Minnesota | 41-0285640 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
88 - 11th Avenue N.E. | |||||||||||
Minneapolis, | Minnesota | 55413 | |||||||||
(Address of principal executive offices) | (Zip Code) |
(612) | 623-6000 | ||||
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, par value $1.00 per share | GGG | The New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||||||||
Emerging growth company | ☐ |
Page | ||||||||
Part I | ||||||||
Item 1 | ||||||||
Item 1A | ||||||||
Item 1B | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
Part II | ||||||||
Item 5 | ||||||||
Item 6 | ||||||||
Item 7 | ||||||||
Item 7A | ||||||||
Item 8 | ||||||||
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34) | ||||||||
Item 9 | ||||||||
Item 9A | ||||||||
Item 9B | ||||||||
Item 9C | ||||||||
Part III | ||||||||
Item 10 | ||||||||
Item 11 | ||||||||
Item 12 | ||||||||
Item 13 | ||||||||
Item 14 | ||||||||
Part IV | ||||||||
Item 15 | ||||||||
Item 16 | ||||||||
ACCESS TO REPORTS | ||
Investors may obtain access free of charge to the Graco Inc. Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, other reports and amendments to the reports by visiting the Graco website at www.graco.com. These reports will be available as soon as reasonably practicable following electronic filing with, or furnishing to, the Securities and Exchange Commission. |
Facility | Owned or Leased | Square Footage | Facility Activities | Operating Segment | ||||||||||
North America | ||||||||||||||
Rogers, Minnesota, United States | Owned | 782,000 | Manufacturing, warehouse, office and product development | Contractor | ||||||||||
Dayton, Minnesota, United States | Owned | 538,000 | Manufacturing, warehouse, office and product development | Contractor and Process | ||||||||||
Minneapolis, Minnesota, United States | Owned | 390,000 | Manufacturing and office | Industrial | ||||||||||
Rogers, Minnesota, United States | Leased | 268,000 | Distribution center and office | All segments | ||||||||||
Anoka, Minnesota, United States | Owned | 208,000 | Manufacturing, warehouse, office and product development | Process | ||||||||||
Sioux Falls, South Dakota, United States | Owned | 203,000 | Manufacturing, warehouse and office | Industrial and Contractor |
Minneapolis, Minnesota, United States | Owned | 141,000 | Worldwide headquarters; office and product development | Corporate and Industrial | ||||||||||
North Canton, Ohio, United States | Owned | 131,000 | Manufacturing, warehouse, office and application laboratory | Industrial | ||||||||||
Pompano Beach, Florida, United States | Leased | 109,000 | Office, assembly and warehouse | Contractor | ||||||||||
Erie, Pennsylvania, United States | Owned | 89,000 | Manufacturing, warehouse, office and product development | Process | ||||||||||
Minneapolis, Minnesota, United States | Owned | 87,000 | Assembly | Industrial | ||||||||||
Kamas, Utah, United States | Owned | 74,000 | Manufacturing, warehouse, office, product development and test laboratory | Process | ||||||||||
Dexter, Michigan, United States | Owned | 65,000 | Manufacturing, warehouse, office and product development | Process | ||||||||||
Indianapolis, Indiana, United States | Owned | 64,000 | Warehouse, office, product development and application laboratory | Industrial | ||||||||||
Minneapolis, Minnesota, United States | Owned | 42,000 | Corporate administrative office | All segments | ||||||||||
Irvine, California, United States | Leased | 21,000 | Office, assembly and warehouse | Process | ||||||||||
Europe | ||||||||||||||
Maasmechelen, Belgium | Owned | 210,000 | EMEA headquarters, warehouse and assembly | All segments | ||||||||||
Verona, Italy | Leased | 164,000 | Manufacturing and warehouse | Industrial | ||||||||||
St. Gallen, Switzerland | Owned | 82,000 | Manufacturing, warehouse, office, product development and application laboratory | Industrial | ||||||||||
Sibiu, Romania | Leased | 77,000 | Manufacturing | Industrial | ||||||||||
Coventry, United Kingdom | Owned | 38,000 | Office and assembly | Process | ||||||||||
Rödermark, Germany | Leased | 32,000 | Office and warehouse | Industrial | ||||||||||
Verona, Italy | Owned | 31,000 | Office and warehouse | Industrial | ||||||||||
St. Gallen, Switzerland | Leased | 26,000 | Manufacturing | Industrial | ||||||||||
Maasmechelen, Belgium | Leased | 25,000 | Office and assembly | All segments | ||||||||||
Aachen, Germany | Leased | 22,000 | Office and warehouse | All segments | ||||||||||
Asia Pacific | ||||||||||||||
Shanghai, P.R.C. | Leased | 80,000 | Asia Pacific headquarters | All segments | ||||||||||
Suzhou, P.R.C. | Owned | 80,000 | Manufacturing, warehouse, office and product development | All segments | ||||||||||
Gyeonggi-do, South Korea | Leased | 33,000 | Office | All segments | ||||||||||
Shanghai, P.R.C. | Leased | 27,000 | Office and warehouse | Industrial | ||||||||||
Derrimut, Australia | Leased | 22,000 | Warehouse | All segments |
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||||||||||||||
Dow Jones U.S. Industrial Machinery | 100 | 86 | 117 | 136 | 168 | 147 | |||||||||||||||||||||||||||||
S&P 500 | 100 | 96 | 126 | 149 | 192 | 157 | |||||||||||||||||||||||||||||
Graco Inc. | 100 | 92 | 118 | 167 | 187 | 158 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (at end of period) | ||||||||||||||||||||||
Oct 01, 2022 - Oct 28, 2022 | 1,078,199 | $ | 61.34 | — | 14,971,377 | |||||||||||||||||||||
Oct 29, 2022 - Nov 25, 2022 | — | $ | — | — | 14,971,377 | |||||||||||||||||||||
Nov 26, 2022 - Dec 30, 2022 | — | $ | — | — | 14,971,377 |
2022 | 2021 | ||||||||||
Net Sales | $ | 2,143.5 | $ | 1,987.6 | |||||||
Operating Earnings | 572.7 | 531.3 | |||||||||
Net Earnings | 460.6 | 439.9 | |||||||||
Diluted Net Earnings per Common Share | $ | 2.66 | $ | 2.52 | |||||||
Adjusted (non-GAAP)(1): | |||||||||||
Net Earnings, adjusted | 455.5 | 425.7 | |||||||||
Diluted Net Earnings per Common Share, adjusted | $ | 2.63 | $ | 2.44 |
2022 | 2021 | ||||||||||
Earnings before income taxes, as reported | $ | 565.7 | $ | 508.5 | |||||||
Pension settlement loss | — | 12.0 | |||||||||
Earnings before income taxes, adjusted | $ | 565.7 | $ | 520.5 | |||||||
Income taxes, as reported | $ | 105.1 | $ | 68.6 | |||||||
Pension settlement tax effect | — | 2.5 | |||||||||
Excess tax benefit from option exercises | 5.1 | 11.5 | |||||||||
Other non-recurring tax benefit | — | 12.2 | |||||||||
Income taxes, adjusted | $ | 110.2 | $ | 94.8 | |||||||
Effective income tax rate | |||||||||||
As reported | 18.6 | % | 13.5 | % | |||||||
Adjusted | 19.5 | % | 18.2 | % | |||||||
Net Earnings, as reported | $ | 460.6 | $ | 439.9 | |||||||
Pension settlement loss, net | — | 9.5 | |||||||||
Excess tax benefit from option exercises | (5.1) | (11.5) | |||||||||
Other non-recurring tax benefit | — | (12.2) | |||||||||
Net Earnings, adjusted | $ | 455.5 | $ | 425.7 | |||||||
Weighted Average Diluted Shares | 172.9 | 174.5 | |||||||||
Diluted Net Earnings per Share | |||||||||||
As reported | $ | 2.66 | $ | 2.52 | |||||||
Adjusted | $ | 2.63 | $ | 2.44 |
2022 | 2021 | ||||||||||
Net Sales | 100.0 | % | 100.0 | % | |||||||
Cost of products sold | 50.7 | 48.0 | |||||||||
Gross profit | 49.3 | 52.0 | |||||||||
Product development | 3.7 | 4.0 | |||||||||
Selling, marketing and distribution | 11.7 | 13.7 | |||||||||
General and administrative | 7.2 | 7.6 | |||||||||
Operating earnings | 26.7 | 26.7 | |||||||||
Interest expense | 0.4 | 0.5 | |||||||||
Other expense, net | (0.1) | 0.6 | |||||||||
Earnings before income taxes | 26.4 | 25.6 | |||||||||
Income taxes | 4.9 | 3.5 | |||||||||
Net Earnings | 21.5 | % | 22.1 | % | |||||||
Net Earnings, adjusted (see non-GAAP measurements above) | 21.3 | % | 21.4 | % |
2022 | 2021 | ||||||||||
Americas(1) | $ | 1,281.9 | $ | 1,150.2 | |||||||
EMEA(2) | 451.8 | 464.1 | |||||||||
Asia Pacific | 409.8 | 373.3 | |||||||||
Consolidated | $ | 2,143.5 | $ | 1,987.6 |
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions/Divestitures | Currency | Total | ||||||||||||||||||||||||||||||||||||||||
Americas | 11% | 1% | (1)% | 11% | 15% | 0% | 0% | 15% | |||||||||||||||||||||||||||||||||||||||
EMEA | 7% | 0% | (10)% | (3)% | 21% | 0% | 4% | 25% | |||||||||||||||||||||||||||||||||||||||
Asia Pacific | 16% | 0% | (6)% | 10% | 30% | (3)% | 6% | 33% | |||||||||||||||||||||||||||||||||||||||
Consolidated | 11% | 1% | (4)% | 8% | 19% | 0% | 1% | 20% |
2022 | 2021 | ||||||||||
Sales | |||||||||||
Contractor | $ | 999.1 | $ | 987.6 | |||||||
Industrial | 649.3 | 602.4 | |||||||||
Process | 495.1 | 397.6 | |||||||||
Total | $ | 2,143.5 | $ | 1,987.6 | |||||||
Operating Earnings | |||||||||||
Contractor | $ | 249.9 | $ | 266.2 | |||||||
Industrial | 231.3 | 199.8 | |||||||||
Process | 122.3 | 91.0 | |||||||||
Unallocated corporate (expense) (1) | (30.8) | (25.7) | |||||||||
Total | $ | 572.7 | $ | 531.3 |
2022 | 2021 | ||||||||||
Sales | |||||||||||
Americas | $ | 739.1 | $ | 694.1 | |||||||
EMEA | 176.8 | 204.6 | |||||||||
Asia Pacific | 83.2 | 88.9 | |||||||||
Total | $ | 999.1 | $ | 987.6 | |||||||
Operating Earnings as a Percentage of Sales | 25 | % | 27 | % |
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||||||||||||||||||||||||||||||||||
Americas | 7% | 0% | (1)% | 6% | 12% | 0% | 0% | 12% | |||||||||||||||||||||||||||||||||||||||
EMEA | (6)% | 1% | (9)% | (14)% | 26% | 3% | 4% | 33% | |||||||||||||||||||||||||||||||||||||||
Asia Pacific | 0% | 0% | (6)% | (6)% | 23% | 0% | 5% | 28% | |||||||||||||||||||||||||||||||||||||||
Segment Total | 4% | 0% | (3)% | 1% | 15% | 1% | 1% | 17% |
2022 | 2021 | ||||||||||
Sales | |||||||||||
Americas | $ | 239.3 | $ | 213.4 | |||||||
EMEA | 205.7 | 199.4 | |||||||||
Asia Pacific | 204.3 | 189.6 | |||||||||
Total | $ | 649.3 | $ | 602.4 | |||||||
Operating Earnings as a Percentage of Sales | 36 | % | 33 | % |
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||||||||||||||||||||||||||||||||||
Americas | 13% | 0% | (1)% | 12% | 24% | 0% | 1% | 25% | |||||||||||||||||||||||||||||||||||||||
EMEA | 15% | 0% | (12)% | 3% | 18% | 0% | 3% | 21% | |||||||||||||||||||||||||||||||||||||||
Asia Pacific | 14% | 0% | (6)% | 8% | 25% | 0% | 5% | 30% | |||||||||||||||||||||||||||||||||||||||
Segment Total | 14% | 0% | (6)% | 8% | 22% | 0% | 3% | 25% |
2022 | 2021 | ||||||||||
Sales | |||||||||||
Americas | $ | 303.5 | $ | 242.7 | |||||||
EMEA | 69.3 | 60.1 | |||||||||
Asia Pacific | 122.3 | 94.8 | |||||||||
Total | $ | 495.1 | $ | 397.6 | |||||||
Operating Earnings as a Percentage of Sales | 25 | % | 23 | % |
2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions/Divestitures | Currency | Total | ||||||||||||||||||||||||||||||||||||||||
Americas | 22% | 3% | 0% | 25% | 17% | 0% | 1% | 18% | |||||||||||||||||||||||||||||||||||||||
EMEA | 22% | 1% | (8)% | 15% | 14% | (5)% | 4% | 13% | |||||||||||||||||||||||||||||||||||||||
Asia Pacific | 34% | 0% | (5)% | 29% | 48% | (11)% | 6% | 43% | |||||||||||||||||||||||||||||||||||||||
Segment Total | 25% | 2% | (2)% | 25% | 23% | (3)% | 2% | 22% |
2022 | 2021 | ||||||||||
Working capital | $ | 805.7 | $ | 856.8 | |||||||
Current ratio | 3.0 | 2.7 | |||||||||
Days of sales in receivables outstanding | 57 | 60 | |||||||||
Inventory turnover (LIFO) | 2.5 | 2.8 |
2022 | 2021 | ||||||||||
Operating activities | $ | 377.4 | $ | 456.9 | |||||||
Investing activities | (226.8) | (153.3) | |||||||||
Financing activities | (434.4) | (57.1) | |||||||||
Effect of exchange rates on cash | (1.3) | (1.1) | |||||||||
Net cash provided | (285.1) | 245.4 | |||||||||
Cash and cash equivalents at end of year | $ | 339.2 | $ | 624.3 |
Assumption | Funded Status | Expense | |||||||||||||||||||||
Discount rate | $ | (18.4) | $ | 3.3 | |||||||||||||||||||
Expected return on assets | — | 1.6 |
Years Ended | |||||||||||||||||
December 30, 2022 | December 31, 2021 | December 25, 2020 | |||||||||||||||
Net Sales | $ | 2,143,521 | $ | 1,987,608 | $ | 1,650,115 | |||||||||||
Cost of products sold | 1,086,082 | 953,659 | 795,178 | ||||||||||||||
Gross Profit | 1,057,439 | 1,033,949 | 854,937 | ||||||||||||||
Product development | 80,008 | 79,651 | 72,194 | ||||||||||||||
Selling, marketing and distribution | 250,948 | 271,526 | 220,271 | ||||||||||||||
General and administrative | 153,783 | 151,449 | 135,525 | ||||||||||||||
Impairment | — | — | 35,229 | ||||||||||||||
Operating Earnings | 572,700 | 531,323 | 391,718 | ||||||||||||||
Interest expense | 9,897 | 10,215 | 11,280 | ||||||||||||||
Other expense (income), net | (2,921) | 12,643 | 5,787 | ||||||||||||||
Earnings Before Income Taxes | 565,724 | 508,465 | 374,651 | ||||||||||||||
Income taxes | 105,079 | 68,599 | 44,195 | ||||||||||||||
Net Earnings | $ | 460,645 | $ | 439,866 | $ | 330,456 | |||||||||||
Basic Net Earnings per Common Share | $ | 2.73 | $ | 2.59 | $ | 1.97 | |||||||||||
Diluted Net Earnings per Common Share | $ | 2.66 | $ | 2.52 | $ | 1.92 |
Years Ended | |||||||||||||||||
December 30, 2022 | December 31, 2021 | December 25, 2020 | |||||||||||||||
Net Earnings | $ | 460,645 | $ | 439,866 | $ | 330,456 | |||||||||||
Components of other comprehensive income (loss) | |||||||||||||||||
Cumulative translation adjustment | (9,582) | (10,026) | 46,030 | ||||||||||||||
Pension and postretirement medical liability adjustment | 25,630 | 68,669 | (645) | ||||||||||||||
Income taxes - pension and postretirement medical liability | (5,257) | (14,647) | 237 | ||||||||||||||
Other comprehensive income | 10,791 | 43,996 | 45,622 | ||||||||||||||
Comprehensive Income | $ | 471,436 | $ | 483,862 | $ | 376,078 |
December 30, 2022 | December 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 339,196 | $ | 624,302 | |||||||
Accounts receivable, less allowances of $7,000 and $3,900 | 346,010 | 325,132 | |||||||||
Inventories | 476,790 | 382,301 | |||||||||
Other current assets | 43,624 | 31,886 | |||||||||
Total current assets | 1,205,620 | 1,363,621 | |||||||||
Property, Plant and Equipment, net | 607,609 | 451,061 | |||||||||
Goodwill | 368,171 | 356,255 | |||||||||
Other Intangible Assets, net | 137,507 | 149,740 | |||||||||
Operating Lease Assets | 29,785 | 30,046 | |||||||||
Deferred Income Taxes | 57,090 | 55,786 | |||||||||
Other Assets | 33,118 | 36,689 | |||||||||
Total Assets | $ | 2,438,900 | $ | 2,443,198 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Notes payable to banks | $ | 20,974 | $ | 43,489 | |||||||
Current portion of long term debt | — | 75,000 | |||||||||
Trade accounts payable | 84,218 | 78,432 | |||||||||
Salaries and incentives | 63,969 | 82,941 | |||||||||
Dividends payable | 39,963 | 35,771 | |||||||||
Other current liabilities | 190,793 | 191,159 | |||||||||
Total current liabilities | 399,917 | 506,792 | |||||||||
Long-term Debt | 75,000 | 75,000 | |||||||||
Retirement Benefits and Deferred Compensation | 61,672 | 106,897 | |||||||||
Operating Lease Liabilities | 21,057 | 23,527 | |||||||||
Deferred Income Taxes | 9,443 | 10,661 | |||||||||
Other Non-current Liabilities | 12,159 | 10,978 | |||||||||
Commitments and Contingencies (Note K) | |||||||||||
Shareholders’ Equity | |||||||||||
Common stock, $1 par value; 291,000,000 shares authorized; 167,702,130 and 170,307,412 shares outstanding in 2022 and 2021 | 167,702 | 170,308 | |||||||||
Additional paid-in-capital | 784,477 | 742,288 | |||||||||
Retained earnings | 976,851 | 876,916 | |||||||||
Accumulated other comprehensive income (loss) | (69,378) | (80,169) | |||||||||
Total shareholders’ equity | 1,859,652 | 1,709,343 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,438,900 | $ | 2,443,198 |
Years Ended | |||||||||||||||||
December 30, 2022 | December 31, 2021 | December 25, 2020 | |||||||||||||||
Cash Flows From Operating Activities | |||||||||||||||||
Net Earnings | $ | 460,645 | $ | 439,866 | $ | 330,456 | |||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities | |||||||||||||||||
Depreciation and amortization | 65,997 | 59,325 | 55,329 | ||||||||||||||
Deferred income taxes | (9,997) | (46,572) | 10,747 | ||||||||||||||
Share-based compensation | 24,695 | 24,931 | 25,153 | ||||||||||||||
Impairment | — | — | 35,229 | ||||||||||||||
Change in | |||||||||||||||||
Accounts receivable | (29,944) | (13,801) | (43,122) | ||||||||||||||
Inventories | (95,691) | (97,780) | (13,086) | ||||||||||||||
Trade accounts payable | 4,195 | 12,397 | 6,820 | ||||||||||||||
Salaries and incentives | (18,442) | 29,089 | (2,622) | ||||||||||||||
Retirement benefits and deferred compensation | (18,674) | 1,219 | (6,703) | ||||||||||||||
Other accrued liabilities | (4,191) | 51,342 | (3,772) | ||||||||||||||
Other | (1,199) | (3,120) | (394) | ||||||||||||||
Net cash provided by operating activities | 377,394 | 456,896 | 394,035 | ||||||||||||||
Cash Flows From Investing Activities | |||||||||||||||||
Property, plant and equipment additions | (201,161) | (133,566) | (71,338) | ||||||||||||||
Acquisition of businesses, net of cash acquired | (25,296) | (19,386) | (27,557) | ||||||||||||||
Other | (362) | (347) | (143) | ||||||||||||||
Net cash used in investing activities | (226,819) | (153,299) | (99,038) | ||||||||||||||
Cash Flows From Financing Activities | |||||||||||||||||
Borrowings on short-term lines of credit, net | (18,252) | 20,497 | (1,986) | ||||||||||||||
Borrowings on long-term lines of credit | — | — | 250,000 | ||||||||||||||
Payments on long-term debt | (75,000) | (70) | (250,000) | ||||||||||||||
Payments of debt issuance costs | — | (1,422) | — | ||||||||||||||
Common stock issued | 35,619 | 50,963 | 83,438 | ||||||||||||||
Common stock repurchased | (233,426) | — | (102,143) | ||||||||||||||
Taxes paid related to net share settlement of equity awards | (1,219) | — | (1,797) | ||||||||||||||
Cash dividends paid | (142,125) | (127,110) | (116,983) | ||||||||||||||
Net cash used in financing activities | (434,403) | (57,142) | (139,471) | ||||||||||||||
Effect of exchange rate changes on cash | (1,278) | (1,062) | 2,410 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | (285,106) | 245,393 | 157,936 | ||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Beginning of year | 624,302 | 378,909 | 220,973 | ||||||||||||||
End of year | $ | 339,196 | $ | 624,302 | $ | 378,909 | |||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||||||||
Balance December 27, 2019 | $ | 167,287 | $ | 578,440 | $ | 448,991 | $ | (169,787) | $ | 1,024,931 | |||||||||||||||||||
Shares issued | 3,608 | 78,789 | — | — | 82,397 | ||||||||||||||||||||||||
Shares repurchased | (2,327) | (8,047) | (91,768) | — | (102,142) | ||||||||||||||||||||||||
Stock compensation cost | — | 22,024 | — | — | 22,024 | ||||||||||||||||||||||||
Net earnings | — | — | 330,456 | — | 330,456 | ||||||||||||||||||||||||
Dividends declared ($0.7125 per share) | — | — | (119,384) | — | (119,384) | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 45,622 | 45,622 | ||||||||||||||||||||||||
Balance December 25, 2020 | 168,568 | 671,206 | 568,295 | (124,165) | 1,283,904 | ||||||||||||||||||||||||
Shares issued | 1,740 | 51,560 | — | — | 53,300 | ||||||||||||||||||||||||
Stock compensation cost | — | 21,859 | — | — | 21,859 | ||||||||||||||||||||||||
Restricted stock canceled (issued) | — | (2,337) | — | — | (2,337) | ||||||||||||||||||||||||
Net earnings | — | — | 439,866 | — | 439,866 | ||||||||||||||||||||||||
Dividends declared $0.7725 per share) | — | — | (131,245) | — | (131,245) | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 43,996 | 43,996 | ||||||||||||||||||||||||
Balance December 31, 2021 | 170,308 | 742,288 | 876,916 | (80,169) | 1,709,343 | ||||||||||||||||||||||||
Shares issued | 946 | 33,454 | — | — | 34,400 | ||||||||||||||||||||||||
Shares repurchased | (3,552) | (15,481) | (214,393) | — | (233,426) | ||||||||||||||||||||||||
Stock compensation cost | — | 24,216 | — | — | 24,216 | ||||||||||||||||||||||||
Net earnings | — | — | 460,645 | — | 460,645 | ||||||||||||||||||||||||
Dividends declared ($0.8650 per share) | — | — | (146,317) | — | (146,317) | ||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 10,791 | 10,791 | ||||||||||||||||||||||||
Balance December 30, 2022 | $ | 167,702 | $ | 784,477 | $ | 976,851 | $ | (69,378) | $ | 1,859,652 |
Level | 2022 | 2021 | |||||||||||||||
Assets | |||||||||||||||||
Cash surrender value of life insurance | 2 | $ | 19,192 | $ | 23,147 | ||||||||||||
Liabilities | |||||||||||||||||
Contingent consideration | 3 | $ | 14,914 | $ | 12,274 | ||||||||||||
Deferred compensation | 2 | 5,842 | 5,962 | ||||||||||||||
Forward exchange contracts | 2 | 520 | 111 | ||||||||||||||
Total liabilities at fair value | $ | 21,276 | $ | 18,347 |
2022 | 2021 | 2020 | |||||||||||||||
Balance, beginning | $ | 3,254 | $ | 3,745 | $ | 4,828 | |||||||||||
Additions (reversals) charged to costs and expenses | 3,567 | (27) | 647 | ||||||||||||||
Deductions from reserves (1) | (633) | (676) | (2,732) | ||||||||||||||
Other additions (deductions) (2) | (58) | 212 | 1,002 | ||||||||||||||
Balance, ending | $ | 6,130 | $ | 3,254 | $ | 3,745 |
2022 | 2021 | ||||||||||
Prepaid income taxes | $ | 18,702 | $ | 10,485 | |||||||
Prepaid expenses and other | 24,922 | 21,401 | |||||||||
Total | $ | 43,624 | $ | 31,886 |
Buildings and improvements | 10 to 30 years | |||||||
Leasehold improvements | lesser of 5 to 10 years or life of lease | |||||||
Manufacturing equipment | lesser of 5 to 10 years or life of equipment | |||||||
Office, warehouse and automotive equipment | 3 to 10 years |
Industrial | Process | Contractor | Total | ||||||||||||||||||||
Balance, December 25, 2020 | $ | 140,997 | $ | 141,513 | $ | 65,093 | $ | 347,603 | |||||||||||||||
Additions, adjustments from business acquisitions | — | — | 13,321 | 13,321 | |||||||||||||||||||
Foreign currency translation | (3,842) | (209) | (618) | (4,669) | |||||||||||||||||||
Balance, December 31, 2021 | 137,155 | 141,304 | 77,796 | 356,255 | |||||||||||||||||||
Additions, adjustments from business acquisitions | — | 16,994 | — | 16,994 | |||||||||||||||||||
Foreign currency translation | (2,384) | (1,932) | (762) | (5,078) | |||||||||||||||||||
Balance, December 30, 2022 | $ | 134,771 | $ | 156,366 | $ | 77,034 | $ | 368,171 |
Finite Life | Indefinite Life | ||||||||||||||||||||||||||||
Customer Relationships | Patents and Proprietary Technology | Trademarks, Trade Names and Other | Trade Names | Total | |||||||||||||||||||||||||
As of December 30, 2022 | |||||||||||||||||||||||||||||
Cost | $ | 202,103 | $ | 26,374 | $ | 1,300 | $ | 62,633 | $ | 292,410 | |||||||||||||||||||
Accumulated amortization | (123,603) | (18,027) | (330) | — | (141,960) | ||||||||||||||||||||||||
Foreign currency translation | (10,060) | (894) | — | (1,989) | (12,943) | ||||||||||||||||||||||||
Book value | $ | 68,440 | $ | 7,453 | $ | 970 | $ | 60,644 | $ | 137,507 | |||||||||||||||||||
Weighted average life in years | 13 | 10 | 6 | N/A |
As of December 31, 2021 | |||||||||||||||||||||||||||||
Cost | $ | 194,505 | $ | 26,074 | $ | 900 | $ | 62,633 | $ | 284,112 | |||||||||||||||||||
Accumulated amortization | (108,657) | (15,734) | (452) | — | (124,843) | ||||||||||||||||||||||||
Foreign currency translation | (7,710) | (707) | — | (1,112) | (9,529) | ||||||||||||||||||||||||
Book value | $ | 78,138 | $ | 9,633 | $ | 448 | $ | 61,521 | $ | 149,740 | |||||||||||||||||||
Weighted average life in years | 13 | 10 | 5 | N/A |
2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | ||||||||||||||||||||||||||||||
Estimated Amortization Expense | $ | 17,397 | $ | 16,169 | $ | 15,704 | $ | 8,972 | $ | 6,291 | $ | 12,330 |
2022 | 2021 | ||||||||||
Cash surrender value of life insurance | $ | 19,192 | $ | 23,147 | |||||||
Capitalized software | 2,189 | 2,394 | |||||||||
Equity method investment | 8,767 | 7,541 | |||||||||
Deposits and other | 2,970 | 3,607 | |||||||||
Total | $ | 33,118 | $ | 36,689 |
2022 | 2021 | ||||||||||
Accrued self-insurance retentions | $ | 9,338 | $ | 9,303 | |||||||
Accrued warranty and service liabilities | 14,674 | 14,463 | |||||||||
Accrued trade promotions | 13,799 | 15,872 | |||||||||
Payable for employee stock purchases | 16,497 | 15,746 | |||||||||
Customer advances and deferred revenue | 50,747 | 60,554 | |||||||||
Income taxes payable | 15,987 | 5,200 | |||||||||
Tax payable, other | 9,614 | 8,295 | |||||||||
Operating lease liabilities, current | 9,555 | 9,096 | |||||||||
Right of return refund liability | 18,449 | 18,614 | |||||||||
Other | 32,133 | 34,016 | |||||||||
Total | $ | 190,793 | $ | 191,159 |
2022 | 2021 | ||||||||||
Balance, beginning of year | $ | 14,463 | $ | 13,082 | |||||||
Assumed in business acquisition | 38 | 23 | |||||||||
Charged to expense | 8,946 | 10,764 | |||||||||
Margin on parts sales reversed | 3,292 | 3,475 | |||||||||
Reductions for claims settled | (12,065) | (12,881) | |||||||||
Balance, end of year | $ | 14,674 | $ | 14,463 |
2022 | 2021 | ||||||||||
Foreign Currency Contracts | |||||||||||
Assets | $ | 157 | $ | 239 | |||||||
Liabilities | (677) | (350) | |||||||||
Net Assets (Liabilities) | $ | (520) | $ | (111) |
2022 | 2021 | 2020 | |||||||||||||||
Net Sales | |||||||||||||||||
Contractor | $ | 999,060 | $ | 987,606 | $ | 842,525 | |||||||||||
Industrial | 649,347 | 602,376 | 481,485 | ||||||||||||||
Process | 495,114 | 397,626 | 326,105 | ||||||||||||||
Total | $ | 2,143,521 | $ | 1,987,608 | $ | 1,650,115 | |||||||||||
Operating Earnings | |||||||||||||||||
Contractor | $ | 249,833 | $ | 266,204 | $ | 243,185 | |||||||||||
Industrial | 231,298 | 199,856 | 147,939 | ||||||||||||||
Process | 122,344 | 91,037 | 64,498 | ||||||||||||||
Unallocated corporate (expense) | (30,775) | (25,774) | (28,675) | ||||||||||||||
Impairment | — | — | (35,229) | ||||||||||||||
Total | $ | 572,700 | $ | 531,323 | $ | 391,718 | |||||||||||
Assets | |||||||||||||||||
Contractor | $ | 752,729 | $ | 656,998 | |||||||||||||
Industrial | 578,302 | 544,585 | |||||||||||||||
Process | 564,539 | 436,189 | |||||||||||||||
Unallocated corporate | 543,330 | 805,426 | |||||||||||||||
Total | $ | 2,438,900 | $ | 2,443,198 |
2022 | 2021 | 2020 | |||||||||||||||
Net Sales (based on customer location) | |||||||||||||||||
United States | $ | 1,116,012 | $ | 1,004,318 | $ | 883,451 | |||||||||||
Other countries | 1,027,509 | 983,290 | 766,664 | ||||||||||||||
Total | $ | 2,143,521 | $ | 1,987,608 | $ | 1,650,115 | |||||||||||
Long-lived Assets | |||||||||||||||||
United States | $ | 532,401 | $ | 388,835 | |||||||||||||
Other countries | 75,208 | 62,226 | |||||||||||||||
Total | $ | 607,609 | $ | 451,061 |
2022 | 2021 | ||||||||||
Finished products and components | $ | 222,326 | $ | 166,922 | |||||||
Products and components in various stages of completion | 138,957 | 117,063 | |||||||||
Raw materials and purchased components | 248,636 | 185,291 | |||||||||
Subtotal | 609,919 | 469,276 | |||||||||
Reduction to LIFO cost | (133,129) | (86,975) | |||||||||
Total | $ | 476,790 | $ | 382,301 |
2022 | 2021 | ||||||||||
Land and improvements | $ | 65,066 | $ | 42,195 | |||||||
Buildings and improvements | 376,115 | 280,947 | |||||||||
Manufacturing equipment | 439,109 | 384,617 | |||||||||
Office, warehouse and automotive equipment | 59,988 | 61,994 | |||||||||
Additions in progress | 126,198 | 105,520 | |||||||||
Total property, plant and equipment | 1,066,476 | 875,273 | |||||||||
Accumulated depreciation | (458,867) | (424,212) | |||||||||
Net property, plant and equipment | $ | 607,609 | $ | 451,061 |
2022 | 2021 | 2020 | |||||||||||||||
Domestic | $ | 401,405 | $ | 370,903 | $ | 289,708 | |||||||||||
Foreign | 164,319 | 137,562 | 84,943 | ||||||||||||||
Total | $ | 565,724 | $ | 508,465 | $ | 374,651 |
2022 | 2021 | 2020 | |||||||||||||||
Current | |||||||||||||||||
Federal | $ | 70,976 | $ | 77,703 | $ | 11,509 | |||||||||||
State and local | 5,948 | 7,493 | 3,217 | ||||||||||||||
Foreign | 38,152 | 29,975 | 18,722 | ||||||||||||||
Current income tax expense | 115,076 | 115,171 | 33,448 | ||||||||||||||
Deferred | |||||||||||||||||
Domestic | (8,733) | (42,413) | 12,856 | ||||||||||||||
Foreign | (1,264) | (4,159) | (2,109) | ||||||||||||||
Deferred income tax expense (benefit) | (9,997) | (46,572) | 10,747 | ||||||||||||||
Total | $ | 105,079 | $ | 68,599 | $ | 44,195 |
2022 | 2021 | 2020 | |||||||||||||||
Statutory tax rate | 21 | % | 21 | % | 21 | % | |||||||||||
Tax effect of international operations | 1 | (1) | (2) | ||||||||||||||
State taxes, net of federal effect | 1 | 1 | 1 | ||||||||||||||
U.S. general business tax credits | (1) | (1) | (1) | ||||||||||||||
Loss on sale of business | — | — | 2 | ||||||||||||||
Stock compensation excess tax benefit | (1) | (2) | (6) | ||||||||||||||
Foreign Derived Intangible Income (FDII) | (2) | (5) | (3) | ||||||||||||||
Effective tax rate | 19 | % | 13 | % | 12 | % |
2022 | 2021 | ||||||||||
Inventory valuations | $ | 678 | $ | 1,181 | |||||||
Accrued self-insurance retentions | 1,626 | 1,534 | |||||||||
Accrued warranty and service liabilities | 2,279 | 2,285 | |||||||||
Vacation accruals | 3,409 | 3,261 | |||||||||
Customer allowances | 4,143 | 4,028 | |||||||||
Excess of tax over book depreciation and amortization | (42,322) | (39,785) | |||||||||
Pension benefit obligation | 6,375 | 16,022 | |||||||||
Postretirement medical benefit obligation | 5,072 | 5,028 | |||||||||
Stock compensation | 12,390 | 11,442 | |||||||||
Deferred compensation | 2,283 | 2,595 | |||||||||
Deferred revenue | 2,160 | 2,427 | |||||||||
Research and Development | 11,370 | — | |||||||||
Prepayments from foreign subsidiaries | 36,070 | 32,969 | |||||||||
Other | 2,114 | 2,138 | |||||||||
Net deferred tax assets | $ | 47,647 | $ | 45,125 |
Average Interest Rate | |||||||||||||||||||||||
December 30, 2022 | Maturity | 2022 | 2021 | ||||||||||||||||||||
Private placement unsecured fixed-rate notes | |||||||||||||||||||||||
Series B | 5.01% | January 2022 | — | 75,000 | |||||||||||||||||||
Series D | 5.35% | July 2026 | 75,000 | 75,000 | |||||||||||||||||||
Unsecured revolving credit facility | N/A | March 2026 | — | — | |||||||||||||||||||
Unsecured revolving credit facility - offshore renminbi denominated | 3.34% | N/A | 14,327 | 39,222 | |||||||||||||||||||
Notes payable to banks | 2.80% | 2023 | 6,647 | 4,267 | |||||||||||||||||||
Total debt | $ | 95,974 | $ | 193,489 |
2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | ||||||||||||||||||||||||||||||
Maturities of debt | $ | 20,974 | $ | — | $ | — | $ | 75,000 | $ | — | $ | — |
Pension and Postretirement Medical | Cumulative Translation Adjustment | Total | |||||||||||||||
Balance, December 27, 2019 | $ | (113,721) | $ | (56,066) | $ | (169,787) | |||||||||||
Other comprehensive income (loss) before reclassifications | (7,852) | 46,030 | 38,178 | ||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 7,444 | — | 7,444 | ||||||||||||||
Balance, December 25, 2020 | (114,129) | (10,036) | (124,165) | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 34,953 | (10,026) | 24,927 | ||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 19,069 | — | 19,069 | ||||||||||||||
Balance, December 31, 2021 | (60,107) | (20,062) | (80,169) | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 16,083 | (9,582) | 6,501 | ||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 4,290 | — | 4,290 | ||||||||||||||
Balance, December 30, 2022 | $ | (39,734) | $ | (29,644) | $ | (69,378) |
Option Shares | Weighted Average Exercise Price | Options Exercisable | Weighted Average Exercise Price | ||||||||||||||||||||
Outstanding, December 27, 2019 | 12,112 | $ | 28.91 | 8,231 | $ | 23.75 | |||||||||||||||||
Granted | 1,400 | 55.26 | |||||||||||||||||||||
Exercised | (3,238) | 20.81 | |||||||||||||||||||||
Canceled | (66) | 41.24 | |||||||||||||||||||||
Outstanding, December 25, 2020 | 10,208 | 35.02 | 6,553 | 28.02 | |||||||||||||||||||
Granted | 843 | 72.22 | |||||||||||||||||||||
Exercised | (1,309) | 24.91 | |||||||||||||||||||||
Canceled | (167) | 55.59 | |||||||||||||||||||||
Outstanding, December 31, 2021 | 9,575 | 39.31 | 7,296 | 33.75 | |||||||||||||||||||
Granted | 1,381 | 71.03 | |||||||||||||||||||||
Exercised | (645) | 25.58 | |||||||||||||||||||||
Canceled | (46) | 49.42 | |||||||||||||||||||||
Outstanding, December 30, 2022 | 10,265 | $ | 44.40 | 7,793 | $ | 37.22 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||
Range of Prices | Options Outstanding | Weighted Average Remaining Contractual Term in Years | Weighted Average Exercise Price | Options Exercisable | Weighted Average Exercise Price | |||||||||||||||||||||||||||
$10 - $30 | 2,971 | 2.4 | $ | 24.76 | 2,971 | $ | 24.76 | |||||||||||||||||||||||||
$30 - $45 | 2,317 | 4.7 | 36.88 | 2,255 | 36.67 | |||||||||||||||||||||||||||
$45 - $60 | 2,813 | 6.6 | 50.50 | 2,325 | 50.02 | |||||||||||||||||||||||||||
$60 - $75 | 2,164 | 9.0 | 71.47 | 242 | 72.15 | |||||||||||||||||||||||||||
$10 - $75 | 10,265 | 5.5 | $ | 44.40 | 7,793 | $ | 37.22 |
2022 | 2021 | 2020 | |||||||||||||||
Cash received | $ | 15,739 | $ | 32,610 | $ | 66,625 | |||||||||||
Aggregate intrinsic value | 28,193 | 65,319 | 120,395 | ||||||||||||||
Tax benefit realized | 6,020 | 13,329 | 25,000 |
Total Shares Authorized | Available for Future Issuance as of December 30, 2022 | ||||||||||
Stock Incentive Plan (2019) | 10,000 | 5,790 | |||||||||
Employee Stock Purchase Plan (2006) | 21,000 | 11,763 | |||||||||
Total | 31,000 | 17,553 |
2022 | 2021 | 2020 | |||||||||||||||
Share-based compensation | $ | 24,695 | $ | 24,931 | $ | 25,153 | |||||||||||
Tax benefit | 2,319 | 1,705 | 1,700 | ||||||||||||||
Share-based compensation, net of tax | $ | 22,376 | $ | 23,226 | $ | 23,453 |
2022 | 2021 | 2020 | |||||||||||||||
Expected life in years | 6.4 | 7.5 | 7.5 | ||||||||||||||
Interest rate | 2.7 | % | 0.9 | % | 1.4 | % | |||||||||||
Volatility | 26.2 | % | 25.2 | % | 22.0 | % | |||||||||||
Dividend yield | 1.2 | % | 1.0 | % | 1.3 | % | |||||||||||
Weighted average fair value per share | $ | 19.10 | $ | 17.87 | $ | 12.18 |
2022 | 2021 | 2020 | |||||||||||||||
Expected life in years | 1.0 | 1.0 | 1.0 | ||||||||||||||
Interest rate | 0.9 | % | 0.1 | % | 1.5 | % | |||||||||||
Volatility | 20.5 | % | 40.1 | % | 21.9 | % | |||||||||||
Dividend yield | 1.2 | % | 1.1 | % | 1.4 | % | |||||||||||
Weighted average fair value per share | $ | 16.01 | $ | 21.50 | $ | 11.55 |
2022 | 2021 | 2020 | |||||||||||||||
Net earnings available to common shareholders | $ | 460,645 | $ | 439,866 | $ | 330,456 | |||||||||||
Weighted average shares outstanding for basic earnings per share | 168,952 | 169,635 | 167,462 | ||||||||||||||
Dilutive effect of stock options computed based on the treasury stock method using the average market price | 3,941 | 4,891 | 4,546 | ||||||||||||||
Weighted average shares outstanding for diluted earnings per share | 172,893 | 174,526 | 172,008 | ||||||||||||||
Basic earnings per share | $ | 2.73 | $ | 2.59 | $ | 1.97 | |||||||||||
Diluted earnings per share | $ | 2.66 | $ | 2.52 | $ | 1.92 |
Level | 2022 | 2021 | |||||||||||||||
Cash and cash equivalents | 1 | $ | 351 | $ | 303 | ||||||||||||
Insurance contract | 3 | 32,163 | 30,926 | ||||||||||||||
Investments categorized in fair value hierarchy | 32,514 | 31,229 | |||||||||||||||
Equity | |||||||||||||||||
U.S. Large Cap | N/A | 74,838 | 110,569 | ||||||||||||||
U.S. Small/Mid Cap | N/A | 5,191 | 11,338 | ||||||||||||||
International | N/A | 37,862 | 56,128 | ||||||||||||||
Total equity | 117,891 | 178,035 | |||||||||||||||
Fixed income | N/A | 93,262 | 130,774 | ||||||||||||||
Real estate and other | N/A | 37,508 | 7,862 | ||||||||||||||
Investments measured at net asset value | 248,661 | 316,671 | |||||||||||||||
Total | $ | 281,175 | $ | 347,900 |
2022 | 2021 | ||||||||||
Balance, beginning of year | $ | 30,926 | $ | 31,877 | |||||||
Purchases | 2,431 | 2,430 | |||||||||
Redemptions | (669) | (2,556) | |||||||||
Unrealized losses | (525) | (825) | |||||||||
Balance, end of year | $ | 32,163 | $ | 30,926 |
Pension Benefits | Postretirement Medical Benefits | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||||
Obligation, beginning of year | $ | 418,051 | $ | 510,652 | $ | 32,122 | $ | 34,458 | |||||||||||||||
Service cost | 8,242 | 9,355 | 516 | 670 | |||||||||||||||||||
Interest cost | 10,996 | 11,409 | 839 | 832 | |||||||||||||||||||
Actuarial (gain) loss | (110,467) | (31,093) | (9,044) | (2,391) | |||||||||||||||||||
Benefit payments | (9,122) | (13,360) | (1,503) | (1,447) | |||||||||||||||||||
Plan amendments | (267) | (1,458) | — | — | |||||||||||||||||||
Settlements | — | (64,886) | — | — | |||||||||||||||||||
Exchange rate changes | (1,626) | (2,568) | — | — | |||||||||||||||||||
Obligation, end of year | $ | 315,807 | $ | 418,051 | $ | 22,930 | $ | 32,122 | |||||||||||||||
Change in plan assets | |||||||||||||||||||||||
Fair value, beginning of year | $ | 347,900 | $ | 373,565 | $ | — | $ | — | |||||||||||||||
Actual return on assets | (80,078) | 30,984 | — | — | |||||||||||||||||||
Employer contributions | 22,756 | 22,493 | 1,503 | 1,447 | |||||||||||||||||||
Benefit payments | (9,122) | (13,360) | (1,503) | (1,447) | |||||||||||||||||||
Settlements | — | (64,886) | — | — | |||||||||||||||||||
Exchange rate changes | (281) | (896) | — | — | |||||||||||||||||||
Fair value, end of year | $ | 281,175 | $ | 347,900 | $ | — | $ | — | |||||||||||||||
Unfunded status | $ | (34,632) | $ | (70,151) | $ | (22,930) | $ | (32,122) |
Amounts recognized in consolidated balance sheets | |||||||||||||||||||||||
Non-current assets | $ | 5,398 | $ | — | $ | — | $ | — | |||||||||||||||
Current liabilities | 1,860 | 1,769 | 1,763 | 1,768 | |||||||||||||||||||
Non-current liabilities | 38,170 | 68,382 | 21,167 | 30,354 | |||||||||||||||||||
Net | $ | 34,632 | $ | 70,151 | $ | 22,930 | $ | 32,122 |
2022 | 2021 | ||||||||||
Projected benefit obligation | $ | 72,190 | $ | 91,678 | |||||||
Accumulated benefit obligation | 69,395 | 88,927 | |||||||||
Fair value of plan assets | 32,164 | 30,926 |
Pension Benefits | Postretirement Medical Benefits | ||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||
Service cost-benefits earned during the period | $ | 8,242 | $ | 9,355 | $ | 9,361 | $ | 516 | $ | 670 | $ | 609 | |||||||||||||||||||||||
Interest cost on projected benefit obligation | 10,996 | 11,409 | 13,313 | 839 | 832 | 1,016 | |||||||||||||||||||||||||||||
Expected return on assets | (19,754) | (20,767) | (18,814) | — | — | — | |||||||||||||||||||||||||||||
Amortization of prior service cost | 84 | 246 | 294 | — | — | — | |||||||||||||||||||||||||||||
Amortization of net loss | 4,701 | 9,248 | 10,243 | 345 | 1,002 | 733 | |||||||||||||||||||||||||||||
Settlement loss | — | 12,285 | — | — | — | — | |||||||||||||||||||||||||||||
Cost of pension plans which are not significant and have not adopted ASC 715 | 284 | 368 | 168 | N/A | N/A | N/A | |||||||||||||||||||||||||||||
Net periodic benefit cost | $ | 4,553 | $ | 22,144 | $ | 14,565 | $ | 1,700 | $ | 2,504 | $ | 2,358 |
Pension Benefits | Postretirement Medical Benefits | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net gain (loss) arising during the period | $ | 11,189 | $ | 42,039 | $ | 9,044 | $ | 2,391 | |||||||||||||||
Amortization of net (gain) loss | 4,701 | 9,248 | 345 | 1,002 | |||||||||||||||||||
Prior service credit (cost) arising during the period | 267 | 1,458 | — | — | |||||||||||||||||||
Settlement (gain) loss | — | 12,285 | — | — | |||||||||||||||||||
Amortization of prior service (credit) cost | 84 | 246 | — | — | |||||||||||||||||||
Total | $ | 16,241 | $ | 65,276 | $ | 9,389 | $ | 3,393 |
Pension Benefits | Postretirement Medical Benefits | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Prior service cost | $ | 1,668 | $ | 1,293 | $ | — | $ | — | |||||||||||||||
Net gain (loss) | (55,084) | (70,995) | 1,891 | (7,498) | |||||||||||||||||||
Net gain (loss) before income taxes | (53,416) | (69,702) | 1,891 | (7,498) | |||||||||||||||||||
Income taxes | 12,207 | 15,443 | (416) | 1,650 | |||||||||||||||||||
Net | $ | (41,209) | $ | (54,259) | $ | 1,475 | $ | (5,848) |
Pension Benefits | Postretirement Medical Benefits | |||||||||||||||||||||||||
Weighted average assumptions | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||
U.S. Plans | ||||||||||||||||||||||||||
Discount rate | 5.6 | % | 3.0 | % | 5.6 | % | 2.9 | % | ||||||||||||||||||
Rate of compensation increase | 2.7 | % | 2.7 | % | N/A | N/A | ||||||||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||||||||
Discount rate | 2.4 | % | 0.4 | % | N/A | N/A | ||||||||||||||||||||
Rate of compensation increase | 1.8 | % | 1.3 | % | N/A | N/A |
Pension Benefits | Postretirement Medical Benefits | |||||||||||||||||||||||||||||||||||||
Weighted average assumptions | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
U.S. Plans | ||||||||||||||||||||||||||||||||||||||
Discount rate | 3.0 | % | 2.6 | % | 3.5 | % | 2.9 | % | 2.6 | % | 3.4 | % | ||||||||||||||||||||||||||
Rate of compensation increase | 2.7 | % | 2.7 | % | 2.8 | % | N/A | N/A | N/A | |||||||||||||||||||||||||||||
Expected return on assets | 6.3 | % | 6.3 | % | 6.8 | % | N/A | N/A | N/A | |||||||||||||||||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||||||||||||||||||||
Discount rate | 0.4 | % | 0.4 | % | 0.4 | % | N/A | N/A | N/A | |||||||||||||||||||||||||||||
Rate of compensation increase | 1.3 | % | 1.3 | % | 1.3 | % | N/A | N/A | N/A | |||||||||||||||||||||||||||||
Expected return on assets | 1.0 | % | 1.0 | % | 1.5 | % | N/A | N/A | N/A |
Pension Benefits | Postretirement Medical Benefits | ||||||||||
2023 | $ | 15,583 | $ | 1,763 | |||||||
2024 | 17,035 | 1,748 | |||||||||
2025 | 16,406 | 1,735 | |||||||||
2026 | 18,585 | 1,715 | |||||||||
2027 | 20,116 | 1,699 | |||||||||
Years 2028-2032 | 107,755 | 8,136 |
2022 | 2021 | ||||||||||
Operating lease expense | $ | 12,307 | $ | 11,641 | |||||||
Operating lease payments | 11,886 | 11,564 | |||||||||
Non-cash additions to operating lease assets | 8,859 | 1,631 |
2022 | 2021 | ||||||||||
Weighted average remaining lease term (years) | 3.0 | 5.0 | |||||||||
Weighted average discount rate | 3.00 | % | 2.24 | % |
2023 | $ | 9,555 | |||
2024 | 7,931 | ||||
2025 | 5,462 | ||||
2026 | 4,118 | ||||
2027 | 2,514 | ||||
Thereafter | 2,928 | ||||
Total lease payments | $ | 32,508 | |||
Present value adjustment | (1,896) | ||||
Operating lease liabilities | $ | 30,612 |
Page | ||||||||
(1) | ||||||||
(2) | Financial Statement Schedule | |||||||
All financial statement schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. | ||||||||
(3) | ||||||||
Those entries marked by an asterisk are Management Contracts, Compensatory Plans or Arrangements. |
*10.10 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2010 Stock Incentive Plan in 2011. (Incorporated by reference to Exhibit 10.3 to the Company’s Report on Form 10-Q for the thirteen weeks ended April 1, 2011.) Amended form of agreement for awards made to Chief Executive Officer commencing in 2012. (Incorporated by reference to Exhibit 10.2 of the Company’s Report on Form 10-Q for the thirteen weeks ended March 30, 2012.) | |||||||
*10.11 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to nonemployee directors under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 24, 2016.) | |||||||
*10.12 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. (Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 25, 2016.) | |||||||
*10.13 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2015 Stock Incentive Plan commencing in 2016. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended March 25, 2016.) | |||||||
*10.14 | 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 commencing in 2019. (Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 28, 2019.) | |||||||
*10.15 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to executive officers under the Graco Inc. 2019 Stock Incentive Plan commencing in 2020. (Incorporated by reference to Exhibit 10.22 to the Company’s 2019 Annual Report on Form 10-K.) | |||||||
*10.16 | Stock Option Agreement. Form of agreement used for award of non-incentive stock options to Chief Executive Officer under the Graco Inc. 2019 Stock Incentive Plan commencing in 2020. (Incorporated by reference to Exhibit 10.21 to the Company’s 2019 Annual Report on Form 10-K.) | |||||||
*10.17 | Executive Officer Restricted Stock Unit Agreement. Form of agreement used to award restricted stock units to Dale D. Johnson under the Graco Inc. 2019 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed February 26, 2021.) | |||||||
*10.18 | Nonemployee Director Stock and Deferred Stock Program (2019 Restatement). (Incorporated by reference to Exhibit 10.3 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 28, 2019.) | |||||||
*10.19 | Key Employee Agreement. Form of agreement used with Chief Executive Officer and other executive officers. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed April 27, 2021.) | |||||||
*10.20 | Executive Group Long-Term Disability Policy as revised in 1995. (Incorporated by reference to Exhibit 10.23 to the Company’s 2004 Annual Report on Form 10-K.) Enhanced by Supplemental Income Protection Plan in 2004. ( | |||||||
10.21 | Amended and Restated Credit Agreement, dated March 25, 2021, among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank National Association, as administrative agent. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed March 26, 2021.) | |||||||
10.22 | Note Agreement, dated March 11, 2011, between Graco Inc. and the Purchasers listed on the Purchaser Schedule attached thereto, which includes as exhibits the form of Senior Notes. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed March 16, 2011.) Amendment No. 1 dated May 23, 2011. (Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 10-Q for the thirteen weeks ended July 1, 2011.) Amendment and Restatement No. 1 to Note Agreement dated as of March 27, 2012. (Incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 8-K filed April 2, 2012.) Amendment No. 2 dated as of June 26, 2014 to Note Agreement dated as of March 11, 2011. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 10-Q for the thirteen weeks ended June 27, 2014.) Amendment No. 3 dated as of December 15, 2016 to Note Agreement dated as of March 11, 2011. (Incorporated by reference to Exhibit 10.28 to the Company’s 2016 Annual Report on Form 10-K.) Amendment No. 4 dated May 23, 2017 to Note Agreement dated as of March 11, 2011. (Incorporated by reference to Exhibit 10.1 to the Company’s 10-Q for the thirteen weeks ended June 30, 2017.) Amendment No. 5 dated April 17, 2020 to Note Agreement dated as of March 11, 2011. (Incorporated by reference to Exhibit 10.4 to the Company’s 10-Q for the thirteen weeks ended March 27, 2020.) | |||||||
10.23 | Master Note Agreement, dated January 29, 2020, between Graco Inc. and NYL Investors LLC. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed February 3, 2020.) First Amendment to Master Note Agreement, dated December 16, 2022. (Incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed December 16, 2022.) | |||||||
11 | ||||||||
21 | ||||||||
23 | ||||||||
24 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32 | ||||||||
101 | Interactive data files pursuant to Rule 405 of Regulation S-T formatted in iXBRL (Inline eXtensible Business Reporting Language). | |||||||
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). |
/s/ Mark W. Sheahan | February 21, 2023 | |||||||
Mark W. Sheahan | ||||||||
President and Chief Executive Officer |
/s/ Mark W. Sheahan | February 21, 2023 | |||||||
Mark W. Sheahan | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
/s/ David M. Lowe | February 21, 2023 | |||||||
David M. Lowe | ||||||||
Chief Financial Officer and Treasurer | ||||||||
(Principal Financial Officer) | ||||||||
/s/ Kathryn L. Schoenrock | February 21, 2023 | |||||||
Kathryn L. Schoenrock | ||||||||
Executive Vice President, Corporate Controller and Information Systems | ||||||||
(Principal Accounting Officer) |
Lee R. Mitau | Director, Chairman of the Board | |||||||
Brett C. Carter | Director | |||||||
Eric P. Etchart | Director | |||||||
Jody H. Feragen | Director | |||||||
J. Kevin Gilligan | Director | |||||||
Martha A. Morfitt | Director | |||||||
Mark W. Sheahan | Director | |||||||
R. William Van Sant | Director | |||||||
Kevin J. Wheeler | Director |
/s/ Mark W. Sheahan | February 21, 2023 | |||||||
Mark W. Sheahan | ||||||||
(For himself and as attorney-in-fact) |
Subsidiary | Jurisdiction of Organization | Ownership Type1 | Percent Owned | ||||||||
Electric Torque Machines, Inc | Delaware, USA | Direct | 100% | ||||||||
Gema Eastern Europe s.r.l. | Romania | Indirect | 100% | ||||||||
Gema Europe s.r.l. | Italy | Indirect | 100% | ||||||||
Gema México Powder Finishing, S. de R.L. de C.V. | Mexico | Direct & Indirect | 100% | ||||||||
Gema (Shanghai) Co., Ltd. | P.R. China | Indirect | 100% | ||||||||
Gema Switzerland GmbH | Switzerland | Indirect | 100% | ||||||||
Gema USA Inc. | Minnesota, USA | Direct | 100% | ||||||||
GFEC Free Zone Uruguay S.A. | Uruguay | Indirect | 100% | ||||||||
GFEC Uruguay S.A. | Uruguay | Indirect | 100% | ||||||||
Graco Australia Pty Ltd | Australia | Indirect | 100% | ||||||||
Graco BV | Belgium | Indirect | 100% | ||||||||
Graco Canada Inc. | Canada | Indirect | 100% | ||||||||
Graco Chile SpA | Chile | Direct | 100% | ||||||||
Graco Colombia S.A.S. | Colombia | Direct | 100% | ||||||||
Graco Distribution BV | Belgium | Indirect | 100% | ||||||||
Graco Finance Hong Kong Limited | Hong Kong, P.R. China | Direct | 100% | ||||||||
Graco Fluid Equipment (Shanghai) Co., Ltd. | P.R. China | Direct & Indirect | 100% | ||||||||
Graco Fluid Equipment (Suzhou) Co., Ltd. | P.R. China | Indirect | 100% | ||||||||
Graco Fluid Handling (D) Inc. | Minnesota, USA | Direct | 100% | ||||||||
Graco Fluid Handling (I) Inc. | Minnesota, USA | Direct | 100% | ||||||||
Graco Global Holdings | Luxembourg | Direct | 100% | ||||||||
Graco GmbH | Germany | Indirect | 100% | ||||||||
Graco High Pressure Equipment Inc. | Minnesota, USA | Direct | 100% | ||||||||
Graco Hong Kong Limited | Hong Kong, P.R. China | Indirect | 100% | ||||||||
Graco India Private Limited | India | Indirect | 100% | ||||||||
Graco International Holdings | Luxembourg | Indirect | 100% | ||||||||
Graco K.K. | Japan | Indirect | 100% | ||||||||
Graco Korea Inc. | South Korea | Indirect | 100% | ||||||||
Graco Limited | England and Wales, UK | Indirect | 100% | ||||||||
Graco Malaysia Sdn. Bhd. | Malaysia | Indirect | 100% | ||||||||
Graco Minnesota Inc. | Minnesota, USA | Direct | 100% | ||||||||
Graco Ohio Inc. | Ohio, USA | Direct | 100% | ||||||||
Graco S.A.S. | France | Indirect | 100% | ||||||||
Graco Serviços e Importação de Máquinas e Equipamentos em Geral Ltda. | Brazil | Indirect | 100% | ||||||||
Graco Singapore Pte. Ltd. | Singapore | Direct | 100% | ||||||||
Graco Solutions Inc. | Minnesota, USA | Direct | 100% | ||||||||
Graco Trading (Shanghai) Co., Ltd. | P.R. China | Indirect | 100% | ||||||||
Hi-Tech Spray Equipment, S.A. | Spain | Indirect2 | 89.5% | ||||||||
International Polymer Solutions Inc. | Delaware, USA | Indirect | 100% | ||||||||
Landtec North America, Inc. | California, USA | Indirect | 100% | ||||||||
Q.E.D. Environmental Systems, Inc. | Michigan, USA | Direct | 100% | ||||||||
Q.E.D. Environmental Systems Limited | England and Wales, UK | Indirect | 100% | ||||||||
SAT (Surface Aluminium Technologies) S.r.l. | Italy | Indirect | 100% |
Smith Surface Preparation Systems Inc. | Minnesota, USA | Direct | 100% | ||||||||
Staffordshire Hydraulic Services Limited | England and Wales, UK | Indirect | 100% | ||||||||
White Knight Fluid Handling Inc. | Minnesota, USA | Direct | 100% |
Date | |||||
/s/ BRETT C. CARTER | February 21, 2023 | ||||
Brett C. Carter | |||||
/s/ ERIC P. ETCHART | February 21, 2023 | ||||
Eric P. Etchart | |||||
/s/ JODY H. FERAGEN | February 21, 2023 | ||||
Jody H. Feragen | |||||
/s/ J. KEVIN GILLIGAN | February 21, 2023 | ||||
J. Kevin Gilligan | |||||
/s/ LEE R. MITAU | February 21, 2023 | ||||
Lee R. Mitau | |||||
/s/ MARTHA A. MORFITT | February 21, 2023 | ||||
Martha A. Morfitt | |||||
/s/ MARK W. SHEAHAN | February 21, 2023 | ||||
Mark W. Sheahan | |||||
/s/ R. WILLIAM VAN SANT | February 21, 2023 | ||||
R. William Van Sant | |||||
/s/ KEVIN J. WHEELER | February 21, 2023 | ||||
Kevin J. Wheeler | |||||
Date: | February 21, 2023 | /s/ MARK W. SHEAHAN | ||||||||||||
Mark W. Sheahan | ||||||||||||||
President and Chief Executive Officer |
Date: | February 21, 2023 | /s/ DAVID M. LOWE | ||||||||||||
David M. Lowe | ||||||||||||||
Chief Financial Officer and Treasurer |
Date: | February 21, 2023 | /s/ MARK W. SHEAHAN | ||||||||||||
Mark W. Sheahan | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||
Date: | February 21, 2023 | /s/ DAVID M. LOWE | ||||||||||||
David M. Lowe | ||||||||||||||
Chief Financial Officer and Treasurer |