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 or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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88 - 11th Avenue N.E.
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Minneapolis,
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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)
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623-6000
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(Registrant’s telephone number, including area code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $1.00 per share
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GGG
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The New York Stock Exchange
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Yes
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☒
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No
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☐
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Yes
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☒
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No
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☐
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Yes
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☐
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No
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☒
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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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Three Months Ended
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Six Months Ended
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||||||||||||
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June 28,
2019 |
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June 29,
2018 |
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June 28,
2019 |
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June 29,
2018 |
||||||||
Net Sales
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$
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428,328
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$
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424,570
|
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$
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833,198
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$
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830,918
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|
Cost of products sold
|
201,374
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194,667
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390,202
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378,594
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||||
Gross Profit
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226,954
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229,903
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442,996
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452,324
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|
||||
Product development
|
17,324
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16,112
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33,893
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31,401
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||||
Selling, marketing and distribution
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60,441
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62,949
|
|
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121,258
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125,471
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|
||||
General and administrative
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36,828
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37,464
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70,957
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70,378
|
|
||||
Operating Earnings
|
112,361
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113,378
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216,888
|
|
|
225,074
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|
||||
Interest expense
|
3,431
|
|
|
3,891
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|
|
6,966
|
|
|
7,124
|
|
||||
Other expense, net
|
1,119
|
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|
4,251
|
|
|
1,388
|
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|
5,286
|
|
||||
Earnings Before Income Taxes
|
107,811
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105,236
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208,534
|
|
|
212,664
|
|
||||
Income taxes
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19,674
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|
|
16,096
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33,648
|
|
|
38,014
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|
||||
Net Earnings
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$
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88,137
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$
|
89,140
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$
|
174,886
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$
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174,650
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Net Earnings per Common Share
|
|
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||||||||
Basic
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$
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0.53
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$
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0.53
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$
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1.05
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$
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1.04
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Diluted
|
$
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0.51
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$
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0.51
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$
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1.02
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$
|
1.00
|
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Three Months Ended
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Six Months Ended
|
||||||||||||
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June 28,
2019 |
|
June 29,
2018 |
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June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Earnings
|
$
|
88,137
|
|
|
$
|
89,140
|
|
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$
|
174,886
|
|
|
$
|
174,650
|
|
Components of other comprehensive
income (loss) |
|
|
|
|
|
|
|
||||||||
Cumulative translation adjustment
|
1,232
|
|
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(15,112
|
)
|
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2,401
|
|
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(6,366
|
)
|
||||
Pension and postretirement medical
liability adjustment |
1,910
|
|
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2,705
|
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4,037
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|
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4,531
|
|
||||
Income taxes - pension and postretirement
medical liability adjustment |
(423
|
)
|
|
(596
|
)
|
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(893
|
)
|
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(997
|
)
|
||||
Other comprehensive income
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2,719
|
|
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(13,003
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)
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5,545
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(2,832
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)
|
||||
Comprehensive Income
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$
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90,856
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$
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76,137
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$
|
180,431
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$
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171,818
|
|
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June 28,
2019 |
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December 28,
2018 |
||||
ASSETS
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Current Assets
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Cash and cash equivalents
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$
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180,883
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$
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132,118
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Accounts receivable, less allowances of $5,200 and $5,300
|
291,008
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274,608
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|
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Inventories
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297,545
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283,982
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|
||
Other current assets
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29,457
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32,508
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||
Total current assets
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798,893
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723,216
|
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Property, Plant and Equipment, net
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286,521
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229,295
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Goodwill
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296,273
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293,846
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Other Intangible Assets, net
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163,564
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166,310
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|
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Operating Lease Assets
|
32,170
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—
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Deferred Income Taxes
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32,691
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32,055
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Other Assets
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30,435
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28,019
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Total Assets
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$
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1,640,547
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$
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1,472,741
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||
Current Liabilities
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|
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|
||||
Notes payable to banks
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$
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7,284
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$
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11,083
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Current portion of long term debt
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75,000
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—
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Trade accounts payable
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61,958
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56,902
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Salaries and incentives
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47,109
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62,297
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Dividends payable
|
26,716
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26,480
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Other current liabilities
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141,535
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143,041
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Total current liabilities
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359,602
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299,803
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||
Long-term Debt
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179,081
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266,391
|
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Retirement Benefits and Deferred Compensation
|
135,209
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133,388
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|
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Operating Lease Liabilities
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25,734
|
|
|
—
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||
Deferred Income Taxes
|
14,963
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|
|
16,586
|
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Other Non-current Liabilities
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—
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4,700
|
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Shareholders’ Equity
|
|
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|
||||
Common stock
|
166,792
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|
|
165,171
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|
||
Additional paid-in-capital
|
556,170
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|
|
510,825
|
|
||
Retained earnings
|
342,308
|
|
|
220,734
|
|
||
Accumulated other comprehensive income (loss)
|
(139,312
|
)
|
|
(144,857
|
)
|
||
Total shareholders’ equity
|
925,958
|
|
|
751,873
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
1,640,547
|
|
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$
|
1,472,741
|
|
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Six Months Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Cash Flows From Operating Activities
|
|
|
|
||||
Net Earnings
|
$
|
174,886
|
|
|
$
|
174,650
|
|
Adjustments to reconcile net earnings to net cash
provided by operating activities |
|
|
|
||||
Depreciation and amortization
|
24,087
|
|
|
23,755
|
|
||
Deferred income taxes
|
(3,881
|
)
|
|
355
|
|
||
Share-based compensation
|
17,548
|
|
|
15,832
|
|
||
Change in
|
|
|
|
||||
Accounts receivable
|
(16,051
|
)
|
|
(26,100
|
)
|
||
Inventories
|
(13,157
|
)
|
|
(17,700
|
)
|
||
Trade accounts payable
|
4,603
|
|
|
2,298
|
|
||
Salaries and incentives
|
(18,514
|
)
|
|
(13,231
|
)
|
||
Retirement benefits and deferred compensation
|
5,780
|
|
|
6,627
|
|
||
Other accrued liabilities
|
(10,789
|
)
|
|
6,493
|
|
||
Other
|
(690
|
)
|
|
(2,202
|
)
|
||
Net cash provided by operating activities
|
163,822
|
|
|
170,777
|
|
||
Cash Flows From Investing Activities
|
|
|
|
||||
Property, plant and equipment additions
|
(70,186
|
)
|
|
(27,443
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(6,176
|
)
|
|
(10,519
|
)
|
||
Other
|
(828
|
)
|
|
(65
|
)
|
||
Net cash provided by (used in) investing activities
|
(77,190
|
)
|
|
(38,027
|
)
|
||
Cash Flows From Financing Activities
|
|
|
|
||||
Borrowings (payments) on short-term lines of credit, net
|
(3,767
|
)
|
|
112
|
|
||
Borrowings on long-term lines of credit
|
23,944
|
|
|
389,340
|
|
||
Payments on long-term debt and lines of credit
|
(36,453
|
)
|
|
(320,603
|
)
|
||
Common stock issued
|
33,954
|
|
|
20,052
|
|
||
Common stock repurchased
|
(2,438
|
)
|
|
(155,601
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(1,268
|
)
|
|
(16,151
|
)
|
||
Cash dividends paid
|
(53,075
|
)
|
|
(44,650
|
)
|
||
Net cash provided by (used in) financing activities
|
(39,103
|
)
|
|
(127,501
|
)
|
||
Effect of exchange rate changes on cash
|
1,236
|
|
|
448
|
|
||
Net increase (decrease) in cash and cash equivalents
|
48,765
|
|
|
5,697
|
|
||
Cash, Cash Equivalents and Restricted Cash
|
|
|
|
||||
Beginning of year
|
132,118
|
|
|
112,904
|
|
||
End of period
|
$
|
180,883
|
|
|
$
|
118,601
|
|
Reconciliation to Consolidated Balance Sheets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
180,883
|
|
|
$
|
109,854
|
|
Restricted cash included in other current assets
|
—
|
|
|
8,747
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
180,883
|
|
|
$
|
118,601
|
|
|
Common
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
||||||||||
Three Months Ended June 28, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, March 29, 2019
|
$
|
166,364
|
|
|
$
|
539,067
|
|
|
$
|
281,038
|
|
|
$
|
(142,031
|
)
|
|
$
|
844,438
|
|
Shares issued
|
428
|
|
|
8,678
|
|
|
—
|
|
|
—
|
|
|
9,106
|
|
|||||
Stock compensation cost
|
—
|
|
|
8,425
|
|
|
—
|
|
|
—
|
|
|
8,425
|
|
|||||
Net earnings
|
—
|
|
|
—
|
|
|
88,137
|
|
|
—
|
|
|
88,137
|
|
|||||
Dividends declared ($0.1600 per share)
|
—
|
|
|
—
|
|
|
(26,867
|
)
|
|
—
|
|
|
(26,867
|
)
|
|||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,719
|
|
|
2,719
|
|
|||||
Balance, June 28, 2019
|
$
|
166,792
|
|
|
$
|
556,170
|
|
|
$
|
342,308
|
|
|
$
|
(139,312
|
)
|
|
$
|
925,958
|
|
Six Months Ended June 28, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, December 28, 2018
|
$
|
165,171
|
|
|
$
|
510,825
|
|
|
$
|
220,734
|
|
|
$
|
(144,857
|
)
|
|
$
|
751,873
|
|
Shares issued
|
1,621
|
|
|
31,064
|
|
|
—
|
|
|
—
|
|
|
32,685
|
|
|||||
Stock compensation cost
|
—
|
|
|
14,281
|
|
|
—
|
|
|
—
|
|
|
14,281
|
|
|||||
Net earnings
|
—
|
|
|
—
|
|
|
174,886
|
|
|
—
|
|
|
174,886
|
|
|||||
Dividends declared ($0.3200 per share)
|
—
|
|
|
—
|
|
|
(53,312
|
)
|
|
—
|
|
|
(53,312
|
)
|
|||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
5,545
|
|
|
5,545
|
|
|||||
Balance, June 28, 2019
|
$
|
166,792
|
|
|
$
|
556,170
|
|
|
$
|
342,308
|
|
|
$
|
(139,312
|
)
|
|
$
|
925,958
|
|
Three Months Ended June 29, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, March 30, 2018
|
$
|
168,033
|
|
|
515,693
|
|
|
176,524
|
|
|
$
|
(133,071
|
)
|
|
$
|
727,179
|
|
Shares issued
|
548
|
|
|
(13,963
|
)
|
|
—
|
|
|
—
|
|
|
(13,415
|
)
|
|||
Shares repurchased
|
(1,451
|
)
|
|
(4,285
|
)
|
|
(58,352
|
)
|
|
—
|
|
|
(64,088
|
)
|
|||
Stock compensation cost
|
—
|
|
|
7,897
|
|
|
—
|
|
|
—
|
|
|
7,897
|
|
|||
Restricted stock canceled (issued)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net earnings
|
—
|
|
|
—
|
|
|
89,140
|
|
|
—
|
|
|
89,140
|
|
|||
Dividends declared ($0.1325 per share)
|
—
|
|
|
—
|
|
|
(21,905
|
)
|
|
—
|
|
|
(21,905
|
)
|
|||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,003
|
)
|
|
(13,003
|
)
|
|||
Balance, June 29, 2018
|
$
|
167,130
|
|
|
505,342
|
|
|
185,407
|
|
|
$
|
(146,074
|
)
|
|
$
|
711,805
|
|
Six Months Ended June 29, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, December 29, 2017
|
$
|
169,319
|
|
|
$
|
499,934
|
|
|
$
|
181,599
|
|
|
$
|
(127,789
|
)
|
|
$
|
723,063
|
|
Shares issued
|
1,313
|
|
|
3,360
|
|
|
—
|
|
|
—
|
|
|
4,673
|
|
|||||
Shares repurchased
|
(3,502
|
)
|
|
(10,340
|
)
|
|
(141,759
|
)
|
|
—
|
|
|
(155,601
|
)
|
|||||
Stock compensation cost
|
—
|
|
|
13,160
|
|
|
—
|
|
|
—
|
|
|
13,160
|
|
|||||
Restricted stock canceled (issued)
|
—
|
|
|
(772
|
)
|
|
—
|
|
|
—
|
|
|
(772
|
)
|
|||||
Net earnings
|
—
|
|
|
—
|
|
|
174,650
|
|
|
—
|
|
|
174,650
|
|
|||||
Dividends declared ($0.2650 per share)
|
—
|
|
|
—
|
|
|
(44,536
|
)
|
|
—
|
|
|
(44,536
|
)
|
|||||
Reclassified to retained earnings from AOCI
|
—
|
|
|
—
|
|
|
15,453
|
|
|
(15,453
|
)
|
|
—
|
|
|||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,832
|
)
|
|
(2,832
|
)
|
|||||
Balance, June 29, 2018
|
$
|
167,130
|
|
|
$
|
505,342
|
|
|
$
|
185,407
|
|
|
$
|
(146,074
|
)
|
|
$
|
711,805
|
|
2.
|
Segment Information
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
Industrial
|
$
|
188,507
|
|
|
$
|
190,459
|
|
|
$
|
377,607
|
|
|
$
|
385,655
|
|
Process
|
85,064
|
|
|
85,059
|
|
|
171,958
|
|
|
165,094
|
|
||||
Contractor
|
154,757
|
|
|
149,052
|
|
|
283,633
|
|
|
280,169
|
|
||||
Total
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
Operating Earnings
|
|
|
|
|
|
|
|
||||||||
Industrial
|
$
|
64,428
|
|
|
$
|
67,030
|
|
|
$
|
129,631
|
|
|
$
|
136,155
|
|
Process
|
18,378
|
|
|
17,065
|
|
|
38,392
|
|
|
34,767
|
|
||||
Contractor
|
40,054
|
|
|
38,382
|
|
|
66,593
|
|
|
69,793
|
|
||||
Unallocated corporate (expense)
|
(10,499
|
)
|
|
(9,099
|
)
|
|
(17,728
|
)
|
|
(15,641
|
)
|
||||
Total
|
$
|
112,361
|
|
|
$
|
113,378
|
|
|
$
|
216,888
|
|
|
$
|
225,074
|
|
|
June 28,
2019 |
|
December 28,
2018 |
||||
Industrial
|
$
|
633,813
|
|
|
$
|
640,683
|
|
Process
|
364,496
|
|
|
350,306
|
|
||
Contractor
|
361,832
|
|
|
283,727
|
|
||
Unallocated corporate
|
280,406
|
|
|
198,025
|
|
||
Total
|
$
|
1,640,547
|
|
|
$
|
1,472,741
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Sales (based on customer location)
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
221,565
|
|
|
$
|
212,541
|
|
|
$
|
424,450
|
|
|
$
|
406,323
|
|
Other countries
|
206,763
|
|
|
212,029
|
|
|
408,748
|
|
|
424,595
|
|
||||
Total
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
|
June 28,
2019 |
|
December 28,
2018 |
||||
Long-lived Assets
|
|
|
|
||||
United States
|
$
|
229,398
|
|
|
$
|
178,331
|
|
Other countries
|
57,123
|
|
|
50,964
|
|
||
Total
|
$
|
286,521
|
|
|
$
|
229,295
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net earnings available to common shareholders
|
$
|
88,137
|
|
|
$
|
89,140
|
|
|
$
|
174,886
|
|
|
$
|
174,650
|
|
Weighted average shares outstanding for basic earnings per share
|
166,684
|
|
|
167,260
|
|
|
166,150
|
|
|
168,166
|
|
||||
Dilutive effect of stock options computed using the treasury stock method and the average market price
|
5,363
|
|
|
6,005
|
|
|
5,303
|
|
|
6,291
|
|
||||
Weighted average shares outstanding for diluted earnings per share
|
172,047
|
|
|
173,265
|
|
|
171,453
|
|
|
174,457
|
|
||||
Basic earnings per share
|
$
|
0.53
|
|
|
$
|
0.53
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Diluted earnings per share
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
|
Option
Shares
|
|
Weighted Average
Exercise Price
|
|
Options
Exercisable
|
|
Weighted Average
Exercise Price
|
||||||
Outstanding, December 28, 2018
|
12,270
|
|
|
$
|
24.67
|
|
|
7,312
|
|
|
$
|
20.17
|
|
Granted
|
1,285
|
|
|
45.91
|
|
|
|
|
|
||||
Exercised
|
(1,241
|
)
|
|
15.59
|
|
|
|
|
|
||||
Canceled
|
(22
|
)
|
|
32.72
|
|
|
|
|
|
||||
Outstanding, June 28, 2019
|
12,292
|
|
|
$
|
27.79
|
|
|
7,731
|
|
|
$
|
22.98
|
|
|
Six Months Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Expected life in years
|
7.5
|
|
|
7.5
|
|
||
Interest rate
|
2.6
|
%
|
|
2.8
|
%
|
||
Volatility
|
24.6
|
%
|
|
25.5
|
%
|
||
Dividend yield
|
1.4
|
%
|
|
1.2
|
%
|
||
Weighted average fair value per share
|
$
|
12.26
|
|
|
$
|
12.84
|
|
|
Six Months Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Expected life in years
|
1.0
|
|
|
1.0
|
|
||
Interest rate
|
2.6
|
%
|
|
2.1
|
%
|
||
Volatility
|
22.7
|
%
|
|
21.3
|
%
|
||
Dividend yield
|
1.4
|
%
|
|
1.2
|
%
|
||
Weighted average fair value per share
|
$
|
11.36
|
|
|
$
|
10.28
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Pension Benefits
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1,635
|
|
|
$
|
1,998
|
|
|
$
|
3,644
|
|
|
$
|
4,211
|
|
Interest cost
|
3,572
|
|
|
3,411
|
|
|
7,310
|
|
|
6,845
|
|
||||
Expected return on assets
|
(4,216
|
)
|
|
(4,632
|
)
|
|
(8,575
|
)
|
|
(8,718
|
)
|
||||
Amortization and other
|
1,838
|
|
|
2,080
|
|
|
3,817
|
|
|
4,175
|
|
||||
Net periodic benefit cost
|
$
|
2,829
|
|
|
$
|
2,857
|
|
|
$
|
6,196
|
|
|
$
|
6,513
|
|
Postretirement Medical
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
123
|
|
|
$
|
175
|
|
|
$
|
273
|
|
|
$
|
350
|
|
Interest cost
|
264
|
|
|
265
|
|
|
581
|
|
|
529
|
|
||||
Amortization
|
29
|
|
|
136
|
|
|
137
|
|
|
272
|
|
||||
Net periodic benefit cost
|
$
|
416
|
|
|
$
|
576
|
|
|
$
|
991
|
|
|
$
|
1,151
|
|
|
Pension and
Postretirement
Medical
|
|
Cumulative
Translation
Adjustment
|
|
Total
|
||||||
Three Months Ended June 28, 2019
|
|
|
|
|
|
||||||
Balance, March 29, 2019
|
$
|
(85,232
|
)
|
|
$
|
(56,799
|
)
|
|
$
|
(142,031
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
1,232
|
|
|
1,232
|
|
|||
Reclassified to pension cost and deferred tax
|
1,487
|
|
|
—
|
|
|
1,487
|
|
|||
Balance, June 28, 2019
|
$
|
(83,745
|
)
|
|
$
|
(55,567
|
)
|
|
$
|
(139,312
|
)
|
Six Months Ended June 28, 2019
|
|
|
|
|
|
||||||
Balance, December 28, 2018
|
$
|
(86,889
|
)
|
|
$
|
(57,968
|
)
|
|
$
|
(144,857
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
2,401
|
|
|
2,401
|
|
|||
Reclassified to pension cost and deferred tax
|
3,144
|
|
|
—
|
|
|
3,144
|
|
|||
Balance, June 28, 2019
|
$
|
(83,745
|
)
|
|
$
|
(55,567
|
)
|
|
$
|
(139,312
|
)
|
Three Months Ended June 29, 2018
|
|
|
|
|
|
||||||
Balance, March 30, 2018
|
$
|
(92,458
|
)
|
|
$
|
(40,613
|
)
|
|
$
|
(133,071
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(15,112
|
)
|
|
(15,112
|
)
|
|||
Reclassified to pension cost and deferred tax
|
2,109
|
|
|
—
|
|
|
2,109
|
|
|||
Balance, June 29, 2018
|
$
|
(90,349
|
)
|
|
$
|
(55,725
|
)
|
|
$
|
(146,074
|
)
|
Six Months Ended June 29, 2018
|
|
|
|
|
|
||||||
Balance, December 29, 2017
|
$
|
(78,430
|
)
|
|
$
|
(49,359
|
)
|
|
$
|
(127,789
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(6,366
|
)
|
|
(6,366
|
)
|
|||
Reclassified to pension cost and deferred tax
|
3,534
|
|
|
—
|
|
|
3,534
|
|
|||
Reclassified to retained earnings
|
(15,453
|
)
|
|
—
|
|
|
(15,453
|
)
|
|||
Balance, June 29, 2018
|
$
|
(90,349
|
)
|
|
$
|
(55,725
|
)
|
|
$
|
(146,074
|
)
|
|
June 28,
2019 |
|
December 28,
2018 |
||||
Finished products and components
|
$
|
147,159
|
|
|
$
|
142,535
|
|
Products and components in various stages of completion
|
87,670
|
|
|
83,768
|
|
||
Raw materials and purchased components
|
122,318
|
|
|
115,705
|
|
||
Subtotal
|
357,147
|
|
|
342,008
|
|
||
Reduction to LIFO cost
|
(59,602
|
)
|
|
(58,026
|
)
|
||
Total
|
$
|
297,545
|
|
|
$
|
283,982
|
|
|
Finite Life
|
|
Indefinite Life
|
|
|
||||||||||||||
|
Customer
Relationships |
|
Patents and
Proprietary Technology |
|
Trademarks,
Trade Names and Other |
|
Trade
Names |
|
Total
|
||||||||||
As of June 28, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost
|
$
|
182,410
|
|
|
$
|
18,913
|
|
|
$
|
1,020
|
|
|
$
|
60,220
|
|
|
$
|
262,563
|
|
Accumulated amortization
|
(73,974
|
)
|
|
(9,557
|
)
|
|
(545
|
)
|
|
—
|
|
|
(84,076
|
)
|
|||||
Foreign currency translation
|
(10,352
|
)
|
|
(861
|
)
|
|
(72
|
)
|
|
(3,638
|
)
|
|
(14,923
|
)
|
|||||
Book value
|
$
|
98,084
|
|
|
$
|
8,495
|
|
|
$
|
403
|
|
|
$
|
56,582
|
|
|
$
|
163,564
|
|
Weighted average life in years
|
13
|
|
|
10
|
|
|
4
|
|
|
N/A
|
|
|
|
As of December 28, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost
|
$
|
179,449
|
|
|
$
|
18,571
|
|
|
$
|
1,020
|
|
|
$
|
59,537
|
|
|
$
|
258,577
|
|
Accumulated amortization
|
(67,322
|
)
|
|
(8,647
|
)
|
|
(439
|
)
|
|
—
|
|
|
(76,408
|
)
|
|||||
Foreign currency translation
|
(10,817
|
)
|
|
(895
|
)
|
|
(73
|
)
|
|
(4,074
|
)
|
|
(15,859
|
)
|
|||||
Book value
|
$
|
101,310
|
|
|
$
|
9,029
|
|
|
$
|
508
|
|
|
$
|
55,463
|
|
|
$
|
166,310
|
|
Weighted average life in years
|
13
|
|
|
10
|
|
|
4
|
|
|
N/A
|
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Estimated Amortization Expense
|
$
|
15,503
|
|
|
$
|
15,289
|
|
|
$
|
15,089
|
|
|
$
|
15,001
|
|
|
$
|
14,088
|
|
|
$
|
39,686
|
|
|
Industrial
|
|
Process
|
|
Contractor
|
|
Total
|
||||||||
Balance, December 28, 2018
|
$
|
177,124
|
|
|
$
|
97,168
|
|
|
$
|
19,554
|
|
|
$
|
293,846
|
|
Additions, adjustments from business acquisitions
|
—
|
|
|
1,575
|
|
|
—
|
|
|
1,575
|
|
||||
Foreign currency translation
|
803
|
|
|
49
|
|
|
—
|
|
|
852
|
|
||||
Balance, June 28, 2019
|
$
|
177,927
|
|
|
$
|
98,792
|
|
|
$
|
19,554
|
|
|
$
|
296,273
|
|
9.
|
Other Current Liabilities
|
|
June 28,
2019 |
|
December 28,
2018 |
||||
Accrued self-insurance retentions
|
$
|
7,920
|
|
|
$
|
7,870
|
|
Accrued warranty and service liabilities
|
11,797
|
|
|
11,056
|
|
||
Accrued trade promotions
|
7,229
|
|
|
11,449
|
|
||
Payable for employee stock purchases
|
6,437
|
|
|
11,916
|
|
||
Customer advances and deferred revenue
|
41,509
|
|
|
39,995
|
|
||
Income taxes payable
|
9,727
|
|
|
8,515
|
|
||
Right of return refund liability
|
12,996
|
|
|
12,705
|
|
||
Operating lease liability, current
|
8,416
|
|
|
—
|
|
||
Other
|
35,504
|
|
|
39,535
|
|
||
Total
|
$
|
141,535
|
|
|
$
|
143,041
|
|
Balance, December 28, 2018
|
$
|
11,056
|
|
Charged to expense
|
5,001
|
|
|
Margin on parts sales reversed
|
1,537
|
|
|
Reductions for claims settled
|
(5,797
|
)
|
|
Balance, June 28, 2019
|
$
|
11,797
|
|
|
Level
|
|
June 28,
2019 |
|
December 28,
2018 |
||||
Assets
|
|
|
|
|
|
||||
Cash surrender value of life insurance
|
2
|
|
$
|
16,572
|
|
|
$
|
14,320
|
|
Forward exchange contracts
|
2
|
|
78
|
|
|
82
|
|
||
Total assets at fair value
|
|
|
$
|
16,650
|
|
|
$
|
14,402
|
|
Liabilities
|
|
|
|
|
|
||||
Contingent consideration
|
3
|
|
$
|
4,700
|
|
|
$
|
7,200
|
|
Deferred compensation
|
2
|
|
4,373
|
|
|
4,203
|
|
||
Total liabilities at fair value
|
|
|
$
|
9,073
|
|
|
$
|
11,403
|
|
|
Operating Leases
|
||
2019
|
$
|
4,755
|
|
2020
|
8,581
|
|
|
2021
|
6,473
|
|
|
2022
|
5,320
|
|
|
2023
|
3,947
|
|
|
2024
|
1,825
|
|
|
Thereafter
|
7,507
|
|
|
Total lease payments
|
$
|
38,408
|
|
Present value adjustment
|
(4,258
|
)
|
|
Operating lease liabilities
|
$
|
34,150
|
|
|
Total
|
||
2019
|
$
|
11,613
|
|
2020
|
8,759
|
|
|
2021
|
6,745
|
|
|
2022
|
5,102
|
|
|
2023
|
3,721
|
|
|
Thereafter
|
2,340
|
|
|
Total
|
$
|
38,280
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
%
Change
|
|
June 28,
2019 |
|
June 29,
2018 |
|
%
Change
|
||||||||||
Net Sales
|
$
|
428.3
|
|
|
$
|
424.6
|
|
|
1
|
%
|
|
$
|
833.2
|
|
|
$
|
830.9
|
|
|
0
|
%
|
Operating Earnings
|
112.4
|
|
|
113.4
|
|
|
(1
|
)%
|
|
216.9
|
|
|
225.1
|
|
|
(4
|
)%
|
||||
Net Earnings
|
88.1
|
|
|
89.1
|
|
|
(1
|
)%
|
|
174.9
|
|
|
174.7
|
|
|
0
|
%
|
||||
Net Earnings, adjusted (1)
|
85.9
|
|
|
82.7
|
|
|
4
|
%
|
|
166.0
|
|
|
166.8
|
|
|
0
|
%
|
||||
Diluted Net Earnings per Common Share
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
0
|
%
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
|
2
|
%
|
Diluted Net Earnings per Common Share, adjusted (1)
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
4
|
%
|
|
$
|
0.97
|
|
|
$
|
0.96
|
|
|
1
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Earnings before income taxes
|
$
|
107.8
|
|
|
$
|
105.2
|
|
|
$
|
208.5
|
|
|
$
|
212.7
|
|
|
|
|
|
|
|
|
|
||||||||
Income taxes, as reported
|
$
|
19.7
|
|
|
$
|
16.1
|
|
|
$
|
33.6
|
|
|
$
|
38.0
|
|
Excess tax benefit from option exercises
|
2.2
|
|
|
6.4
|
|
|
7.4
|
|
|
7.9
|
|
||||
Other non-recurring tax benefit
|
—
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
||||
Income taxes, adjusted
|
$
|
21.9
|
|
|
$
|
22.5
|
|
|
$
|
42.5
|
|
|
$
|
45.9
|
|
|
|
|
|
|
|
|
|
||||||||
Effective income tax rate
|
|
|
|
|
|
|
|
||||||||
As reported
|
18.2
|
%
|
|
15.3
|
%
|
|
16.1
|
%
|
|
17.9
|
%
|
||||
Adjusted
|
20.3
|
%
|
|
21.4
|
%
|
|
20.4
|
%
|
|
21.6
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net Earnings, as reported
|
$
|
88.1
|
|
|
$
|
89.1
|
|
|
$
|
174.9
|
|
|
$
|
174.7
|
|
Excess tax benefit from option exercises
|
(2.2
|
)
|
|
(6.4
|
)
|
|
(7.4
|
)
|
|
(7.9
|
)
|
||||
Other non-recurring tax benefit
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
||||
Net Earnings, adjusted
|
$
|
85.9
|
|
|
$
|
82.7
|
|
|
$
|
166.0
|
|
|
$
|
166.8
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Diluted Shares
|
172.0
|
|
|
173.3
|
|
|
171.5
|
|
|
174.5
|
|
||||
Diluted Earnings per Share
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Adjusted
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
$
|
0.97
|
|
|
$
|
0.96
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||
Net Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
47.0
|
|
|
45.9
|
|
|
46.8
|
|
|
45.6
|
|
Gross Profit
|
53.0
|
|
|
54.1
|
|
|
53.2
|
|
|
54.4
|
|
Product development
|
4.1
|
|
|
3.8
|
|
|
4.1
|
|
|
3.8
|
|
Selling, marketing and distribution
|
14.1
|
|
|
14.8
|
|
|
14.6
|
|
|
15.1
|
|
General and administrative
|
8.6
|
|
|
8.8
|
|
|
8.5
|
|
|
8.4
|
|
Operating Earnings
|
26.2
|
|
|
26.7
|
|
|
26.0
|
|
|
27.1
|
|
Interest expense
|
0.8
|
|
|
0.9
|
|
|
0.8
|
|
|
0.9
|
|
Other expense, net
|
0.2
|
|
|
1.0
|
|
|
0.2
|
|
|
0.6
|
|
Earnings Before Income Taxes
|
25.2
|
|
|
24.8
|
|
|
25.0
|
|
|
25.6
|
|
Income taxes
|
4.6
|
|
|
3.8
|
|
|
4.0
|
|
|
4.6
|
|
Net Earnings
|
20.6
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Americas(1)
|
$
|
253.7
|
|
|
$
|
245.7
|
|
|
$
|
485.7
|
|
|
$
|
467.1
|
|
EMEA(2)
|
101.1
|
|
|
96.8
|
|
|
200.6
|
|
|
198.2
|
|
||||
Asia Pacific
|
73.5
|
|
|
82.1
|
|
|
146.9
|
|
|
165.6
|
|
||||
Consolidated
|
$
|
428.3
|
|
|
$
|
424.6
|
|
|
$
|
833.2
|
|
|
$
|
830.9
|
|
(1)
|
North, South and Central America, including the United States
|
(2)
|
Europe, Middle East and Africa
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
4%
|
|
0%
|
|
(1)%
|
|
3%
|
|
4%
|
|
0%
|
|
0%
|
|
4%
|
EMEA
|
10%
|
|
0%
|
|
(6)%
|
|
4%
|
|
7%
|
|
0%
|
|
(6)%
|
|
1%
|
Asia Pacific
|
(6)%
|
|
0%
|
|
(4)%
|
|
(10)%
|
|
(7)%
|
|
0%
|
|
(4)%
|
|
(11)%
|
Consolidated
|
3%
|
|
0%
|
|
(2)%
|
|
1%
|
|
3%
|
|
0%
|
|
(3)%
|
|
0%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
80.7
|
|
|
$
|
79.3
|
|
|
$
|
161.6
|
|
|
$
|
153.5
|
|
EMEA
|
59.1
|
|
|
56.5
|
|
|
117.2
|
|
|
116.7
|
|
||||
Asia Pacific
|
48.7
|
|
|
54.7
|
|
|
98.8
|
|
|
115.5
|
|
||||
Total
|
$
|
188.5
|
|
|
$
|
190.5
|
|
|
$
|
377.6
|
|
|
$
|
385.7
|
|
Operating earnings as a percentage of net sales
|
34
|
%
|
|
35
|
%
|
|
34
|
%
|
|
35
|
%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
2%
|
|
0%
|
|
0%
|
|
2%
|
|
6%
|
|
0%
|
|
(1)%
|
|
5%
|
EMEA
|
10%
|
|
0%
|
|
(5)%
|
|
5%
|
|
7%
|
|
0%
|
|
(7)%
|
|
0%
|
Asia Pacific
|
(6)%
|
|
0%
|
|
(5)%
|
|
(11)%
|
|
(10)%
|
|
0%
|
|
(4)%
|
|
(14)%
|
Segment Total
|
2%
|
|
0%
|
|
(3)%
|
|
(1)%
|
|
1%
|
|
0%
|
|
(3)%
|
|
(2)%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
55.1
|
|
|
$
|
54.8
|
|
|
$
|
112.2
|
|
|
$
|
106.1
|
|
EMEA
|
14.3
|
|
|
14.4
|
|
|
30.1
|
|
|
29.4
|
|
||||
Asia Pacific
|
15.7
|
|
|
15.9
|
|
|
29.7
|
|
|
29.6
|
|
||||
Total
|
$
|
85.1
|
|
|
$
|
85.1
|
|
|
$
|
172.0
|
|
|
$
|
165.1
|
|
Operating earnings as a percentage of net sales
|
22
|
%
|
|
20
|
%
|
|
22
|
%
|
|
21
|
%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
1%
|
|
0%
|
|
0%
|
|
1%
|
|
6%
|
|
0%
|
|
0%
|
|
6%
|
EMEA
|
2%
|
|
1%
|
|
(4)%
|
|
(1)%
|
|
6%
|
|
0%
|
|
(4)%
|
|
2%
|
Asia Pacific
|
3%
|
|
0%
|
|
(4)%
|
|
(1)%
|
|
4%
|
|
0%
|
|
(4)%
|
|
0%
|
Segment Total
|
1%
|
|
0%
|
|
(1)%
|
|
0%
|
|
6%
|
|
0%
|
|
(2)%
|
|
4%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
118.0
|
|
|
$
|
111.6
|
|
|
$
|
211.9
|
|
|
$
|
207.5
|
|
EMEA
|
27.7
|
|
|
26.0
|
|
|
53.3
|
|
|
52.2
|
|
||||
Asia Pacific
|
9.1
|
|
|
11.5
|
|
|
18.4
|
|
|
20.5
|
|
||||
Total
|
$
|
154.8
|
|
|
$
|
149.1
|
|
|
$
|
283.6
|
|
|
$
|
280.2
|
|
Operating earnings as a percentage of net sales
|
26
|
%
|
|
26
|
%
|
|
23
|
%
|
|
25
|
%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
6%
|
|
0%
|
|
0%
|
|
6%
|
|
2%
|
|
0%
|
|
0%
|
|
2%
|
EMEA
|
12%
|
|
0%
|
|
(5)%
|
|
7%
|
|
9%
|
|
0%
|
|
(7)%
|
|
2%
|
Asia Pacific
|
(17)%
|
|
0%
|
|
(4)%
|
|
(21)%
|
|
(5)%
|
|
0%
|
|
(5)%
|
|
(10)%
|
Segment Total
|
5%
|
|
0%
|
|
(1)%
|
|
4%
|
|
3%
|
|
0%
|
|
(2)%
|
|
1%
|
3.1
|
|
|
Restated Articles of Incorporation as amended December 8, 2017. (Incorporated by reference to Exhibit 3.1 to the Company's Report on Form 8-K filed December 8, 2017.)
|
|
|
|
|
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
|
|
|
Graco Inc. 2019 Stock Incentive Plan. (Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 13, 2019.)
|
|
|
|
|
|
|
Stock Option Agreement. Form of agreement used for award of non-incentive stock options to nonemployee directors under the Graco Inc. 2019 Stock Incentive Plan in 2019.
|
|
|
|
|
|
|
|
Nonemployee Director Stock and Deferred Stock Program (2019 Restatement).
|
|
|
|
|
|
|
|
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a).
|
|
|
|
|
|
|
|
Certification of Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a).
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Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C.
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Press Release Reporting Second Quarter Earnings dated July 24, 2019.
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101
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Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language).
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Date:
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July 24, 2019
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By:
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/s/ Patrick J. McHale
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Patrick J. McHale
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President and Chief Executive Officer
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(Principal Executive Officer)
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Date:
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July 24, 2019
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By:
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/s/ Mark W. Sheahan
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Mark W. Sheahan
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Chief Financial Officer and Treasurer
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(Principal Financial Officer)
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Date:
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July 24, 2019
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By:
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/s/ Caroline M. Chambers
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Caroline M. Chambers
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Executive Vice President, Corporate Controller
and Information Systems
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(Principal Accounting Officer)
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Graco Inc. Non-Qualified Stock Option Agreement
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[Grant Plan Long Name]
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Graco Inc., a Minnesota corporation, (the “Company”), pursuant to the terms of the Graco Inc. 2019 Stock Incentive Plan (the “Plan”), wishes to grant this Option (as defined in the Terms and Conditions below) to you (“Nonemployee Director”).
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.
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Participant: XXXX
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Global ID: XXXXXXX
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Award Type: XXXXXX
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Date of Grant: XXXX
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Award Expiration Date: XXXXX
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Shares Granted: XXXXXX
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Award Price: XX.XXUSD
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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.
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A.
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No portion of this Option may be exercised by Nonemployee Director 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.
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Vesting Date
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Portion of Option Exercisable
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First Anniversary of Date of Grant
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25%
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Second Anniversary of Date of Grant
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50%
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Third Anniversary of Date of Grant
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75%
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Fourth Anniversary of Date of Grant
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100%
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B.
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During the lifetime of Nonemployee Director, the Option shall be exercisable only by Nonemployee Director and shall not be assignable or transferable by Nonemployee Director 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 Nonemployee Director and receive any property distributable with respect to the Option upon the death of the Nonemployee Director (any person to whom the Option has been transferred pursuant to this Section 2B, a “Transferee”). The Transferee shall be subject to the provisions of the Agreement, and, as a condition to the transfer of the Option becoming effective, the Transferee shall agree to be bound by the provisions of this Agreement.
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C.
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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.
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3.
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Effect of Termination of Membership on the Board
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A.
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In the event Nonemployee Director ceases being a director of the Company for any reason other than the reasons identified in Section 3B below, Nonemployee Director shall have the right to exercise the Option as follows:
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(1)
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If Nonemployee Director was a member of the Board of Directors of the Company for five (5) or more years, the portion of the Option not yet exercisable shall become immediately exercisable upon the date Nonemployee Director ceases being a director. Nonemployee Director may exercise all or any portion of the Option not yet exercised for a period beginning on the day after the date of Nonemployee Director’s ceasing to be a director and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant. If Nonemployee Director dies during the period between the date of Nonemployee Director ceasing to be a director and the expiration of the Option, the executor(s) or administrator(s) of Nonemployee Director’s estate or any Transferee may exercise the unexercised portion of the Option at any time during a period beginning the day after the date of Nonemployee Director’s death and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant. In no event shall the Option be exercisable following the tenth anniversary of the Date of Grant.
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(2)
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If Nonemployee Director was a member of the Board of Directors of the Company for less than five (5) years, Nonemployee Director may exercise that portion of the Option exercisable upon the date Nonemployee Director ceases being a director at any time within the period beginning on the day after Nonemployee Director ceases being a director and ending at the close of trading on the Exchange ninety (90) days later. If Nonemployee Director dies within the ninety (90) day period and shall not have fully exercised the Option, the executor(s) or administrator(s) of Nonemployee Director’s estate or any Transferee may exercise the remaining portion of the Option at any time during a period beginning on the day after the date of Nonemployee Director’s death and ending at the close of trading on the Exchange on the anniversary of death one (1) year later.
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(3)
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If Nonemployee Director dies while a member of the Board of Directors of the Company, the Option, to the extent exercisable by Nonemployee Director at the date of death, may be exercised by the executor(s) or administrator(s) of Nonemployee Director’s estate or any Transferee at any time during a period beginning on the day after the date of Nonemployee Director’s death and ending at the close of trading on the Exchange on the tenth anniversary of the Date of Grant.
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(4)
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In the event the Option is exercised by a Transferee or the executors or administrators of the estate of a deceased Nonemployee Director, 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 Nonemployee Director’s estate or the proper legatee or distributee thereof.
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B.
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If Nonemployee Director ceases being a director of the Company by reason of Nonemployee Director’s gross and willful misconduct, including but not limited to (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any affiliate of the Company, (iii) breach of fiduciary duty, or (iv) any other gross or willful misconduct, as determined by the Board, in its sole and conclusive discretion, the unexercised portion of the Option granted to such Nonemployee Director shall immediately be forfeited as of the time of the misconduct. If the Board determines subsequent to the time Nonemployee Director ceases being a director of the Company for whatever reason, that Nonemployee Director engaged in conduct while a member of the Board of Directors of the Company that would constitute gross and willful misconduct, the Option shall terminate as of the time of such misconduct. Furthermore, if the Option is exercised in whole or in part and the Board thereafter determines that Nonemployee Director engaged in gross and willful misconduct while a member of the Board of Directors of the Company 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.
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C.
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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.
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4.
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Manner of Exercise
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A.
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Nonemployee Director 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.
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B.
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The Nonemployee Director may, at Nonemployee Director’s election, pay the Option price as follows:
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(1)
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by cash or check (bank check, certified check, or personal check);
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(2)
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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;
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(3)
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if the Nonemployee Director is still serving as a director 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
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(4)
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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.
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5.
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Change of Control
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A.
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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:
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(1)
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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
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(a)
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the then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”) or
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(b)
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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”);
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(i)
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an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company,
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(ii)
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an acquisition by the Employee or any group that includes the Employee, or
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(iii)
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an acquisition by any entity pursuant to a transaction that complies with clauses (a), (b) and (c) of Section 5A(3) below; or
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(2)
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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
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(3)
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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
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(a)
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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,
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(b)
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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
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(c)
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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
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(4)
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approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
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6.
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Adjustments; Fundamental Change
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A.
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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.
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B.
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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:
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(1)
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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
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(2)
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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 6B) 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 6B, the Option, to the extent that it shall not have been exercised prior to the Fundamental Change, shall be canceled at the time of, or immediately prior to, the Fundamental Change, as provided in the declaration. Notwithstanding the foregoing, the holder of the Option shall not be entitled to the payment provided for in this Section 6B if such Option shall
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7.
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Miscellaneous
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A.
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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.
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B.
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Neither the Plan nor any action taken hereunder shall be construed as giving Nonemployee Director any right to be retained in the service of the Company.
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C.
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Neither Nonemployee Director, Nonemployee Director’s legal representative, a Transferee, nor the executor(s) or administrator(s) of Nonemployee Director’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.
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D.
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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.
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E.
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The internal law, and not the law of conflicts, of the State of Minnesota, U.S.A., 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.
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F.
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Nonemployee Director hereby consents to the transfer to Nonemployee Director’s employer or the Company of information relating to Nonemployee Director’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. Nonemployee Director also consents to the storage and processing of such data by such persons for this purpose.
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(i)
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For a lump sum payment, the Company shall pay the Participating Director a single lump sum payment on the January 10 following the Participating Director’s Separation from Service (or the first business day following January 10) of the year following the year of the Participating Director’s Separation from Service.
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(ii)
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For installment payments, the Company shall pay the Participating Director the first installment payment on the January 10 following the Participating Director’s Separation from Service (or the first business day following January 10) of the year following the year of the Participating Director’s Separation from Service. Subsequent payments will be made on each subsequent January 10 (or the first business day following January 10). The amount of each installment payment will be computed by multiplying the number of shares credited to the Deferred Stock Account as of the payment date for each year by a fraction, the numerator of which is one (1) and the denominator of which is the total number of installments elected (not to exceed fifteen (15)) minus the number of installments previously paid. Amounts paid prior to the final installment payment will be rounded to the nearest whole number of shares. The final installment payment shall be for the whole number of shares remaining credited to the Deferred Stock Account, plus cash in lieu of any fractional share.
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(i)
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For a lump sum payment, the Company shall pay the Participating Director a single lump sum payment on the January 10 following the Participating Director’s Separation from Service (or the first business day following January 10) of the year following the year of the Participating Director’s Separation from Service.
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(ii)
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For installment payments, the Company shall pay the Participating Director the first installment payment on the January 10 following the Participating Director’s Separation from Service (or the first business day following January 10) of the year following the year of the Participating Director’s Separation from Service. Subsequent payments will be made on each subsequent January 10 (or the first business day following January 10). The amount of each installment payment will be computed by multiplying the number of shares credited to the Deferred Stock Account as of the payment date for each year by a fraction, the numerator of which is one (1) and the denominator of which is the total number of installments elected (not to exceed fifteen (15)) minus the number of installments previously paid. Amounts paid prior to the final installment payment will be rounded to the nearest whole number of shares. The final installment payment shall be for the whole number of shares remaining credited to the Deferred Stock Account, plus cash in lieu of any fractional share.
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(a)
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If there is insufficient evidence that a Beneficiary was living at the time of the death of the Participating Director, the Beneficiary shall be deemed to be not living at the time of the Participating Director’s death (i.e., to have died prior to the Participating Director).
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(b)
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The Beneficiary designated by the Participating Director and any automatic Beneficiaries (if a Beneficiary has not been designated) shall become fixed at the time of the Participating Director’s death so that, if a Beneficiary survives the Participating Director but dies before the receipt of payment due such Beneficiary hereunder, such payment shall be made to the representatives of such Beneficiary’s estate.
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(c)
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If the Participating Director designates as a Beneficiary the person who is the Participating Director’s spouse on the date of the designation, either by name or relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participating Director and such person shall automatically revoke such designation. The foregoing shall not prevent the Participating Director from designating a former spouse as a Beneficiary on a form signed by the Participating Director and received by the Secretary of the Company after the date of the legal termination of the marriage between the Participating Director and such former spouse, provided it is received during the Participating Director’s lifetime. Notwithstanding the foregoing, if the Participating Director has elected to have the
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(d)
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Except as provided under (c), any designation of a Beneficiary by name accompanied by a description of the relationship of the Beneficiary to the Participating Director shall be given effect without regard to whether the relationship to the Participating Director exists either then or at the time of the Participating Director’s death.
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(e)
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Any designation of a Beneficiary only by statement of the Beneficiary’s relationship to the Participating Director shall be effective only to designate the person or persons standing in that relationship to the Participating Director at the time of the Participating Director’s death.
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(f)
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The Administrator, within 30 days of the receipt of a Beneficiary designation, may reject any Beneficiary designation if the Administrator determines the Beneficiary designation is not clear, too complex, or onerously difficult to administer. If the Administrator rejects a Beneficiary designation, then the Program’s default Beneficiary designation rules shall apply (and not any prior Beneficiary designation submitted by the Participating Director).
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(g)
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Notwithstanding any other provision of this Program or any election or designation made under the Program, any individual who feloniously and intentionally kills a Participating Director or Beneficiary shall be deemed for all purposes of the Program and all elections and designations made under the Program to have died before such Participating Director or Beneficiary. Prior to a judgment or conviction, the Administrator, in its sole discretion, shall determine whether a killing was felonious and intentional. A final judgment of conviction of felonious and intentional killing is conclusive for the purposes of this determination
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(a)
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there is in effect with respect to such shares a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) and any applicable state securities laws or an exemption from such registration under the Securities Act and applicable state securities laws, and
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(b)
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there has been obtained any other consent, approval or permit from any other regulatory body that the Administrator, in his or her sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company, in order to comply with such securities law or other restriction.
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Exhibit 31.1
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1.
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I have reviewed this quarterly report on Form 10-Q of Graco Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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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
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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
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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.
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Date:
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|
July 24, 2019
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|
/s/ Patrick J. McHale
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|
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Patrick J. McHale
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|
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President and Chief Executive Officer
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Exhibit 31.2
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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:
|
|
July 24, 2019
|
|
/s/ Mark W. Sheahan
|
|
|
|
|
Mark W. Sheahan
|
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
Exhibit 32
|
|
|
|
|
|
Date:
|
|
July 24, 2019
|
|
/s/ Patrick J. McHale
|
|
|
|
|
Patrick J. McHale
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
|
July 24, 2019
|
|
/s/ Mark W. Sheahan
|
|
|
|
|
Mark W. Sheahan
|
|
|
|
|
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, July 24, 2019
|
Financial Contact: Mark Sheahan, 612-623-6656
Media Contact: Charlotte Boyd, 612-623-6153
Charlotte_M_Boyd@graco.com
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
|
Jun 28,
2019 |
|
Jun 29,
2018 |
|
%
Change
|
|
Jun 28,
2019 |
|
Jun 29,
2018 |
|
%
Change
|
||||||||||
Net Sales
|
$
|
428.3
|
|
|
$
|
424.6
|
|
|
1
|
%
|
|
$
|
833.2
|
|
|
$
|
830.9
|
|
|
0
|
%
|
Operating Earnings
|
112.4
|
|
|
113.4
|
|
|
(1)
|
%
|
|
216.9
|
|
|
225.1
|
|
|
(4)
|
%
|
||||
Net Earnings
|
88.1
|
|
|
89.1
|
|
|
(1)
|
%
|
|
174.9
|
|
|
174.7
|
|
|
0
|
%
|
||||
Diluted Net Earnings per Common Share
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
0
|
%
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted (non-GAAP): (1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Earnings, adjusted
|
$
|
85.9
|
|
|
$
|
82.7
|
|
|
4
|
%
|
|
$
|
166.0
|
|
|
$
|
166.8
|
|
|
(0)
|
%
|
Diluted Net Earnings per Common Share, adjusted
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
4
|
%
|
|
$
|
0.97
|
|
|
$
|
0.96
|
|
|
1
|
%
|
•
|
Changes in currency translation rates offset underlying growth in sales compared to last year. At consistent currency rates, sales for the quarter and year to date increased by 3 percent.
|
•
|
Gross margin rates for the quarter and year to date decreased by 1 percentage point from the comparable periods last year. Changes in currency translation rates accounted for approximately half of the decrease.
|
•
|
Total operating expenses decreased in dollars and as a percentage of sales.
|
•
|
For the quarter, the effective income tax rate increased 3 percentage points mainly due to a decrease in excess tax benefits from option exercises. For the year to date, the effective rate decreased 2 percentage points due to additional net benefits from U.S. tax reform provisions and other non-recurring benefits from tax planning activities.
|
|
Three Months
|
|
Six Months
|
||||||||||||||||||||
|
Industrial
|
|
Process
|
|
Contractor
|
|
Industrial
|
|
Process
|
|
Contractor
|
||||||||||||
Net Sales (in millions)
|
$
|
188.5
|
|
|
$
|
85.1
|
|
|
$
|
154.8
|
|
|
$
|
377.6
|
|
|
$
|
172.0
|
|
|
$
|
283.6
|
|
Percentage change from last year
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales
|
(1
|
)%
|
|
0
|
%
|
|
4
|
%
|
|
(2
|
)%
|
|
4
|
%
|
|
1
|
%
|
||||||
Operating earnings
|
(4
|
)%
|
|
8
|
%
|
|
4
|
%
|
|
(5
|
)%
|
|
10
|
%
|
|
(5
|
)%
|
||||||
Operating earnings as a percentage of sales
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2019
|
34
|
%
|
|
22
|
%
|
|
26
|
%
|
|
34
|
%
|
|
22
|
%
|
|
23
|
%
|
||||||
2018
|
35
|
%
|
|
20
|
%
|
|
26
|
%
|
|
35
|
%
|
|
21
|
%
|
|
25
|
%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
2%
|
|
0%
|
|
0%
|
|
2%
|
|
6%
|
|
0%
|
|
(1)%
|
|
5%
|
EMEA
|
10%
|
|
0%
|
|
(5)%
|
|
5%
|
|
7%
|
|
0%
|
|
(7)%
|
|
0%
|
Asia Pacific
|
(6)%
|
|
0%
|
|
(5)%
|
|
(11)%
|
|
(10)%
|
|
0%
|
|
(4)%
|
|
(14)%
|
Consolidated
|
2%
|
|
0%
|
|
(3)%
|
|
(1)%
|
|
1%
|
|
0%
|
|
(3)%
|
|
(2)%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
1%
|
|
0%
|
|
0%
|
|
1%
|
|
6%
|
|
0%
|
|
0%
|
|
6%
|
EMEA
|
2%
|
|
1%
|
|
(4)%
|
|
(1)%
|
|
6%
|
|
0%
|
|
(4)%
|
|
2%
|
Asia Pacific
|
3%
|
|
0%
|
|
(4)%
|
|
(1)%
|
|
4%
|
|
0%
|
|
(4)%
|
|
0%
|
Consolidated
|
1%
|
|
0%
|
|
(1)%
|
|
0%
|
|
6%
|
|
0%
|
|
(2)%
|
|
4%
|
|
Three Months
|
|
Six Months
|
||||||||||||
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
|
Volume and Price
|
|
Acquisitions
|
|
Currency
|
|
Total
|
Americas
|
6%
|
|
0%
|
|
0%
|
|
6%
|
|
2%
|
|
0%
|
|
0%
|
|
2%
|
EMEA
|
12%
|
|
0%
|
|
(5)%
|
|
7%
|
|
9%
|
|
0%
|
|
(7)%
|
|
2%
|
Asia Pacific
|
(17)%
|
|
0%
|
|
(4)%
|
|
(21)%
|
|
(5)%
|
|
0%
|
|
(5)%
|
|
(10)%
|
Consolidated
|
5%
|
|
0%
|
|
(1)%
|
|
4%
|
|
3%
|
|
0%
|
|
(2)%
|
|
1%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
Jun 28,
2019 |
|
Jun 29,
2018 |
|
Jun 28,
2019 |
|
Jun 29,
2018 |
||||||||
Earnings before income taxes
|
$
|
107.8
|
|
|
$
|
105.2
|
|
|
$
|
208.5
|
|
|
$
|
212.7
|
|
|
|
|
|
|
|
|
|
||||||||
Income taxes, as reported
|
$
|
19.7
|
|
|
$
|
16.1
|
|
|
$
|
33.6
|
|
|
$
|
38.0
|
|
Excess tax benefit from option exercises
|
2.2
|
|
|
6.4
|
|
|
7.4
|
|
|
7.9
|
|
||||
Other non-recurring tax benefit
|
—
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
||||
Income taxes, adjusted
|
$
|
21.9
|
|
|
$
|
22.5
|
|
|
$
|
42.5
|
|
|
$
|
45.9
|
|
|
|
|
|
|
|
|
|
||||||||
Effective income tax rate
|
|
|
|
|
|
|
|
||||||||
As reported
|
18.2
|
%
|
|
15.3
|
%
|
|
16.1
|
%
|
|
17.9
|
%
|
||||
Adjusted
|
20.3
|
%
|
|
21.4
|
%
|
|
20.4
|
%
|
|
21.6
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net Earnings, as reported
|
$
|
88.1
|
|
|
$
|
89.1
|
|
|
$
|
174.9
|
|
|
$
|
174.7
|
|
Excess tax benefit from option exercises
|
(2.2
|
)
|
|
(6.4
|
)
|
|
(7.4
|
)
|
|
(7.9
|
)
|
||||
Other non-recurring tax benefit
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
||||
Net Earnings, adjusted
|
$
|
85.9
|
|
|
$
|
82.7
|
|
|
$
|
166.0
|
|
|
$
|
166.8
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Diluted Shares
|
172.0
|
|
|
173.3
|
|
|
171.5
|
|
|
174.5
|
|
||||
Diluted Earnings per Share
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Adjusted
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
$
|
0.97
|
|
|
$
|
0.96
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
Jun 28,
2019 |
|
Jun 29,
2018 |
|
Jun 28,
2019 |
|
Jun 29,
2018 |
||||||||
Net Sales
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
Cost of products sold
|
201,374
|
|
|
194,667
|
|
|
390,202
|
|
|
378,594
|
|
||||
Gross Profit
|
226,954
|
|
|
229,903
|
|
|
442,996
|
|
|
452,324
|
|
||||
Product development
|
17,324
|
|
|
16,112
|
|
|
33,893
|
|
|
31,401
|
|
||||
Selling, marketing and distribution
|
60,441
|
|
|
62,949
|
|
|
121,258
|
|
|
125,471
|
|
||||
General and administrative
|
36,828
|
|
|
37,464
|
|
|
70,957
|
|
|
70,378
|
|
||||
Operating Earnings
|
112,361
|
|
|
113,378
|
|
|
216,888
|
|
|
225,074
|
|
||||
Interest expense
|
3,431
|
|
|
3,891
|
|
|
6,966
|
|
|
7,124
|
|
||||
Other expense, net
|
1,119
|
|
|
4,251
|
|
|
1,388
|
|
|
5,286
|
|
||||
Earnings Before Income Taxes
|
107,811
|
|
|
105,236
|
|
|
208,534
|
|
|
212,664
|
|
||||
Income taxes
|
19,674
|
|
|
16,096
|
|
|
33,648
|
|
|
38,014
|
|
||||
Net Earnings
|
$
|
88,137
|
|
|
$
|
89,140
|
|
|
$
|
174,886
|
|
|
$
|
174,650
|
|
Net Earnings (Loss) per Common Share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.53
|
|
|
$
|
0.53
|
|
|
$
|
1.05
|
|
|
$
|
1.04
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
0.51
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Weighted Average Number of Shares
|
|
|
|
|
|
|
|
||||||||
Basic
|
166,684
|
|
|
167,260
|
|
|
166,150
|
|
|
168,166
|
|
||||
Diluted
|
172,047
|
|
|
173,265
|
|
|
171,453
|
|
|
174,457
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
Jun 28,
2019 |
|
Jun 29,
2018 |
|
Jun 28,
2019 |
|
Jun 29,
2018 |
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
Industrial
|
$
|
188,507
|
|
|
$
|
190,459
|
|
|
$
|
377,607
|
|
|
$
|
385,655
|
|
Process
|
85,064
|
|
|
85,059
|
|
|
171,958
|
|
|
165,094
|
|
||||
Contractor
|
154,757
|
|
|
149,052
|
|
|
283,633
|
|
|
280,169
|
|
||||
Total
|
$
|
428,328
|
|
|
$
|
424,570
|
|
|
$
|
833,198
|
|
|
$
|
830,918
|
|
Operating Earnings
|
|
|
|
|
|
|
|
||||||||
Industrial
|
$
|
64,428
|
|
|
$
|
67,030
|
|
|
$
|
129,631
|
|
|
$
|
136,155
|
|
Process
|
18,378
|
|
|
17,065
|
|
|
38,392
|
|
|
34,767
|
|
||||
Contractor
|
40,054
|
|
|
38,382
|
|
|
66,593
|
|
|
69,793
|
|
||||
Unallocated corporate (expense)
|
(10,499
|
)
|
|
(9,099
|
)
|
|
(17,728
|
)
|
|
(15,641
|
)
|
||||
Total
|
$
|
112,361
|
|
|
$
|
113,378
|
|
|
$
|
216,888
|
|
|
$
|
225,074
|
|