that each meeting of shareholders will be presided over by a chairperson, who will be the Chair of the Board, the Chief Executive Officer or such other officer of the Company as the Board designates as chairperson of
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Source:
cik:42888
ticker:GGG
name:GRACO INC
exchange:NYSE
filing_type:10-K
Text:
iting proxies from other shareholders must use a proxy card color other than white, which is reserved for exclusive use by the Board; (vi) clarifying that any meeting of shareholders may be adjourned exclusively by the chairperson of the meeting; and (vii) clarifying that each meeting of shareholders will be presided over by a chairperson, who will be the Chair of the Board, the Chief Executive Officer or such other officer of the Company as the Board designates as chairperson of the meeting, and clarifying certain other procedural aspects of the conduct of shareholder meetings. Additional minor amendments and conforming changes were made that do not materially affect the substance of the Bylaws.
61
Table of Contents
The foregoing description of the amendments to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is filed as Exhibit 3.2 hereto and is incorporated by reference in this Annual Report on Form 10-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
62
Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information under the heading “Information About Our
|
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