GRACO INC.
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(Exact name of registrant as specified in its charter)
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Minnesota
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41-0285640
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(State of incorporation)
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(I.R.S. Employer Identification Number)
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88 - 11th Avenue N.E.
Minneapolis, Minnesota
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55413
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(Address of principal executive offices)
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(Zip Code)
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(612) 623-6000
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(Registrant’s telephone number, including area code)
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Large Accelerated Filer
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X
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Accelerated Filer
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Non-accelerated Filer
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Smaller reporting company
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Page
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PART I - FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II - OTHER INFORMATION
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Item 1A.
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Item 2.
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Item 6.
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EXHIBITS
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Thirteen Weeks Ended
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||||||
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March 25,
2016 |
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March 27,
2015 |
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Net Sales
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$
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304,912
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$
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306,453
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Cost of products sold
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143,116
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144,324
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Gross Profit
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161,796
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162,129
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Product development
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14,686
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15,290
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Selling, marketing and distribution
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52,701
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51,424
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General and administrative
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33,460
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30,184
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Operating Earnings
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60,949
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65,231
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Interest expense
|
4,493
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5,303
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Held separate investment (income), net
|
—
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(29,523
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)
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Other expense (income), net
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(1,146
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)
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|
710
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Earnings Before Income Taxes
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57,602
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88,741
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Income taxes
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18,050
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19,900
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Net Earnings
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$
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39,552
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$
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68,841
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Per Common Share
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||||
Basic net earnings
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$
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0.71
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$
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1.17
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Diluted net earnings
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$
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0.70
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$
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1.14
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Cash dividends declared
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$
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0.33
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$
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0.30
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Thirteen Weeks Ended
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||||||
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March 25,
2016 |
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March 27,
2015 |
||||
Net Earnings
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$
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39,552
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$
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68,841
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Components of other comprehensive income (loss)
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||||
Cumulative translation adjustment
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(2,402
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)
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(3,011
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)
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Pension and postretirement medical liability adjustment
|
1,473
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2,438
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Income taxes - pension and postretirement medical liability adjustment
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(569
|
)
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(902
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)
|
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Other comprehensive income (loss)
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(1,498
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)
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(1,475
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)
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Comprehensive Income
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$
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38,054
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$
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67,366
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March 25,
2016 |
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December 25,
2015 |
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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36,490
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$
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52,295
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Accounts receivable, less allowances of $11,400 and $10,400
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226,030
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225,509
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Inventories
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212,331
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202,136
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Other current assets
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20,993
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29,077
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Total current assets
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495,844
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509,017
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Property, Plant and Equipment
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Cost
|
469,381
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461,173
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Accumulated depreciation
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(285,170
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)
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(282,736
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)
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Property, plant and equipment, net
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184,211
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178,437
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Goodwill
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419,447
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394,488
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Other Intangible Assets, net
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248,827
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227,987
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Deferred Income Taxes
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58,674
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56,976
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Other Assets
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23,995
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24,447
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Total Assets
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$
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1,430,998
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$
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1,391,352
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities
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Notes payable to banks
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$
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14,508
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$
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15,901
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Trade accounts payable
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40,329
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40,505
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Salaries and incentives
|
27,886
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44,673
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Dividends payable
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18,150
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18,447
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Other current liabilities
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60,884
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75,090
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Total current liabilities
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161,757
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194,616
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Long-term Debt
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457,670
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392,695
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Retirement Benefits and Deferred Compensation
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137,356
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137,457
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Deferred Income Taxes
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28,577
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22,303
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Other Non-current Liabilities
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8,730
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8,730
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Shareholders’ Equity
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Common stock
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55,566
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55,766
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Additional paid-in-capital
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422,436
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398,774
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Retained earnings
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264,901
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285,508
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Accumulated other comprehensive income (loss)
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(105,995
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)
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(104,497
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)
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Total shareholders’ equity
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636,908
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635,551
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Total Liabilities and Shareholders’ Equity
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$
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1,430,998
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$
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1,391,352
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Thirteen Weeks Ended
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||||||
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March 25,
2016 |
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March 27,
2015 |
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Cash Flows From Operating Activities
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Net Earnings
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$
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39,552
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$
|
68,841
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Adjustments to reconcile net earnings to net cash provided by operating activities
|
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|
||||
Depreciation and amortization
|
12,010
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|
10,810
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Deferred income taxes
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(2,688
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)
|
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(4,044
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)
|
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Share-based compensation
|
6,093
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|
5,033
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Excess tax benefit related to share-based payment arrangements
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(3,300
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)
|
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(300
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)
|
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Change in
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|
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|
||||
Accounts receivable
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3,100
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(26,632
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)
|
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Inventories
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(8,127
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)
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(13,545
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)
|
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Trade accounts payable
|
119
|
|
|
6,088
|
|
||
Salaries and incentives
|
(17,191
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)
|
|
(16,910
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)
|
||
Retirement benefits and deferred compensation
|
669
|
|
|
3,171
|
|
||
Other accrued liabilities
|
(3,233
|
)
|
|
4,947
|
|
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Other
|
(1,426
|
)
|
|
9,762
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Net cash provided by operating activities
|
25,578
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|
|
47,221
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Cash Flows From Investing Activities
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|
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|
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Property, plant and equipment additions
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(13,121
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)
|
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(9,796
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)
|
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Acquisition of businesses, net of cash acquired
|
(48,881
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)
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(182,904
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)
|
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Investment in restricted assets
|
876
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|
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—
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Other
|
320
|
|
|
38
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|
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Net cash provided by (used in) investing activities
|
(60,806
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)
|
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(192,662
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)
|
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Cash Flows From Financing Activities
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|
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|
||||
Borrowings (payments) on short-term lines of credit, net
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(1,461
|
)
|
|
47,605
|
|
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Borrowings on long-term line of credit
|
298,709
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|
|
379,095
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|
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Payments on long-term line of credit
|
(233,734
|
)
|
|
(227,055
|
)
|
||
Excess tax benefit related to share-based payment arrangements
|
3,300
|
|
|
300
|
|
||
Common stock issued
|
20,111
|
|
|
12,746
|
|
||
Common stock repurchased
|
(48,050
|
)
|
|
(46,935
|
)
|
||
Cash dividends paid
|
(18,332
|
)
|
|
(17,730
|
)
|
||
Net cash provided by (used in) financing activities
|
20,543
|
|
|
148,026
|
|
||
Effect of exchange rate changes on cash
|
(1,120
|
)
|
|
1,437
|
|
||
Net increase (decrease) in cash and cash equivalents
|
(15,805
|
)
|
|
4,022
|
|
||
Cash and cash equivalents
|
|
|
|
||||
Beginning of year
|
52,295
|
|
|
23,656
|
|
||
End of period
|
$
|
36,490
|
|
|
$
|
27,678
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net earnings available to common shareholders
|
$
|
39,552
|
|
|
$
|
68,841
|
|
Weighted average shares outstanding for basic earnings per share
|
55,394
|
|
|
58,981
|
|
||
Dilutive effect of stock options computed using the treasury stock method and the average market price
|
1,315
|
|
|
1,484
|
|
||
Weighted average shares outstanding for diluted earnings per share
|
56,709
|
|
|
60,465
|
|
||
Basic earnings per share
|
$
|
0.71
|
|
|
$
|
1.17
|
|
Diluted earnings per share
|
$
|
0.70
|
|
|
$
|
1.14
|
|
|
Option Shares
|
|
Weighted Average Exercise Price
|
|
Options Exercisable
|
|
Weighted Average Exercise Price
|
||||||
Outstanding, December 25, 2015
|
5,165
|
|
|
$
|
48.16
|
|
|
3,583
|
|
|
$
|
38.49
|
|
Granted
|
642
|
|
|
71.54
|
|
|
|
|
|
||||
Exercised
|
(465
|
)
|
|
37.78
|
|
|
|
|
|
||||
Canceled
|
(6
|
)
|
|
67.46
|
|
|
|
|
|
||||
Outstanding, March 25, 2016
|
5,336
|
|
|
$
|
51.86
|
|
|
3,575
|
|
|
$
|
41.83
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Expected life in years
|
7.0
|
|
|
6.5
|
|
||
Interest rate
|
1.4
|
%
|
|
1.7
|
%
|
||
Volatility
|
30.3
|
%
|
|
35.3
|
%
|
||
Dividend yield
|
1.9
|
%
|
|
1.6
|
%
|
||
Weighted average fair value per share
|
$
|
18.89
|
|
|
$
|
23.42
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Expected life in years
|
1.0
|
|
|
1.0
|
|
||
Interest rate
|
0.7
|
%
|
|
0.2
|
%
|
||
Volatility
|
19.3
|
%
|
|
18.9
|
%
|
||
Dividend yield
|
1.7
|
%
|
|
1.6
|
%
|
||
Weighted average fair value per share
|
$
|
17.49
|
|
|
$
|
16.51
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Pension Benefits
|
|
|
|
||||
Service cost
|
$
|
1,997
|
|
|
$
|
2,096
|
|
Interest cost
|
4,017
|
|
|
3,775
|
|
||
Expected return on assets
|
(4,637
|
)
|
|
(4,917
|
)
|
||
Amortization and other
|
2,300
|
|
|
2,353
|
|
||
Net periodic benefit cost
|
$
|
3,677
|
|
|
$
|
3,307
|
|
Postretirement Medical
|
|
|
|
||||
Service cost
|
$
|
150
|
|
|
$
|
150
|
|
Interest cost
|
262
|
|
|
226
|
|
||
Amortization
|
(138
|
)
|
|
(101
|
)
|
||
Net periodic benefit cost
|
$
|
274
|
|
|
$
|
275
|
|
|
Pension and Post-
retirement Medical
|
|
Cumulative
Translation
Adjustment
|
|
Total
|
||||||
Balance, December 26, 2014
|
$
|
(76,584
|
)
|
|
$
|
(24,152
|
)
|
|
$
|
(100,736
|
)
|
Other comprehensive income before reclassifications
|
—
|
|
|
(3,011
|
)
|
|
(3,011
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
1,536
|
|
|
—
|
|
|
1,536
|
|
|||
Balance, March 27, 2015
|
$
|
(75,048
|
)
|
|
$
|
(27,163
|
)
|
|
$
|
(102,211
|
)
|
Balance, December 25, 2015
|
$
|
(69,922
|
)
|
|
$
|
(34,575
|
)
|
|
$
|
(104,497
|
)
|
Other comprehensive income before reclassifications
|
—
|
|
|
(2,402
|
)
|
|
(2,402
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
904
|
|
|
—
|
|
|
904
|
|
|||
Balance, March 25, 2016
|
$
|
(69,018
|
)
|
|
$
|
(36,977
|
)
|
|
$
|
(105,995
|
)
|
.
|
|
|
|
|
|
.
|
|
|
|
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Cost of products sold
|
$
|
528
|
|
|
$
|
938
|
|
Product development
|
204
|
|
|
383
|
|
||
Selling, marketing and distribution
|
486
|
|
|
703
|
|
||
General and administrative
|
255
|
|
|
414
|
|
||
Total before tax
|
$
|
1,473
|
|
|
$
|
2,438
|
|
Income tax (benefit)
|
(569
|
)
|
|
(902
|
)
|
||
Total after tax
|
$
|
904
|
|
|
$
|
1,536
|
|
6.
|
Segment Information
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net Sales
|
|
|
|
||||
Industrial
|
$
|
147,088
|
|
|
$
|
143,266
|
|
Process
|
64,285
|
|
|
67,681
|
|
||
Contractor
|
93,539
|
|
|
95,506
|
|
||
Total
|
$
|
304,912
|
|
|
$
|
306,453
|
|
Operating Earnings
|
|
|
|
||||
Industrial
|
$
|
45,794
|
|
|
$
|
42,940
|
|
Process
|
7,277
|
|
|
10,498
|
|
||
Contractor
|
16,743
|
|
|
19,375
|
|
||
Unallocated corporate (expense)
|
(8,865
|
)
|
|
(7,582
|
)
|
||
Total
|
$
|
60,949
|
|
|
$
|
65,231
|
|
|
March 25,
2016 |
|
December 25,
2015 |
||||
Industrial
|
$
|
562,702
|
|
|
$
|
558,799
|
|
Process
|
532,447
|
|
|
481,677
|
|
||
Contractor
|
216,170
|
|
|
205,632
|
|
||
Unallocated corporate
|
119,679
|
|
|
145,244
|
|
||
Total
|
$
|
1,430,998
|
|
|
$
|
1,391,352
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net sales
(based on customer location)
|
|
|
|
||||
United States
|
$
|
153,001
|
|
|
$
|
159,328
|
|
Other countries
|
151,911
|
|
|
147,125
|
|
||
Total
|
$
|
304,912
|
|
|
$
|
306,453
|
|
|
March 25,
2016 |
|
December 25,
2015 |
||||
Long-lived assets
|
|
|
|
||||
United States
|
$
|
148,058
|
|
|
$
|
144,571
|
|
Other countries
|
36,153
|
|
|
33,866
|
|
||
Total
|
$
|
184,211
|
|
|
$
|
178,437
|
|
|
March 25,
2016 |
|
December 25,
2015 |
||||
Finished products and components
|
$
|
117,180
|
|
|
$
|
112,267
|
|
Products and components in various stages of completion
|
55,136
|
|
|
51,033
|
|
||
Raw materials and purchased components
|
84,556
|
|
|
82,894
|
|
||
|
256,872
|
|
|
246,194
|
|
||
Reduction to LIFO cost
|
(44,541
|
)
|
|
(44,058
|
)
|
||
Total
|
$
|
212,331
|
|
|
$
|
202,136
|
|
|
Estimated Life
(years)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Foreign
Currency Translation
|
|
Book
Value
|
||||||||
March 25, 2016
|
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
3 - 14
|
|
$
|
218,227
|
|
|
$
|
(41,010
|
)
|
|
$
|
(9,306
|
)
|
|
$
|
167,911
|
|
Patents, proprietary technology and product documentation
|
3 - 11
|
|
22,222
|
|
|
(9,514
|
)
|
|
(576
|
)
|
|
12,132
|
|
||||
Trademarks, trade names and other
|
5
|
|
595
|
|
|
(156
|
)
|
|
(79
|
)
|
|
360
|
|
||||
|
|
|
241,044
|
|
|
(50,680
|
)
|
|
(9,961
|
)
|
|
180,403
|
|
||||
Not Subject to Amortization:
|
|
|
|
|
|
|
|
|
|
||||||||
Brand names
|
|
|
72,128
|
|
|
—
|
|
|
(3,704
|
)
|
|
68,424
|
|
||||
Total
|
|
|
$
|
313,172
|
|
|
$
|
(50,680
|
)
|
|
$
|
(13,665
|
)
|
|
$
|
248,827
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
December 25, 2015
|
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
3 - 14
|
|
$
|
197,900
|
|
|
$
|
(36,852
|
)
|
|
$
|
(9,738
|
)
|
|
$
|
151,310
|
|
Patents, proprietary technology and product documentation
|
3 - 11
|
|
20,400
|
|
|
(8,952
|
)
|
|
(658
|
)
|
|
10,790
|
|
||||
Trademarks, trade names and other
|
5
|
|
495
|
|
|
(132
|
)
|
|
(94
|
)
|
|
269
|
|
||||
|
|
|
218,795
|
|
|
(45,936
|
)
|
|
(10,490
|
)
|
|
162,369
|
|
||||
Not Subject to Amortization:
|
|
|
|
|
|
|
|
|
|
||||||||
Brand names
|
|
|
69,514
|
|
|
—
|
|
|
(3,896
|
)
|
|
65,618
|
|
||||
Total
|
|
|
$
|
288,309
|
|
|
$
|
(45,936
|
)
|
|
$
|
(14,386
|
)
|
|
$
|
227,987
|
|
|
Industrial
|
|
Process
|
|
Contractor
|
|
Total
|
||||||||
Balance, December 25, 2015
|
$
|
153,283
|
|
|
$
|
228,473
|
|
|
$
|
12,732
|
|
|
$
|
394,488
|
|
Additions from business acquisitions
|
—
|
|
|
27,049
|
|
|
—
|
|
|
27,049
|
|
||||
Foreign currency translation
|
1,585
|
|
|
(3,675
|
)
|
|
—
|
|
|
(2,090
|
)
|
||||
Balance, March 25, 2016
|
$
|
154,868
|
|
|
$
|
251,847
|
|
|
$
|
12,732
|
|
|
$
|
419,447
|
|
9.
|
Other Current Liabilities
|
|
March 25,
2016 |
|
December 25,
2015 |
||||
Accrued self-insurance retentions
|
$
|
6,953
|
|
|
$
|
6,908
|
|
Accrued warranty and service liabilities
|
7,913
|
|
|
7,870
|
|
||
Accrued trade promotions
|
5,869
|
|
|
8,522
|
|
||
Payable for employee stock purchases
|
1,845
|
|
|
8,825
|
|
||
Customer advances and deferred revenue
|
8,393
|
|
|
9,449
|
|
||
Income taxes payable
|
4,770
|
|
|
1,308
|
|
||
Other
|
25,141
|
|
|
32,208
|
|
||
Total
|
$
|
60,884
|
|
|
$
|
75,090
|
|
Balance, December 25, 2015
|
$
|
7,870
|
|
Charged to expense
|
1,655
|
|
|
Margin on parts sales reversed
|
120
|
|
|
Reductions for claims settled
|
(1,732
|
)
|
|
Balance, March 25, 2016
|
$
|
7,913
|
|
|
Level
|
|
March 25,
2016 |
|
December 25,
2015 |
||||
Assets
|
|
|
|
|
|
||||
Cash surrender value of life insurance
|
2
|
|
$
|
12,749
|
|
|
$
|
12,856
|
|
Forward exchange contracts
|
2
|
|
—
|
|
|
107
|
|
||
Total assets at fair value
|
|
|
$
|
12,749
|
|
|
$
|
12,963
|
|
Liabilities
|
|
|
|
|
|
||||
Contingent consideration
|
3
|
|
$
|
4,081
|
|
|
$
|
9,600
|
|
Deferred compensation
|
2
|
|
2,991
|
|
|
2,958
|
|
||
Forward exchange contracts
|
2
|
|
603
|
|
|
—
|
|
||
Total liabilities at fair value
|
|
|
$
|
7,675
|
|
|
$
|
12,558
|
|
|
Thirteen Weeks Ended
|
|||||||||
|
March 25,
2016 |
|
March 27,
2015 |
|
%
Change
|
|||||
Net Sales
|
$
|
304.9
|
|
|
$
|
306.5
|
|
|
(1
|
)%
|
Operating Earnings
|
60.9
|
|
|
65.2
|
|
|
(7
|
)%
|
||
Net Earnings
|
$
|
39.6
|
|
|
$
|
68.8
|
|
|
(43
|
)%
|
Diluted Net Earnings per Common Share
|
$
|
0.70
|
|
|
$
|
1.14
|
|
|
(39
|
)%
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net Earnings, as reported
|
$
|
39.6
|
|
|
$
|
68.8
|
|
Held separate investment (income), net
|
—
|
|
|
(29.5
|
)
|
||
Income tax effect
|
—
|
|
|
(0.2
|
)
|
||
Net Earnings, adjusted
|
$
|
39.6
|
|
|
$
|
39.1
|
|
Diluted earnings per share
|
|
|
|
||||
As reported
|
$
|
0.70
|
|
|
$
|
1.14
|
|
Adjusted
|
$
|
0.70
|
|
|
$
|
0.65
|
|
|
Year-to-Date
|
|||||||||||||||||||
|
Segment
|
|
Region
|
|
Total
|
|||||||||||||||
|
Industrial
|
|
Process
|
|
Contractor
|
|
Americas
(1)
|
|
EMEA
(2)
|
|
Asia Pacific
|
|
||||||||
Volume and Price
|
3
|
%
|
|
(11
|
)%
|
|
(1
|
)%
|
|
(7
|
)%
|
|
10
|
%
|
|
6
|
%
|
|
(1
|
)%
|
Acquisitions
|
2
|
%
|
|
8
|
%
|
|
—
|
%
|
|
1
|
%
|
|
3
|
%
|
|
3
|
%
|
|
2
|
%
|
Currency
|
(2
|
)%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
—
|
%
|
|
(3
|
)%
|
|
(3
|
)%
|
|
(2
|
)%
|
Total
|
3
|
%
|
|
(5
|
)%
|
|
(2
|
)%
|
|
(6
|
)%
|
|
10
|
%
|
|
6
|
%
|
|
(1
|
)%
|
(1)
North and South America, including the United States
|
(2)
Europe, Middle East and Africa
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net sales (in millions)
|
|
|
|
||||
Americas
|
$
|
65.1
|
|
|
$
|
67.8
|
|
EMEA
|
44.2
|
|
|
41.0
|
|
||
Asia Pacific
|
37.8
|
|
|
34.5
|
|
||
Total
|
$
|
147.1
|
|
|
$
|
143.3
|
|
Operating earnings as a percentage of net sales
|
31
|
%
|
|
30
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net sales (in millions)
|
|
|
|
||||
Americas
|
$
|
40.0
|
|
|
$
|
42.9
|
|
EMEA
|
13.9
|
|
|
13.9
|
|
||
Asia Pacific
|
10.4
|
|
|
10.9
|
|
||
Total
|
$
|
64.3
|
|
|
$
|
67.7
|
|
Operating earnings as a percentage of net sales
|
11
|
%
|
|
16
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net sales (in millions)
|
|
|
|
||||
Americas
|
$
|
68.3
|
|
|
$
|
74.2
|
|
EMEA
|
17.6
|
|
|
13.9
|
|
||
Asia Pacific
|
7.6
|
|
|
7.4
|
|
||
Total
|
$
|
93.5
|
|
|
$
|
95.5
|
|
Operating earnings as a percentage of net sales
|
18
|
%
|
|
20
|
%
|
Period
|
Total Number
of Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
(at end of period)
|
|||||
December 26, 2015 - January 22, 2016
|
538,624
|
|
|
$
|
65.62
|
|
|
538,624
|
|
|
4,040,800
|
|
January 23, 2016 - February 19, 2016
|
188,433
|
|
|
$
|
67.42
|
|
|
188,433
|
|
|
3,852,367
|
|
February 20, 2016 - March 25, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
3.1
|
|
|
Restated Articles of Incorporation as amended June 13, 2014. (Incorporated by reference to Exhibit 3.1 to the Company’s Report on Form 8-K filed June 16, 2014.)
|
|
|
|
|
3.2
|
|
|
Restated Bylaws as amended February 14, 2014. (Incorporated by reference to Exhibit 3.2 to the Company’s 2013 Annual Report on Form 10-K.)
|
|
|
|
|
10.1
|
|
|
Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2015 Stock Incentive Plan in 2016 .
|
|
|
|
|
10.2
|
|
|
Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2015 Stock Incentive Plan in 2016.
|
|
|
|
|
31.1
|
|
|
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a).
|
|
|
|
|
31.2
|
|
|
Certification of Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a).
|
|
|
|
|
32
|
|
|
Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C.
|
|
|
|
|
99.1
|
|
|
Press Release Reporting First Quarter Earnings dated April 20, 2016.
|
|
|
|
|
101
|
|
|
Interactive Data File.
|
|
|
|
|
|
|
|
Date:
|
|
April 20, 2016
|
|
By:
|
|
/s/ Patrick J. McHale
|
|
|
|
|
|
|
Patrick J. McHale
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|||
Date:
|
|
April 20, 2016
|
|
By:
|
|
/s/ Christian E. Rothe
|
|
|
|
|
|
|
Christian E. Rothe
|
|
|
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|||
Date:
|
|
April 20, 2016
|
|
By:
|
|
/s/ Caroline M. Chambers
|
|
|
|
|
|
|
Caroline M. Chambers
|
|
|
|
|
|
|
Vice President, Corporate Controller
and Information Systems
|
|
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
Exhibit 10.1
|
Graco Inc. Non-Qualified Stock Option Agreement
|
[Grant Plan Long Name]
|
|
|
Graco Inc., a Minnesota corporation, (the “Company”), pursuant to the terms of the Graco Inc. 2015 Stock Incentive Plan (the “Plan”), wishes to grant this Option (as defined in the Terms and Conditions below) to you (“Employee”).
You must carefully read the Terms and Conditions governing this Option, as well as the Prospectus and any other documents provided in connection with the Option grant. Be sure you understand these documents and what your responsibilities and obligations are before acknowledging receipt of the Option. If you are not willing to agree to the Option Terms and Conditions, you must not accept the Option and you should not sign the Option Grant Acknowledgment and Agreement. If you accept the Option, you are accepting all of the Terms and Conditions that are applicable to your receipt of the Option. If you do not accept the Option, you are forfeiting your right to receive any potential benefits from the Option.
|
|
|
Employee: XXXX
|
Global ID: XXXXXXX
|
Award Type: XXXXXX
|
Date of Grant: XXXX
|
Award Expiration Date: XXXXX
|
Shares Granted: XXXXXX
|
Award Price: XX.XXUSD
|
Note
: The statements above are qualified in their entirety by the Terms and Conditions below, and should be read in conjunction with such Terms and Conditions.
|
2.
|
Duration and Exercisability
|
A.
|
No portion of this Option may be exercised by Employee until the first anniversary of the Date of Grant and then only in accordance with the Vesting Schedule set forth below. In no event shall this Option or any portion of this Option be exercisable following the tenth anniversary of the Date of Grant.
|
Vesting Date
|
Portion of Option Exercisable
|
First Anniversary of Date of Grant
|
25%
|
Second Anniversary of Date of Grant
|
50%
|
Third Anniversary of Date of Grant
|
75%
|
Fourth Anniversary of Date of Grant
|
100%
|
C.
|
Under no circumstances may the Option or any portion of the Option granted by this Agreement be exercised after the term of the Option expires.
|
3.
|
Effect of Termination of Employment
|
A.
|
If Employee’s employment terminates for any reason other than Employee’s gross and willful misconduct, death, retirement (as defined in Section 3D), or disability (as defined in Section 3D), any portion of the Option that was exercisable as of the date of termination of employment shall be exercisable at any time within the period beginning on the day after termination of Employee’s employment and ending at the close of trading on the Exchange ninety (90) days later.
|
B.
|
If Employee’s employment terminates by reason of Employee’s gross and willful misconduct during employment, including, but not limited to, wrongful appropriation of Company or affiliate funds, serious violations of Company policy, breach of fiduciary duty or the conviction of a felony, the unexercised portion of the Option shall terminate as of the time of the misconduct. If the Company determines subsequent to the termination of Employee’s employment for whatever reason, that Employee engaged in conduct during employment that would constitute gross and willful misconduct justifying termination, the Option shall terminate as of the time of such misconduct. Furthermore, if the Option is exercised in whole or in part and the Company thereafter determines that Employee engaged in gross and willful misconduct during employment which would have justified termination at any time prior to the date of such exercise, the Option shall be deemed to have terminated as of the time of the misconduct and the Company may elect to rescind the Option exercise. Gross and willful misconduct shall not include any action or inaction by the Employee contrary to the direction of the Board with respect to any initiative, strategy or action of the Company, which action or inaction the Employee believes is in the best interest of the Company.
|
C.
|
If Employee shall die while employed by the Company or an affiliate and shall not have fully exercised the Option, all shares remaining under the Option shall become immediately exercisable. If Employee shall die within ninety (90) days after a termination of employment which meets the criteria of Section 3A above, only the portion of the Option for those shares that are vested as of the date of termination shall be exercisable. The executor or administrator of Employee’s estate or any Transferee may exercise the portion of such exercisable Option at any time during a period beginning on the day after the date of Employee’s death and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant.
|
D.
|
If Employee’s termination of employment is due to retirement or disability, all shares remaining under the Option shall become immediately exercisable. Employee shall be deemed to have retired if the termination of employment occurs for reasons other than the Employee’s gross and willful misconduct, death, or disability after Employee (i) has attained age 55 and 10 years of service with the Company or an affiliate, or (ii) has attained age 65. Employee shall be deemed to be disabled if the termination of employment occurs because Employee is unable to work due to an impairment which would qualify as a disability under the Company’s long term disability program. Employee may exercise the portion of the Option remaining unexercised at any time during a period beginning on the day after the date of Employee’s termination of employment and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant. If Employee should die during the period between the date of Employee’s retirement or disability and the expiration of the Option, the unexercised portion of the Option shall be exercisable at any time during a period beginning the
|
E.
|
Notwithstanding anything to the contrary contained in this Section 3, if Employee’s employment is terminated by retirement (as defined in Section 3D) and Employee has not given written notice to the Chair of the Committee, of Employee’s intention to retire not less than six (6) months prior to the date of Employee’s retirement, then in such event, for purposes of this Agreement only, said termination of employment shall be deemed to be not a retirement but a termination subject to the provisions of Section 3A,
provided, however,
that in the event that the Committee determines that said termination of employment without six (6) months prior written notice is in the best interests of the Company, such termination shall be deemed to be a retirement and shall be subject to Section 3D.
|
F.
|
If the Option is exercised by a Transferee or the executors or administrators of the estate of a deceased optionee, the Company shall be under no obligation to issue stock hereunder unless and until the Company is satisfied that the person(s) exercising the Option is the validly designated beneficiary or the duly appointed legal representative of the deceased optionee’s estate or the proper legatee or distributee thereof.
|
G.
|
For purposes of this Section 3, if the last day of the relevant period is a day upon which the Exchange is not open for trading or the Common Stock is not trading on that day, the relevant period will expire at the close of trading on such earlier business day on which the Exchange is open and the Common Stock is trading.
|
A.
|
Employee or other proper party may exercise the Option only by delivering within the term of the Option written notice to the Company at its principal office in Minneapolis, Minnesota, stating the number of shares as to which the Option is being exercised and, except as provided in Sections 4B(2), 4B(3) and 4B(4), accompanied by payment-in-full of the Option price for all shares designated in the notice.
|
B.
|
The Employee may, at Employee’s election, pay the Option price as follows:
|
(1)
|
by cash or check (bank check, certified check, or personal check);
|
(2)
|
by delivering to the Company for cancellation, shares of Common Stock of the Company which have a fair market value equal to the Option price;
|
(3)
|
if the Employee is still serving as an executive officer of the Company on the date of exercise, by a reduction in the number of shares of Common Stock to be delivered upon exercise, which number of shares to be withheld shall have an aggregate fair market value on the date of exercise equal to the exercise price; or
|
(4)
|
by delivering to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to promptly deliver to the Company from sale or loan proceeds the amount required to pay the exercise price.
|
A.
|
Notwithstanding Section 2A hereof, the entire Option shall become immediately and fully exercisable upon a “Change of Control” and shall remain fully exercisable until either exercised or expiring by its terms. A “Change of Control” means:
|
(1)
|
an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) which, together with other acquisitions by such Person, results in the aggregate beneficial ownership by such Person of 30% or more of either
|
(a)
|
the then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or
|
(b)
|
the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
|
(i)
|
an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company,
|
(ii)
|
an acquisition by the Employee or any group that includes the Employee, or
|
(iii)
|
an acquisition by any entity pursuant to a transaction that complies with clauses (a), (b) and (c) of Section 6A(3) below; or
|
(2)
|
Individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of said Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial membership on the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board; or
|
(3)
|
Consummation of a reorganization, merger or consolidation of the Company with or into another entity or a statutory exchange of Outstanding Company Common Stock or Outstanding Company Voting Securities or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”); excluding, however, such a Business Combination pursuant to which
|
(a)
|
all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, a majority of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or comparable equity interests), as the case may be, of the surviving or acquiring entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction beneficially owns 100% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities (or comparable equity securities) or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions (as compared to the other holders of the Company’s common stock and voting securities prior to the Business Combination) as their respective ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities,
|
(b)
|
no Person (excluding (i) any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination or any entity controlled by the Company or the entity resulting from such Business Combination, (ii) any entity beneficially owning 100% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities (or comparable equity securities) or all or substantially all of the Company’s assets either directly or indirectly and (iii) the Employee and any group that includes the Employee) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of common stock (or comparable equity interests) of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities (or comparable equity interests) of such entity, and
|
(c)
|
immediately after the Business Combination, a majority of the members of the board of directors (or comparable governors) of the entity resulting from such Business Combination were members of the Incumbent Board at the
|
(4)
|
approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
|
7.
|
Adjustments; Fundamental Change
|
A.
|
If there shall be any change in the number or character of the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split or other change in the corporate structure of the Company, and all or any portion of the Option shall then be unexercised and not yet expired, appropriate adjustments in the outstanding Option shall be made by the Company, in order to prevent dilution or enlargement of Employee’s Option rights. Such adjustments shall include, where appropriate, changes in the number of shares of Common Stock and the price per share subject to the outstanding Option.
|
B.
|
In the event of a proposed (i) dissolution or liquidation of the Company, (ii) a sale of substantially all of the assets of the Company, (iii) a merger or consolidation of the Company with or into any other corporation, regardless of whether the Company is the surviving corporation, or (iv) a statutory share exchange involving the capital stock of the Company (each, a “Fundamental Change”), the Committee may, but shall not be obligated to:
|
(1)
|
with respect to a Fundamental Change that involves a merger, consolidation or statutory share exchange, make appropriate provision for the protection of the Option by the substitution of options and appropriate voting common stock of the corporation surviving any such merger or consolidation or, if appropriate, the “parent corporation” (as defined in Section 424(e) of the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder, or any successor provision) of the Company or such surviving corporation, in lieu of the Option and shares of Common Stock of the Company, or
|
(2)
|
with respect to any Fundamental Change, including, without limitation, a merger, consolidation or statutory share exchange, declare, prior to the occurrence of the Fundamental Change, and provide written notice to the holder of the Option of the declaration, that the Option, whether or not then exercisable, shall be canceled at the time of, or immediately prior to the occurrence of, the Fundamental Change in exchange for payment to the holder of the Option, within 20 days after the Fundamental Change, of cash (or, if the Committee so elects in lieu of solely cash, of such form(s) of consideration, including cash and/or property, singly or in such combination as the Committee shall determine, that the holder of the Option would have received as a result of the Fundamental Change if the holder of the Option had exercised the Option immediately prior to the Fundamental Change) equal to, for each share of Common Stock covered by the canceled Option, the amount, if any, by which the Fair Market Value (as defined in this Section 7B) per share of Common Stock exceeds the exercise price per share of Common Stock covered by the Option. At the time of the declaration provided for in the immediately preceding sentence, the Option shall immediately become exercisable in full and the holder of the Option shall have the right, during the period preceding the time of cancellation of the Option, to exercise the Option as to all or any part of the shares of Common Stock covered thereby in whole or in part, as the case may be. In the event of a declaration pursuant to this Section 7B, the
|
A.
|
This Option is issued pursuant to the Plan and is subject to its terms. The terms of the Plan are available for inspection during business hours at the principal offices of the Company.
|
B.
|
This Agreement shall not confer on Employee any right with respect to continuance of employment by the Company or any of its subsidiaries, nor will it interfere in any way with the right of the Company to terminate such employment at any time.
|
C.
|
Neither Employee, the Employee’s legal representative, a Transferee, nor the executor(s) or administrator(s) of the Employee’s estate shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any shares of Common Stock receivable upon the exercise of this Option, in whole or in part, unless and until such shares shall have been issued upon exercise of this Option.
|
D.
|
The Company shall at all times during the term of the Option reserve and keep available such number of shares as will be sufficient to satisfy the requirements of this Agreement.
|
E.
|
The internal law, and not the law of conflicts, of the State of Minnesota, USA, shall govern all questions concerning the validity, construction and effect of this Agreement, the Plan and any rules and regulations relating to the Plan or this Option.
|
F.
|
Employee hereby consents to the transfer by Employee’s employer or the Company of information relating to Employee’s participation in the Plan, including the personal data set forth in this Agreement, between them or to other related parties in the United States or elsewhere, or to any financial institution or other third party engaged by the Company, but solely for the purpose of administering the Plan and this Option. Employee also consents to the storage and processing of such data by such persons for this purpose.
|
|
|
|
|
Exhibit 10.2
|
|
Graco Inc. Non-Qualified Stock Option Agreement
|
[Grant Plan Long Name]
|
|
|
Graco Inc., a Minnesota corporation, (the “Company”), pursuant to the terms of the Graco Inc. 2015 Stock Incentive Plan (the “Plan”), wishes to grant this Option (as defined in the Terms and Conditions below) to you (“Employee”).
You must carefully read the Terms and Conditions governing this Option, as well as the Prospectus and any other documents provided in connection with the Option grant. Be sure you understand these documents and what your responsibilities and obligations are before acknowledging receipt of the Option. If you are not willing to agree to the Option Terms and Conditions, you must not accept the Option and you should not sign the Option Grant Acknowledgment and Agreement. If you accept the Option, you are accepting all of the Terms and Conditions that are applicable to your receipt of the Option. If you do not accept the Option, you are forfeiting your right to receive any potential benefits from the Option.
|
|
|
Employee: XXXX
|
Global ID: XXXXXXX
|
Award Type: XXXXXX
|
Date of Grant: XXXX
|
Award Expiration Date: XXXXX
|
Shares Granted: XXXXXX
|
Award Price: XX.XXUSD
|
Note
: The statements above are qualified in their entirety by the Terms and Conditions below, and should be read in conjunction with such Terms and Conditions.
|
2.
|
Duration and Exercisability
|
A.
|
No portion of this Option may be exercised by Employee until the first anniversary of the Date of Grant and then only in accordance with the Vesting Schedule set forth below. In no event shall this Option or any portion of this Option be exercisable following the tenth anniversary of the Date of Grant.
|
Vesting Date
|
Portion of Option Exercisable
|
First Anniversary of Date of Grant
|
25%
|
Second Anniversary of Date of Grant
|
50%
|
Third Anniversary of Date of Grant
|
75%
|
Fourth Anniversary of Date of Grant
|
100%
|
B.
|
During the lifetime of Employee, the Option shall be exercisable only by Employee and shall not be assignable or transferable by Employee otherwise than (i) by will or the laws of descent and distribution, or (ii) by designating a beneficiary or beneficiaries (in a manner established by the Management Organization and Compensation Committee of the Board of Directors of the Company (the “Committee”)) to exercise the rights of Employee and receive any property distributable with respect to the Option upon the death of the Employee (any person to whom the Option has been transferred pursuant to this Section 2B, a “Transferee”). The Transferee shall be subject to the provision of the Agreement, and, as a condition to the transfer of the Option becoming effective, the Transferee shall agree to be bound by the provision of this Agreement.
|
C.
|
Under no circumstances may the Option or any portion of the Option granted by this Agreement be exercised after the term of the Option expires.
|
3.
|
Effect of Termination of Employment
|
A.
|
If Employee’s employment terminates for any reason other than Employee’s gross and willful misconduct, death, retirement (as defined in Section 3D), or disability (as defined in Section 3D), any portion of the Option that was exercisable as of the date of termination of employment shall be exercisable at any time within the period beginning on the day after termination of Employee’s employment and ending at the close of trading on the Exchange ninety (90) days later.
|
B.
|
If Employee’s employment terminates by reason of Employee’s gross and willful misconduct during employment, including, but not limited to, wrongful appropriation of Company or affiliate funds, serious violations of Company policy, breach of fiduciary duty or the conviction of a felony, the unexercised portion of the Option shall terminate as of the time of the misconduct. If the Company determines subsequent to the termination of Employee’s employment for whatever reason, that Employee engaged in conduct during employment that would constitute gross and willful misconduct justifying termination, the Option shall terminate as of the time of such misconduct. Furthermore, if the Option is exercised in whole or in part and the Company thereafter determines that Employee engaged in gross and willful misconduct during employment which would have justified termination at any time prior to the date of such exercise, the Option shall be deemed to have terminated as of the time of the misconduct and the Company may elect to rescind the Option exercise.
|
C.
|
If Employee shall die while employed by the Company or an affiliate and shall not have fully exercised the Option, all shares remaining under the Option shall become immediately exercisable. If Employee shall die within ninety (90) days after a termination of employment which meets the criteria of Section 3A above, only the portion of the Option for those shares that are vested as of the date of termination shall be exercisable. The executor or administrator of Employee’s estate or any Transferee may exercise the portion of such exercisable Option at any time during a period beginning on the day after the date of Employee’s death and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant.
|
D.
|
If Employee’s termination of employment is due to retirement or disability, all shares remaining under the Option shall become immediately exercisable. Employee shall be deemed to have retired if the termination of employment occurs for reasons other than the Employee’s gross and willful misconduct, death, or disability after Employee (i) has attained age 55 and 10 years of service with the Company or an affiliate, or (ii) has attained age 65. Employee shall be deemed to be disabled if the termination of employment
|
E.
|
Notwithstanding anything to the contrary contained in this Section 3, if Employee’s employment is terminated by retirement (as defined in Section 3D) and Employee has not given the Company written notice to Employee’s immediate supervisor and the Chief Executive Officer, of Employee’s intention to retire not less than six (6) months prior to the date of Employee’s retirement, then in such event, for purposes of this Agreement only, said termination of employment shall be deemed to be not a retirement but a termination subject to the provisions of Section 3A, provided, however, that in the event that the Chief Executive Officer determines that said termination of employment without six (6) months prior written notice is in the best interests of the Company, such termination shall be deemed to be a retirement and shall be subject to Section 3D.
|
F.
|
If the Option is exercised by a Transferee or the executors or administrators of the estate of a deceased optionee, the Company shall be under no obligation to issue stock hereunder unless and until the Company is satisfied that the person(s) exercising the Option is the validly designated beneficiary or the duly appointed legal representative of the deceased optionee’s estate or the proper legatee or distributee thereof.
|
G.
|
For purposes of this Section 3, if the last day of the relevant period is a day upon which the Exchange is not open for trading or the Common Stock is not trading on that day, the relevant period will expire at the close of trading on such earlier business day on which the Exchange is open and the Common Stock is trading.
|
A.
|
Employee or other proper party may exercise the Option only by delivering within the term of the Option written notice to the Company at its principal office in Minneapolis, Minnesota, stating the number of shares as to which the Option is being exercised and, except as provided in Sections 4B(2), 4B(3) and 4B(4), accompanied by payment-in-full of the Option price for all shares designated in the notice.
|
B.
|
The Employee may, at Employee’s election, pay the Option price as follows:
|
(1)
|
by cash or check (bank check, certified check, or personal check);
|
(2)
|
by delivering to the Company for cancellation, shares of Common Stock of the Company which have a fair market value equal to the Option price;
|
(3)
|
if the Employee is still serving as an executive officer of the Company on the date of exercise, by a reduction in the number of shares of Common Stock to be delivered upon exercise, which number of shares to be withheld shall have an aggregate fair market value on the date of exercise equal to the exercise price; or
|
(4)
|
by delivering to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to promptly deliver to the Company from sale or loan proceeds the amount required to pay the exercise price.
|
A.
|
Notwithstanding Section 2A hereof, the entire Option shall become immediately and fully exercisable upon a “Change of Control” and shall remain fully exercisable until either exercised or expiring by its terms. A “Change of Control” means:
|
(1)
|
an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) which, together with other acquisitions by such Person, results in the aggregate beneficial ownership by such Person of 30% or more of either
|
(a)
|
the then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or
|
(b)
|
the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
|
(i)
|
an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company,
|
(ii)
|
an acquisition by the Employee or any group that includes the Employee, or
|
(iii)
|
an acquisition by any entity pursuant to a transaction that complies with clauses (a), (b) and (c) of Section 6A(3) below; or
|
(2)
|
Individuals who, as of the date hereof, constitute the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of said Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial membership on the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board; or
|
(3)
|
Consummation of a reorganization, merger or consolidation of the Company with or into another entity or a statutory exchange of Outstanding Company Common Stock or Outstanding Company Voting Securities or sale or other disposition of all or substantially all of the assets of the Company (“Business Combination”); excluding, however, such a Business Combination pursuant to which
|
(a)
|
all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, a majority of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or comparable equity interests), as the case may be, of the surviving or acquiring entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction beneficially owns 100% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities (or comparable equity securities) or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions (as compared to the other holders of the Company’s common stock and voting securities prior to the Business Combination) as their respective ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities,
|
(b)
|
no Person (excluding (i) any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination or any entity controlled by the Company or the entity resulting from such Business Combination, (ii) any entity beneficially owning 100% of the outstanding shares of common stock and the combined voting power of the then outstanding voting securities (or comparable equity securities) or all or substantially all of the Company’s assets either directly or indirectly and (iii) the Employee and any group that includes the Employee) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of common stock
|
(c)
|
immediately after the Business Combination, a majority of the members of the board of directors (or comparable governors) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
|
(4)
|
approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
|
7.
|
Adjustments; Fundamental Change
|
A.
|
If there shall be any change in the number or character of the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, dividend in the form of stock (of whatever amount), stock split or other change in the corporate structure of the Company, and all or any portion of the Option shall then be unexercised and not yet expired, appropriate adjustments in the outstanding Option shall be made by the Company, in order to prevent dilution or enlargement of Employee’s Option rights. Such adjustments shall include, where appropriate, changes in the number of shares of Common Stock and the price per share subject to the outstanding Option.
|
B.
|
In the event of a proposed (i) dissolution or liquidation of the Company, (ii) a sale of substantially all of the assets of the Company, (iii) a merger or consolidation of the Company with or into any other corporation, regardless of whether the Company is the surviving corporation, or (iv) a statutory share exchange involving the capital stock of the Company (each, a “Fundamental Change”), the Committee may, but shall not be obligated to:
|
(1)
|
with respect to a Fundamental Change that involves a merger, consolidation or statutory share exchange, make appropriate provision for the protection of the Option by the substitution of options and appropriate voting common stock of the corporation surviving any such merger or consolidation or, if appropriate, the “parent corporation” (as defined in Section 424(e) of the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder, or any successor provision) of the Company or such surviving corporation, in lieu of the Option and shares of Common Stock of the Company, or
|
(2)
|
with respect to any Fundamental Change, including, without limitation, a merger, consolidation or statutory share exchange, declare, prior to the occurrence of the Fundamental Change, and provide written notice to the holder of the Option of the declaration, that the Option, whether or not then exercisable, shall be canceled at the time of, or immediately prior to the occurrence of, the Fundamental Change in exchange for payment to the holder of the Option, within 20 days after the Fundamental Change, of cash (or, if the Committee so elects in lieu of solely cash, of such form(s) of consideration, including cash and/or property, singly or in such combination as the Committee shall determine, that the holder of the Option would have received as a result of the Fundamental Change if the holder of the Option had exercised the Option immediately prior to the Fundamental Change) equal to, for each share of Common Stock covered by the canceled Option, the amount, if any,
|
A.
|
This Option is issued pursuant to the Plan and is subject to its terms. The terms of the Plan are available for inspection during business hours at the principal offices of the Company.
|
B.
|
This Agreement shall not create an employment relationship between Employee and the Company and shall not confer on Employee any right with respect to continuance of employment by the Company or any of its affiliates or subsidiaries, nor will it interfere in any way with the right of the Company to terminate such employment at any time.
|
C.
|
Neither Employee, the Employee’s legal representative, a Transferee, nor the executor(s) or administrator(s) of the Employee’s estate shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any shares of Common Stock receivable upon the exercise of this Option, in whole or in part, unless and until such shares shall have been issued upon exercise of this Option.
|
D.
|
This Option has been granted to Employee as a purely discretionary benefit and shall not form part of Employee’s salary or entitle Employee to receive similar option grants in the future. Benefits received under the Plan shall not be used in calculating severance payments, if any.
|
E.
|
The Company shall at all times during the term of the Option reserve and keep available such number of shares as will be sufficient to satisfy the requirements of this Agreement.
|
F.
|
The internal law, and not the law of conflicts, of the State of Minnesota, USA, shall govern all questions concerning the validity, construction and effect of this Agreement, the Plan and any rules and regulations relating to the Plan or this Option.
|
G.
|
Employee hereby consents to the transfer by Employee’s employer or the Company of information relating to Employee’s participation in the Plan, including the personal data set forth in this Agreement, between them or to other related parties in the United States or
|
|
|
|
|
Exhibit 31.1
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Graco Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
|
April 20, 2016
|
|
/s/ Patrick J. McHale
|
|
|
|
|
Patrick J. McHale
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Exhibit 31.2
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Graco Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
|
April 20, 2016
|
|
/s/ Christian E. Rothe
|
|
|
|
|
Christian E. Rothe
|
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
Exhibit 32
|
|
|
|
|
|
Date:
|
|
April 20, 2016
|
|
/s/ Patrick J. McHale
|
|
|
|
|
Patrick J. McHale
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
|
April 20, 2016
|
|
/s/ Christian E. Rothe
|
|
|
|
|
Christian E. Rothe
|
|
|
|
|
Chief Financial Officer and Treasurer
|
Exhibit 99.1
|
|
|
GRACO INC.
|
|
|
|
|
P.O. Box 1441
|
|
|
Minneapolis, MN
|
|||
55440-1441
|
||||
NYSE: GGG
|
FOR IMMEDIATE RELEASE:
|
FOR FURTHER INFORMATION:
|
Wednesday, April 20, 2016
|
Financial Contact: Christian Rothe, 612-623-6205
Media Contact: Charlotte Boyd, 612-623-6153
Charlotte_M_Boyd@graco.com
|
|
Thirteen Weeks Ended
|
|||||||||
|
March 25,
2016 |
|
March 27,
2015 |
|
%
Change
|
|||||
Net Sales
|
$
|
304.9
|
|
|
$
|
306.5
|
|
|
(1)
|
%
|
Operating Earnings
|
60.9
|
|
|
65.2
|
|
|
(7)
|
%
|
||
Net Earnings
|
39.6
|
|
|
68.8
|
|
|
(43)
|
%
|
||
Diluted Net Earnings per Common Share
|
0.70
|
|
|
1.14
|
|
|
(39)
|
%
|
||
Diluted Net Earnings per Common Share, adjusted
(1)
|
$
|
0.70
|
|
|
$
|
0.65
|
|
|
8
|
%
|
•
|
At consistent translation rates, sales increased 1 percent. Incremental sales from acquired operations contributed 2 percentage points of growth.
|
•
|
Changes in currency translation rates decreased sales and net earnings by approximately $5 million and $2 million, respectively.
|
•
|
Operating expenses increased by $4 million, including $3 million from acquired operations and a $1 million increase in unallocated corporate expenses driven by higher stock compensation and non-divisional pension cost.
|
|
Thirteen Weeks Ended
|
||||||
|
March 25, 2016
|
|
March 27, 2015
|
||||
Net Earnings, as reported
|
$
|
39.6
|
|
|
$
|
68.8
|
|
Held separate investment (income), net
|
0.0
|
|
|
(29.5
|
)
|
||
Income tax effect
|
0.0
|
|
|
(0.2
|
)
|
||
Net Earnings, adjusted
|
$
|
39.6
|
|
|
$
|
39.1
|
|
|
|
|
|
||||
Diluted earnings per share
|
|
|
|
||||
As reported
|
$
|
0.70
|
|
|
$
|
1.14
|
|
Adjusted
|
$
|
0.70
|
|
|
$
|
0.65
|
|
|
Thirteen Weeks
|
||||||||||
|
Industrial
|
|
Process
|
|
Contractor
|
||||||
Net sales (in millions)
|
$
|
147.1
|
|
|
$
|
64.3
|
|
|
$
|
93.5
|
|
Percentage change from last year
|
|
|
|
|
|
||||||
Sales
|
3
|
%
|
|
(5
|
)%
|
|
(2
|
)%
|
|||
Operating earnings
|
7
|
%
|
|
(31
|
)%
|
|
(14
|
)%
|
|||
Operating earnings as a percentage of sales
|
|
|
|
|
|
||||||
2016
|
31
|
%
|
|
11
|
%
|
|
18
|
%
|
|||
2015
|
30
|
%
|
|
16
|
%
|
|
20
|
%
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net Sales
|
$
|
304,912
|
|
|
$
|
306,453
|
|
Cost of products sold
|
143,116
|
|
|
144,324
|
|
||
Gross Profit
|
161,796
|
|
|
162,129
|
|
||
Product development
|
14,686
|
|
|
15,290
|
|
||
Selling, marketing and distribution
|
52,701
|
|
|
51,424
|
|
||
General and administrative
|
33,460
|
|
|
30,184
|
|
||
Operating Earnings
|
60,949
|
|
|
65,231
|
|
||
Interest expense
|
4,493
|
|
|
5,303
|
|
||
Held separate investment (income), net
|
—
|
|
|
(29,523
|
)
|
||
Other expense (income), net
|
(1,146
|
)
|
|
710
|
|
||
Earnings Before Income Taxes
|
57,602
|
|
|
88,741
|
|
||
Income taxes
|
18,050
|
|
|
19,900
|
|
||
Net Earnings
|
$
|
39,552
|
|
|
$
|
68,841
|
|
Net Earnings per Common Share
|
|
|
|
||||
Basic
|
$
|
0.71
|
|
|
$
|
1.17
|
|
Diluted
|
$
|
0.70
|
|
|
$
|
1.14
|
|
Weighted Average Number of Shares
|
|
|
|
||||
Basic
|
55,394
|
|
|
58,981
|
|
||
Diluted
|
56,709
|
|
|
60,465
|
|
|
Thirteen Weeks Ended
|
||||||
|
March 25,
2016 |
|
March 27,
2015 |
||||
Net Sales
|
|
|
|
||||
Industrial
|
$
|
147,088
|
|
|
$
|
143,266
|
|
Process
|
64,285
|
|
|
67,681
|
|
||
Contractor
|
93,539
|
|
|
95,506
|
|
||
Total
|
$
|
304,912
|
|
|
$
|
306,453
|
|
Operating Earnings
|
|
|
|
||||
Industrial
|
$
|
45,794
|
|
|
$
|
42,940
|
|
Process
|
7,277
|
|
|
10,498
|
|
||
Contractor
|
16,743
|
|
|
19,375
|
|
||
Unallocated corporate (expense)
|
(8,865
|
)
|
|
(7,582
|
)
|
||
Total
|
$
|
60,949
|
|
|
$
|
65,231
|
|