GRACO INC. |
(Exact name of registrant as specified in its charter) |
Minnesota | 41-0285640 | |
(State of incorporation) | (I.R.S. Employer Identification Number) |
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) |
Yes | X | No |
Yes | X | No |
Large accelerated filer | X | Accelerated filer | Non-accelerated filer | Smaller reporting company | |||
Emerging growth company |
Yes | No | X |
Page | ||||
PART I - FINANCIAL INFORMATION | ||||
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
PART II - OTHER INFORMATION | ||||
Item 1A. | ||||
Item 2. | ||||
Item 6. | ||||
EXHIBITS |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net Sales | $ | 415,936 | $ | 379,812 | $ | 1,246,854 | $ | 1,099,885 | |||||||
Cost of products sold | 194,477 | 175,732 | 573,071 | 505,450 | |||||||||||
Gross Profit | 221,459 | 204,080 | 673,783 | 594,435 | |||||||||||
Product development | 15,734 | 14,552 | 47,135 | 43,473 | |||||||||||
Selling, marketing and distribution | 57,270 | 57,381 | 182,741 | 167,353 | |||||||||||
General and administrative | 33,676 | 30,712 | 104,054 | 94,329 | |||||||||||
Operating Earnings | 114,779 | 101,435 | 339,853 | 289,280 | |||||||||||
Interest expense | 3,583 | 3,901 | 10,707 | 12,110 | |||||||||||
Other expense, net | 3,139 | 1,142 | 8,425 | 3,599 | |||||||||||
Earnings Before Income Taxes | 108,057 | 96,392 | 320,721 | 273,571 | |||||||||||
Income taxes | 15,376 | 20,932 | 53,390 | 57,551 | |||||||||||
Net Earnings | $ | 92,681 | $ | 75,460 | $ | 267,331 | $ | 216,020 | |||||||
Per Common Share | |||||||||||||||
Basic net earnings | $ | 0.55 | $ | 0.45 | $ | 1.59 | $ | 1.29 | |||||||
Diluted net earnings | $ | 0.54 | $ | 0.43 | $ | 1.54 | $ | 1.24 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net Earnings | $ | 92,681 | $ | 75,460 | $ | 267,331 | $ | 216,020 | |||||||
Components of other comprehensive income (loss) | |||||||||||||||
Cumulative translation adjustment | 4,161 | 574 | (2,205 | ) | 17,921 | ||||||||||
Pension and postretirement medical liability adjustment | 1,972 | 2,250 | 6,503 | 6,034 | |||||||||||
Income taxes - pension and postretirement medical liability adjustment | (448 | ) | (797 | ) | (1,445 | ) | (2,280 | ) | |||||||
Other comprehensive income | 5,685 | 2,027 | 2,853 | 21,675 | |||||||||||
Comprehensive Income | $ | 98,366 | $ | 77,487 | $ | 270,184 | $ | 237,695 |
September 28, 2018 | December 29, 2017 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 137,589 | $ | 103,662 | |||
Accounts receivable, less allowances of $5,200 and $4,300 | 289,633 | 266,080 | |||||
Inventories | 277,726 | 239,349 | |||||
Other current assets | 25,812 | 34,247 | |||||
Total current assets | 730,760 | 643,338 | |||||
Property, Plant and Equipment, net | 220,164 | 204,298 | |||||
Goodwill | 296,299 | 278,789 | |||||
Other Intangible Assets, net | 172,476 | 183,056 | |||||
Deferred Income Taxes | 32,958 | 50,916 | |||||
Other Assets | 32,844 | 30,220 | |||||
Total Assets | $ | 1,485,501 | $ | 1,390,617 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities | |||||||
Notes payable to banks | $ | 3,960 | $ | 6,578 | |||
Trade accounts payable | 53,102 | 48,748 | |||||
Salaries and incentives | 54,896 | 55,884 | |||||
Dividends payable | 22,191 | 22,260 | |||||
Other current liabilities | 130,085 | 112,368 | |||||
Total current liabilities | 264,234 | 245,838 | |||||
Long-term Debt | 266,424 | 226,035 | |||||
Retirement Benefits and Deferred Compensation | 136,539 | 172,411 | |||||
Deferred Income Taxes | 17,242 | 17,253 | |||||
Other Non-current Liabilities | 4,500 | 6,017 | |||||
Shareholders’ Equity | |||||||
Common stock | 167,409 | 169,319 | |||||
Additional paid-in-capital | 513,643 | 499,934 | |||||
Retained earnings | 255,899 | 181,599 | |||||
Accumulated other comprehensive income (loss) | (140,389 | ) | (127,789 | ) | |||
Total shareholders’ equity | 796,562 | 723,063 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,485,501 | $ | 1,390,617 |
Nine Months Ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Cash Flows From Operating Activities | |||||||
Net Earnings | $ | 267,331 | $ | 216,020 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities | |||||||
Depreciation and amortization | 35,570 | 33,620 | |||||
Deferred income taxes | 15,407 | 58 | |||||
Share-based compensation | 22,016 | 19,154 | |||||
Change in | |||||||
Accounts receivable | (25,576 | ) | (31,614 | ) | |||
Inventories | (23,094 | ) | (16,788 | ) | |||
Trade accounts payable | 74 | 4,319 | |||||
Salaries and incentives | (4,943 | ) | 7,214 | ||||
Retirement benefits and deferred compensation | (30,202 | ) | (8,595 | ) | |||
Other accrued liabilities | (1,348 | ) | 25,402 | ||||
Other | (974 | ) | (2,642 | ) | |||
Net cash provided by operating activities | 254,261 | 246,148 | |||||
Cash Flows From Investing Activities | |||||||
Property, plant and equipment additions | (39,569 | ) | (28,899 | ) | |||
Acquisition of businesses, net of cash acquired | (10,769 | ) | (12,905 | ) | |||
Other | (1,386 | ) | (124 | ) | |||
Net cash provided by (used in) investing activities | (51,724 | ) | (41,928 | ) | |||
Cash Flows From Financing Activities | |||||||
Borrowings (payments) on short-term lines of credit, net | (2,558 | ) | (3,361 | ) | |||
Borrowings on long-term lines of credit | 612,979 | 293,880 | |||||
Payments on long-term debt and lines of credit | (575,113 | ) | (299,565 | ) | |||
Common stock issued | 23,471 | 53,422 | |||||
Common stock repurchased | (155,601 | ) | (90,160 | ) | |||
Taxes paid related to net share settlement of equity awards | (16,151 | ) | (10,735 | ) | |||
Cash dividends paid | (66,794 | ) | (60,273 | ) | |||
Net cash provided by (used in) financing activities | (179,767 | ) | (116,792 | ) | |||
Effect of exchange rate changes on cash | 1,915 | (1,142 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 24,685 | 86,286 | |||||
Cash, Cash Equivalents and Restricted Cash | |||||||
Beginning of year | 112,904 | 61,594 | |||||
End of period | $ | 137,589 | $ | 147,880 | |||
Reconciliation to Consolidated Balance Sheets | |||||||
Cash and cash equivalents | $ | 137,589 | $ | 140,000 | |||
Restricted cash included in other current assets | — | 7,880 | |||||
Cash, cash equivalents and restricted cash | $ | 137,589 | $ | 147,880 |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||
Balance, June 30, 2017 | $ | 55,991 | 493,329 | 224,822 | $ | (122,580 | ) | $ | 651,562 | ||||||||
Shares issued | 155 | 6,578 | — | — | 6,733 | ||||||||||||
Shares repurchased | (31 | ) | (255 | ) | 288 | — | 2 | ||||||||||
Stock compensation cost | — | 4,422 | — | — | 4,422 | ||||||||||||
Restricted stock canceled (issued) | — | (2 | ) | — | — | (2 | ) | ||||||||||
Net earnings | — | — | 75,460 | — | 75,460 | ||||||||||||
Dividends declared ($0.1200 per share) | — | — | (20,215 | ) | — | (20,215 | ) | ||||||||||
Other comprehensive income (loss) | — | — | — | 2,027 | 2,027 | ||||||||||||
Balance, September 29, 2017 | $ | 56,115 | 504,072 | 280,355 | $ | (120,553 | ) | $ | 719,989 |
Balance, June 29, 2018 | $ | 167,130 | $ | 505,342 | $ | 185,407 | $ | (146,074 | ) | $ | 711,805 | ||||||||
Shares issued | 279 | 3,140 | — | — | 3,419 | ||||||||||||||
Shares repurchased | — | — | — | — | — | ||||||||||||||
Stock compensation cost | — | 5,161 | — | — | 5,161 | ||||||||||||||
Net earnings | — | — | 92,681 | — | 92,681 | ||||||||||||||
Dividends declared ($0.1325 per share) | — | — | (22,189 | ) | — | (22,189 | ) | ||||||||||||
Other comprehensive income (loss) | — | — | — | 5,685 | 5,685 | ||||||||||||||
Balance, September 28, 2018 | $ | 167,409 | 513,643 | 255,899 | $ | (140,389 | ) | $ | 796,562 |
Balance, December 30, 2016 | $ | 55,834 | $ | 453,394 | $ | 206,820 | $ | (142,228 | ) | $ | 573,820 | ||||||||
Shares issued | 1,164 | 41,809 | — | — | 42,973 | ||||||||||||||
Shares repurchased | (883 | ) | (7,172 | ) | (82,104 | ) | — | (90,159 | ) | ||||||||||
Stock compensation cost | — | 16,326 | — | — | 16,326 | ||||||||||||||
Restricted stock canceled (issued) | — | (285 | ) | — | — | (285 | ) | ||||||||||||
Net earnings | — | — | 216,020 | — | 216,020 | ||||||||||||||
Dividends declared ($0.3600 per share) | — | — | (60,381 | ) | — | (60,381 | ) | ||||||||||||
Other comprehensive income (loss) | — | — | — | 21,675 | 21,675 | ||||||||||||||
Balance, September 29, 2017 | $ | 56,115 | $ | 504,072 | $ | 280,355 | $ | (120,553 | ) | $ | 719,989 |
Balance, December 29, 2017 | $ | 169,319 | $ | 499,934 | $ | 181,599 | $ | (127,789 | ) | $ | 723,063 | ||||||||
Shares issued | 1,592 | 6,500 | — | — | 8,092 | ||||||||||||||
Shares repurchased | (3,502 | ) | (10,340 | ) | (141,759 | ) | — | (155,601 | ) | ||||||||||
Stock compensation cost | — | 18,321 | — | — | 18,321 | ||||||||||||||
Restricted stock canceled (issued) | — | (772 | ) | — | — | (772 | ) | ||||||||||||
Net earnings | — | — | 267,331 | — | 267,331 | ||||||||||||||
Dividends declared ($0.3975 per share) | — | — | (66,725 | ) | — | (66,725 | ) | ||||||||||||
Reclassified to retained earnings from AOCI | — | — | 15,453 | (15,453 | ) | — | |||||||||||||
Other comprehensive income (loss) | — | — | — | 2,853 | 2,853 | ||||||||||||||
Balance, September 28, 2018 | $ | 167,409 | $ | 513,643 | $ | 255,899 | $ | (140,389 | ) | $ | 796,562 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net earnings available to common shareholders | $ | 92,681 | $ | 75,460 | $ | 267,331 | $ | 216,020 | |||||||
Weighted average shares outstanding for basic earnings per share | 167,247 | 168,069 | 167,860 | 167,592 | |||||||||||
Dilutive effect of stock options computed using the treasury stock method and the average market price | 5,790 | 6,544 | 6,124 | 6,252 | |||||||||||
Weighted average shares outstanding for diluted earnings per share | 173,037 | 174,613 | 173,984 | 173,844 | |||||||||||
Basic earnings per share | $ | 0.55 | $ | 0.45 | $ | 1.59 | $ | 1.29 | |||||||
Diluted earnings per share | $ | 0.54 | $ | 0.43 | $ | 1.54 | $ | 1.24 |
Option Shares | Weighted Average Exercise Price | Options Exercisable | Weighted Average Exercise Price | ||||||||||
Outstanding, December 29, 2017 | 13,290 | $ | 21.99 | 7,729 | $ | 18.33 | |||||||
Granted | 1,163 | 44.05 | |||||||||||
Exercised | (2,020 | ) | 18.23 | ||||||||||
Canceled | (69 | ) | 27.43 | ||||||||||
Outstanding, September 28, 2018 | 12,364 | $ | 24.64 | 7,366 | $ | 20.13 |
Nine Months Ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Expected life in years | 7.5 | 7.0 | |||||
Interest rate | 2.8 | % | 2.2 | % | |||
Volatility | 25.5 | % | 26.7 | % | |||
Dividend yield | 1.2 | % | 1.6 | % | |||
Weighted average fair value per share | $ | 12.84 | $ | 8.08 |
Nine Months Ended | |||||||
September 28, 2018 | September 29, 2017 | ||||||
Expected life in years | 1.0 | 1.0 | |||||
Interest rate | 2.1 | % | 0.9 | % | |||
Volatility | 21.3 | % | 22.3 | % | |||
Dividend yield | 1.2 | % | 1.5 | % | |||
Weighted average fair value per share | $ | 10.28 | $ | 7.32 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Pension Benefits | |||||||||||||||
Service cost | $ | 2,165 | $ | 1,917 | $ | 6,376 | $ | 5,732 | |||||||
Interest cost | 3,227 | 3,874 | 10,072 | 11,477 | |||||||||||
Expected return on assets | (4,369 | ) | (4,236 | ) | (13,087 | ) | (12,700 | ) | |||||||
Amortization and other | 2,077 | 2,408 | 6,252 | 6,932 | |||||||||||
Net periodic benefit cost | $ | 3,100 | $ | 3,963 | $ | 9,613 | $ | 11,441 | |||||||
Postretirement Medical | |||||||||||||||
Service cost | $ | 127 | $ | 150 | $ | 477 | $ | 451 | |||||||
Interest cost | 284 | 274 | 813 | 820 | |||||||||||
Amortization | 213 | (2 | ) | 485 | (7 | ) | |||||||||
Net periodic benefit cost | $ | 624 | $ | 422 | $ | 1,775 | $ | 1,264 |
Pension and Postretirement Medical | Cumulative Translation Adjustment | Total | |||||||||
Balance, June 30, 2017 | $ | (74,125 | ) | $ | (48,455 | ) | $ | (122,580 | ) | ||
Other comprehensive income (loss) before reclassifications | — | 574 | 574 | ||||||||
Reclassified to pension cost and deferred tax | 1,453 | — | 1,453 | ||||||||
Balance, September 29, 2017 | $ | (72,672 | ) | $ | (47,881 | ) | $ | (120,553 | ) |
Balance, June 29, 2018 | $ | (90,349 | ) | $ | (55,725 | ) | $ | (146,074 | ) | ||
Other comprehensive income (loss) before reclassifications | — | 4,161 | 4,161 | ||||||||
Reclassified to pension cost and deferred tax | 1,524 | — | 1,524 | ||||||||
Balance, September 28, 2018 | $ | (88,825 | ) | $ | (51,564 | ) | $ | (140,389 | ) |
Balance, December 30, 2016 | $ | (76,426 | ) | $ | (65,802 | ) | $ | (142,228 | ) | ||
Other comprehensive income (loss) before reclassifications | — | 17,921 | 17,921 | ||||||||
Reclassified to pension cost and deferred tax | 3,754 | — | 3,754 | ||||||||
Balance, September 29, 2017 | $ | (72,672 | ) | $ | (47,881 | ) | $ | (120,553 | ) |
Balance, December 29, 2017 | $ | (78,430 | ) | $ | (49,359 | ) | $ | (127,789 | ) | ||
Other comprehensive income (loss) before reclassifications | — | (2,205 | ) | (2,205 | ) | ||||||
Reclassified to pension cost and deferred tax | 5,058 | — | 5,058 | ||||||||
Reclassified to retained earnings | (15,453 | ) | — | (15,453 | ) | ||||||
Balance, September 28, 2018 | $ | (88,825 | ) | $ | (51,564 | ) | $ | (140,389 | ) |
7. | Segment Information |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net Sales | |||||||||||||||
Industrial | $ | 195,855 | $ | 178,461 | $ | 581,510 | $ | 509,719 | |||||||
Process | 84,556 | 73,656 | 249,650 | 217,084 | |||||||||||
Contractor | 135,525 | 127,695 | 415,694 | 373,082 | |||||||||||
Total | $ | 415,936 | $ | 379,812 | $ | 1,246,854 | $ | 1,099,885 | |||||||
Operating Earnings | |||||||||||||||
Industrial | $ | 70,572 | $ | 61,790 | $ | 206,727 | $ | 177,121 | |||||||
Process | 17,862 | 12,088 | 52,629 | 38,969 | |||||||||||
Contractor | 32,739 | 33,471 | 102,532 | 93,249 | |||||||||||
Unallocated corporate (expense) | (6,394 | ) | (5,914 | ) | (22,035 | ) | (20,059 | ) | |||||||
Total | $ | 114,779 | $ | 101,435 | $ | 339,853 | $ | 289,280 |
September 28, 2018 | December 29, 2017 | ||||||
Industrial | $ | 633,922 | $ | 572,436 | |||
Process | 349,071 | 345,572 | |||||
Contractor | 300,712 | 255,615 | |||||
Unallocated corporate | 201,796 | 216,994 | |||||
Total | $ | 1,485,501 | $ | 1,390,617 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 28, 2018 | September 29, 2017 | September 28, 2018 | September 29, 2017 | ||||||||||||
Net Sales (based on customer location) | |||||||||||||||
United States | $ | 208,269 | $ | 190,178 | $ | 614,592 | $ | 559,651 | |||||||
Other countries | 207,667 | 189,634 | 632,262 | 540,234 | |||||||||||
Total | $ | 415,936 | $ | 379,812 | $ | 1,246,854 | $ | 1,099,885 |
September 28, 2018 | December 29, 2017 | ||||||
Long-lived Assets | |||||||
United States | $ | 169,286 | $ | 163,416 | |||
Other countries | 50,878 | 40,882 | |||||
Total | $ | 220,164 | $ | 204,298 |
September 28, 2018 | December 29, 2017 | ||||||
Finished products and components | $ | 145,077 | $ | 124,327 | |||
Products and components in various stages of completion | 75,706 | 61,274 | |||||
Raw materials and purchased components | 113,349 | 103,407 | |||||
Subtotal | 334,132 | 289,008 | |||||
Reduction to LIFO cost | (56,406 | ) | (49,659 | ) | |||
Total | $ | 277,726 | $ | 239,349 |
Finite Life | Indefinite Life | ||||||||||||||||||
Customer Relationships | Patents and Proprietary Technology | Trademarks, Trade Names and Other | Trade Names | Total | |||||||||||||||
As of September 28, 2018 | |||||||||||||||||||
Cost | $ | 179,449 | $ | 19,371 | $ | 1,470 | $ | 59,537 | $ | 259,827 | |||||||||
Accumulated amortization | (64,064 | ) | (8,990 | ) | (806 | ) | — | (73,860 | ) | ||||||||||
Foreign currency translation | (9,392 | ) | (746 | ) | (75 | ) | (3,278 | ) | (13,491 | ) | |||||||||
Book value | $ | 105,993 | $ | 9,635 | $ | 589 | $ | 56,259 | $ | 172,476 | |||||||||
Weighted average life in years | 13 | 10 | 4 | N/A |
As of December 29, 2017 | |||||||||||||||||||
Cost | $ | 179,826 | $ | 18,479 | $ | 1,071 | $ | 59,553 | $ | 258,929 | |||||||||
Accumulated amortization | (54,076 | ) | (7,795 | ) | (542 | ) | — | (62,413 | ) | ||||||||||
Foreign currency translation | (9,186 | ) | (727 | ) | (61 | ) | (3,486 | ) | (13,460 | ) | |||||||||
Book value | $ | 116,564 | $ | 9,957 | $ | 468 | $ | 56,067 | $ | 183,056 | |||||||||
Weighted average life in years | 13 | 10 | 4 | N/A |
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | ||||||||||||||||||
Estimated Amortization Expense | $ | 15,608 | $ | 15,251 | $ | 15,038 | $ | 14,840 | $ | 14,743 | $ | 52,491 |
Industrial | Process | Contractor | Total | ||||||||||||
Balance, December 29, 2017 | $ | 161,673 | $ | 97,971 | $ | 19,145 | $ | 278,789 | |||||||
Additions, adjustments from business acquisitions | 17,544 | 170 | 409 | 18,123 | |||||||||||
Foreign currency translation | (222 | ) | (391 | ) | — | (613 | ) | ||||||||
Balance, September 28, 2018 | $ | 178,995 | $ | 97,750 | $ | 19,554 | $ | 296,299 |
10. | Other Current Liabilities |
September 28, 2018 | December 29, 2017 | ||||||
Accrued self-insurance retentions | $ | 7,870 | $ | 7,956 | |||
Accrued warranty and service liabilities | 11,087 | 10,535 | |||||
Accrued trade promotions | 10,461 | 10,588 | |||||
Payable for employee stock purchases | 8,868 | 10,053 | |||||
Customer advances and deferred revenue | 45,074 | 22,632 | |||||
Income taxes payable | 2,003 | 7,564 | |||||
Right of return refund liability | 12,289 | 11,412 | |||||
Other | 32,433 | 31,628 | |||||
Total | $ | 130,085 | $ | 112,368 |
Balance, December 29, 2017 | $ | 10,535 | |
Charged to expense | 6,116 | ||
Margin on parts sales reversed | 2,047 | ||
Reductions for claims settled | (7,611 | ) | |
Balance, September 28, 2018 | $ | 11,087 |
Level | September 28, 2018 | December 29, 2017 | |||||||
Assets | |||||||||
Cash surrender value of life insurance | 2 | $ | 16,404 | $ | 16,128 | ||||
Forward exchange contracts | 2 | 55 | — | ||||||
Total assets at fair value | $ | 16,459 | $ | 16,128 | |||||
Liabilities | |||||||||
Contingent consideration | 3 | $ | 5,700 | $ | 4,081 | ||||
Deferred compensation | 2 | 4,383 | 3,836 | ||||||
Forward exchange contracts | 2 | — | 517 | ||||||
Total liabilities at fair value | $ | 10,083 | $ | 8,434 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | % Change | Sep 28, 2018 | Sep 29, 2017 | % Change | ||||||||||||||||
Net Sales | $ | 415.9 | $ | 379.8 | 10 | % | $ | 1,246.9 | $ | 1,099.9 | 13 | % | |||||||||
Operating Earnings | 114.8 | 101.4 | 13 | % | 339.9 | 289.3 | 17 | % | |||||||||||||
Net Earnings | 92.7 | 75.5 | 23 | % | 267.3 | 216.0 | 24 | % | |||||||||||||
Net Earnings, adjusted (1) | 85.8 | 66.8 | 29 | % | 252.5 | 190.0 | 33 | % | |||||||||||||
Diluted Net Earnings per Common Share | $ | 0.54 | $ | 0.43 | 26 | % | $ | 1.54 | $ | 1.24 | 24 | % | |||||||||
Diluted Net Earnings per Common Share, adjusted (1) | $ | 0.50 | $ | 0.38 | 32 | % | $ | 1.45 | $ | 1.09 | 33 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Earnings before income taxes | $ | 108.1 | $ | 96.4 | $ | 320.7 | $ | 273.6 | |||||||
Income taxes, as reported | $ | 15.4 | $ | 20.9 | $ | 53.4 | $ | 57.6 | |||||||
Excess tax benefit from option exercises | 1.9 | 3.2 | 9.8 | 20.5 | |||||||||||
Tax provision adjustments | 5.0 | 5.5 | 5.0 | 5.5 | |||||||||||
Income taxes, adjusted | $ | 22.3 | $ | 29.6 | $ | 68.2 | $ | 83.6 | |||||||
Effective income tax rate | |||||||||||||||
As reported | 14.2 | % | 21.7 | % | 16.6 | % | 21.0 | % | |||||||
Adjusted | 20.6 | % | 30.8 | % | 21.2 | % | 30.5 | % | |||||||
Net Earnings, as reported | $ | 92.7 | $ | 75.5 | $ | 267.3 | $ | 216.0 | |||||||
Excess tax benefit from option exercises | (1.9 | ) | (3.2 | ) | (9.8 | ) | (20.5 | ) | |||||||
Tax provision adjustments | (5.0 | ) | (5.5 | ) | (5.0 | ) | (5.5 | ) | |||||||
Net Earnings, adjusted | $ | 85.8 | $ | 66.8 | $ | 252.5 | $ | 190.0 | |||||||
Weighted Average Diluted Shares | 173.0 | 174.6 | 174.0 | 173.8 | |||||||||||
Diluted Earnings per Share | |||||||||||||||
As reported | $ | 0.54 | $ | 0.43 | $ | 1.54 | $ | 1.24 | |||||||
Adjusted | $ | 0.50 | $ | 0.38 | $ | 1.45 | $ | 1.09 |
Three Months Ended | Nine Months Ended | ||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||
Net Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of products sold | 46.8 | 46.3 | 46.0 | 46.0 | |||||||
Gross Profit | 53.2 | 53.7 | 54.0 | 54.0 | |||||||
Product development | 3.8 | 3.8 | 3.8 | 4.0 | |||||||
Selling, marketing and distribution | 13.7 | 15.1 | 14.6 | 15.2 | |||||||
General and administrative | 8.1 | 8.1 | 8.3 | 8.5 | |||||||
Operating Earnings | 27.6 | 26.7 | 27.3 | 26.3 | |||||||
Interest expense | 0.9 | 1.0 | 0.9 | 1.1 | |||||||
Other expense, net | 0.7 | 0.3 | 0.7 | 0.3 | |||||||
Earnings Before Income Taxes | 26.0 | 25.4 | 25.7 | 24.9 | |||||||
Income taxes | 3.7 | 5.5 | 4.3 | 5.3 | |||||||
Net Earnings | 22.3 | % | 19.9 | % | 21.4 | % | 19.6 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Americas(1) | $ | 235.9 | $ | 217.7 | $ | 703.0 | $ | 639.1 | |||||||
EMEA(2) | 94.2 | 86.7 | 292.4 | 252.8 | |||||||||||
Asia Pacific | 85.8 | 75.4 | 251.5 | 208.0 | |||||||||||
Consolidated | $ | 415.9 | $ | 379.8 | $ | 1,246.9 | $ | 1,099.9 |
(1) | North, South and Central America, including the United States |
(2) | Europe, Middle East and Africa |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 8% | 1% | (1)% | 8% | 9% | 1% | 0% | 10% | |||||||
EMEA | 3% | 6% | 0% | 9% | 3% | 6% | 7% | 16% | |||||||
Asia Pacific | 10% | 6% | (2)% | 14% | 13% | 5% | 3% | 21% | |||||||
Consolidated | 7% | 3% | 0% | 10% | 8% | 3% | 2% | 13% |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Net Sales | |||||||||||||||
Americas | $ | 78.6 | $ | 74.9 | $ | 232.1 | $ | 219.8 | |||||||
EMEA | 58.1 | 52.1 | 174.7 | 146.1 | |||||||||||
Asia Pacific | 59.2 | 51.5 | 174.7 | 143.8 | |||||||||||
Total | $ | 195.9 | $ | 178.5 | $ | 581.5 | $ | 509.7 | |||||||
Operating earnings as a percentage of net sales | 36 | % | 35 | % | 36 | % | 35 | % |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 5% | 0% | 0% | 5% | 5% | 0% | 1% | 6% | |||||||
EMEA | 2% | 10% | 0% | 12% | 2% | 11% | 7% | 20% | |||||||
Asia Pacific | 9% | 8% | (2)% | 15% | 11% | 7% | 3% | 21% | |||||||
Segment Total | 5% | 5% | 0% | 10% | 6% | 5% | 3% | 14% |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Net Sales | |||||||||||||||
Americas | $ | 53.5 | $ | 47.9 | $ | 159.5 | $ | 139.1 | |||||||
EMEA | 13.8 | 12.4 | 43.2 | 41.2 | |||||||||||
Asia Pacific | 17.3 | 13.4 | 47.0 | 36.8 | |||||||||||
Total | $ | 84.6 | $ | 73.7 | $ | 249.7 | $ | 217.1 | |||||||
Operating earnings as a percentage of net sales | 21 | % | 16 | % | 21 | % | 18 | % |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 11% | 1% | 0% | 12% | 13% | 1% | 1% | 15% | |||||||
EMEA | 11% | 0% | 0% | 11% | (1)% | 1% | 5% | 5% | |||||||
Asia Pacific | 32% | 1% | (3)% | 30% | 25% | 1% | 2% | 28% | |||||||
Segment Total | 15% | 1% | (1)% | 15% | 12% | 1% | 2% | 15% |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Net Sales | |||||||||||||||
Americas | $ | 103.8 | $ | 94.9 | $ | 311.3 | $ | 280.2 | |||||||
EMEA | 22.4 | 22.3 | 74.6 | 65.6 | |||||||||||
Asia Pacific | 9.3 | 10.5 | 29.8 | 27.3 | |||||||||||
Total | $ | 135.5 | $ | 127.7 | $ | 415.7 | $ | 373.1 | |||||||
Operating earnings as a percentage of net sales | 24 | % | 26 | % | 25 | % | 25 | % |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 8% | 2% | (1)% | 9% | 9% | 2% | 0% | 11% | |||||||
EMEA | 1% | 0% | 0% | 1% | 7% | 0% | 7% | 14% | |||||||
Asia Pacific | (9)% | 0% | (3)% | (12)% | 7% | 0% | 2% | 9% | |||||||
Segment Total | 5% | 1% | 0% | 6% | 9% | 1% | 1% | 11% |
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.) | ||
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). | |||
Certification of President and Chief Executive Officer and Chief Financial Officer and Treasurer pursuant to Section 1350 of Title 18, U.S.C. | |||
Press Release Reporting Third Quarter Earnings dated October 24, 2018. | |||
101 | Interactive Data File. |
Date: | October 24, 2018 | By: | /s/ Patrick J. McHale | |||
Patrick J. McHale | ||||||
President and Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: | October 24, 2018 | By: | /s/ Mark W. Sheahan | |||
Mark W. Sheahan | ||||||
Chief Financial Officer and Treasurer | ||||||
(Principal Financial Officer) | ||||||
Date: | October 24, 2018 | By: | /s/ Caroline M. Chambers | |||
Caroline M. Chambers | ||||||
Executive Vice President, Corporate Controller and Information Systems | ||||||
(Principal Accounting Officer) |
Exhibit 31.1 |
1. | I have reviewed this quarterly report on Form 10-Q of Graco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 24, 2018 | /s/ Patrick J. McHale | ||
Patrick J. McHale | ||||
President and Chief Executive Officer |
Exhibit 31.2 |
1. | I have reviewed this quarterly report on Form 10-Q of Graco Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | October 24, 2018 | /s/ Mark W. Sheahan | ||
Mark W. Sheahan | ||||
Chief Financial Officer and Treasurer |
Exhibit 32 |
Date: | October 24, 2018 | /s/ Patrick J. McHale | ||
Patrick J. McHale | ||||
President and Chief Executive Officer | ||||
Date: | October 24, 2018 | /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, October 24, 2018 | Financial Contact: Mark Sheahan, 612-623-6656 Media Contact: Charlotte Boyd, 612-623-6153 Charlotte_M_Boyd@graco.com |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | % Change | Sep 28, 2018 | Sep 29, 2017 | % Change | ||||||||||||||||
Net Sales | $ | 415.9 | $ | 379.8 | 10 | % | $ | 1,246.9 | $ | 1,099.9 | 13 | % | |||||||||
Operating Earnings | 114.8 | 101.4 | 13 | % | 339.9 | 289.3 | 17 | % | |||||||||||||
Net Earnings | 92.7 | 75.5 | 23 | % | 267.3 | 216.0 | 24 | % | |||||||||||||
Diluted Net Earnings per Common Share | $ | 0.54 | $ | 0.43 | 26 | % | $ | 1.54 | $ | 1.24 | 24 | % | |||||||||
Adjusted (non-GAAP): (1) | |||||||||||||||||||||
Net Earnings, adjusted | $ | 85.8 | $ | 66.8 | 29 | % | $ | 252.5 | $ | 190.0 | 33 | % | |||||||||
Diluted Net Earnings per Common Share, adjusted | $ | 0.50 | $ | 0.38 | 32 | % | $ | 1.45 | $ | 1.09 | 33 | % |
• | Sales for the quarter and year to date increased in all segments and regions. Effects of currency translation were not significant for the quarter and contributed 2 percentage points to year-to-date growth. Acquired operations contributed 3 percentage points of growth to both the quarter and the year to date. |
• | Gross margin rate for the quarter was lower compared to the comparable period last year due to lower margin rates of acquired operations. |
• | Expense leverage drove double-digit percentage increases in operating earnings for the quarter and year to date. Operating earnings as a percentage of sales increased in all segments except for Contractor, where changes in channel mix and spending related to future new product introductions led to a decrease in operating earnings. |
• | Other expense increased $2 million for the quarter and $5 million year to date, mostly due to exchange losses on net assets of foreign operations. |
• | The effective income tax rate decreased by 8 percentage points for the quarter and 4 percentage points for the year to date, as the net benefits of U.S. federal income tax reform were partially offset by the impact of decreases in excess tax benefits from option exercises. Excess tax benefits from option exercises decreased compared to last year by $1 million for the quarter and $11 million for the year to date. |
Three Months | Nine Months | ||||||||||||||||||||||
Industrial | Process | Contractor | Industrial | Process | Contractor | ||||||||||||||||||
Net Sales (in millions) | $ | 195.9 | $ | 84.6 | $ | 135.5 | $ | 581.5 | $ | 249.7 | $ | 415.7 | |||||||||||
Percentage change from last year | |||||||||||||||||||||||
Sales | 10 | % | 15 | % | 6 | % | 14 | % | 15 | % | 11 | % | |||||||||||
Operating earnings | 14 | % | 48 | % | (2 | )% | 17 | % | 35 | % | 10 | % | |||||||||||
Operating earnings as a percentage of sales | |||||||||||||||||||||||
2018 | 36 | % | 21 | % | 24 | % | 36 | % | 21 | % | 25 | % | |||||||||||
2017 | 35 | % | 16 | % | 26 | % | 35 | % | 18 | % | 25 | % |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 5% | 0% | 0% | 5% | 5% | 0% | 1% | 6% | |||||||
EMEA | 2% | 10% | 0% | 12% | 2% | 11% | 7% | 20% | |||||||
Asia Pacific | 9% | 8% | (2)% | 15% | 11% | 7% | 3% | 21% | |||||||
Consolidated | 5% | 5% | 0% | 10% | 6% | 5% | 3% | 14% |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 11% | 1% | 0% | 12% | 13% | 1% | 1% | 15% | |||||||
EMEA | 11% | 0% | 0% | 11% | (1)% | 1% | 5% | 5% | |||||||
Asia Pacific | 32% | 1% | (3)% | 30% | 25% | 1% | 2% | 28% | |||||||
Consolidated | 15% | 1% | (1)% | 15% | 12% | 1% | 2% | 15% |
Three Months | Nine Months | ||||||||||||||
Volume and Price | Acquisitions | Currency | Total | Volume and Price | Acquisitions | Currency | Total | ||||||||
Americas | 8% | 2% | (1)% | 9% | 9% | 2% | 0% | 11% | |||||||
EMEA | 1% | 0% | 0% | 1% | 7% | 0% | 7% | 14% | |||||||
Asia Pacific | (9)% | 0% | (3)% | (12)% | 7% | 0% | 2% | 9% | |||||||
Consolidated | 5% | 1% | 0% | 6% | 9% | 1% | 1% | 11% |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Earnings before income taxes | $ | 108.1 | $ | 96.4 | $ | 320.7 | $ | 273.6 | |||||||
Income taxes, as reported | $ | 15.4 | $ | 20.9 | $ | 53.4 | $ | 57.6 | |||||||
Excess tax benefit from option exercises | 1.9 | 3.2 | 9.8 | 20.5 | |||||||||||
Tax provision adjustments | 5.0 | 5.5 | 5.0 | 5.5 | |||||||||||
Income taxes, adjusted | $ | 22.3 | $ | 29.6 | $ | 68.2 | $ | 83.6 | |||||||
Effective income tax rate | |||||||||||||||
As reported | 14.2 | % | 21.7 | % | 16.6 | % | 21.0 | % | |||||||
Adjusted | 20.6 | % | 30.8 | % | 21.2 | % | 30.5 | % | |||||||
Net Earnings, as reported | $ | 92.7 | $ | 75.5 | $ | 267.3 | $ | 216.0 | |||||||
Excess tax benefit from option exercises | (1.9 | ) | (3.2 | ) | (9.8 | ) | (20.5 | ) | |||||||
Tax provision adjustments | (5.0 | ) | (5.5 | ) | (5.0 | ) | (5.5 | ) | |||||||
Net Earnings, adjusted | $ | 85.8 | $ | 66.8 | $ | 252.5 | $ | 190.0 | |||||||
Weighted Average Diluted Shares | 173.0 | 174.6 | 174.0 | 173.8 | |||||||||||
Diluted Earnings per Share | |||||||||||||||
As reported | $ | 0.54 | $ | 0.43 | $ | 1.54 | $ | 1.24 | |||||||
Adjusted | $ | 0.50 | $ | 0.38 | $ | 1.45 | $ | 1.09 |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Net Sales | $ | 415,936 | $ | 379,812 | $ | 1,246,854 | $ | 1,099,885 | |||||||
Cost of products sold | 194,477 | 175,732 | 573,071 | 505,450 | |||||||||||
Gross Profit | 221,459 | 204,080 | 673,783 | 594,435 | |||||||||||
Product development | 15,734 | 14,552 | 47,135 | 43,473 | |||||||||||
Selling, marketing and distribution | 57,270 | 57,381 | 182,741 | 167,353 | |||||||||||
General and administrative | 33,676 | 30,712 | 104,054 | 94,329 | |||||||||||
Operating Earnings | 114,779 | 101,435 | 339,853 | 289,280 | |||||||||||
Interest expense | 3,583 | 3,901 | 10,707 | 12,110 | |||||||||||
Other expense, net | 3,139 | 1,142 | 8,425 | 3,599 | |||||||||||
Earnings Before Income Taxes | 108,057 | 96,392 | 320,721 | 273,571 | |||||||||||
Income taxes | 15,376 | 20,932 | 53,390 | 57,551 | |||||||||||
Net Earnings | $ | 92,681 | $ | 75,460 | $ | 267,331 | $ | 216,020 | |||||||
Net Earnings (Loss) per Common Share | |||||||||||||||
Basic | $ | 0.55 | $ | 0.45 | $ | 1.59 | $ | 1.29 | |||||||
Diluted | $ | 0.54 | $ | 0.43 | $ | 1.54 | $ | 1.24 | |||||||
Weighted Average Number of Shares | |||||||||||||||
Basic | 167,247 | 168,069 | 167,860 | 167,592 | |||||||||||
Diluted | 173,037 | 174,613 | 173,984 | 173,844 |
Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 28, 2018 | Sep 29, 2017 | Sep 28, 2018 | Sep 29, 2017 | ||||||||||||
Net Sales | |||||||||||||||
Industrial | $ | 195,855 | $ | 178,461 | $ | 581,510 | $ | 509,719 | |||||||
Process | 84,556 | 73,656 | 249,650 | 217,084 | |||||||||||
Contractor | 135,525 | 127,695 | 415,694 | 373,082 | |||||||||||
Total | $ | 415,936 | $ | 379,812 | $ | 1,246,854 | $ | 1,099,885 | |||||||
Operating Earnings | |||||||||||||||
Industrial | $ | 70,572 | $ | 61,790 | $ | 206,727 | $ | 177,121 | |||||||
Process | 17,862 | 12,088 | 52,629 | 38,969 | |||||||||||
Contractor | 32,739 | 33,471 | 102,532 | 93,249 | |||||||||||
Unallocated corporate (expense) | (6,394 | ) | (5,914 | ) | (22,035 | ) | (20,059 | ) | |||||||
Total | $ | 114,779 | $ | 101,435 | $ | 339,853 | $ | 289,280 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Oct. 18, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 28, 2018 | |
Amendment Flag | false | |
Entity Registrant Name | Graco Inc. | |
Entity Central Index Key | 0000042888 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-28 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 166,437,000 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | GGG | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Income Statement [Abstract] | ||||
Revenues | $ 415,936 | $ 379,812 | $ 1,246,854 | $ 1,099,885 |
Cost of Goods and Services Sold | 194,477 | 175,732 | 573,071 | 505,450 |
Gross Profit | 221,459 | 204,080 | 673,783 | 594,435 |
Product development | 15,734 | 14,552 | 47,135 | 43,473 |
Selling, marketing and distribution | 57,270 | 57,381 | 182,741 | 167,353 |
General and administrative | 33,676 | 30,712 | 104,054 | 94,329 |
Operating Earnings | 114,779 | 101,435 | 339,853 | 289,280 |
Interest expense | 3,583 | 3,901 | 10,707 | 12,110 |
Other expense, net | 3,139 | 1,142 | 8,425 | 3,599 |
Earnings Before Income Taxes | 108,057 | 96,392 | 320,721 | 273,571 |
Income taxes | 15,376 | 20,932 | 53,390 | 57,551 |
Net Earnings | $ 92,681 | $ 75,460 | $ 267,331 | $ 216,020 |
Basic earnings per share | $ 0.55 | $ 0.45 | $ 1.59 | $ 1.29 |
Diluted earnings per share | $ 0.54 | $ 0.43 | $ 1.54 | $ 1.24 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Earnings | $ 92,681 | $ 75,460 | $ 267,331 | $ 216,020 |
Components of other comprehensive income (loss) | ||||
Cumulative translation adjustment | 4,161 | 574 | (2,205) | 17,921 |
Pension and postretirement medical liability adjustment | 1,972 | 2,250 | 6,503 | 6,034 |
Income taxes - pension and postretirement medical liability adjustment | (448) | (797) | (1,445) | (2,280) |
Other comprehensive income | 5,685 | 2,027 | 2,853 | 21,675 |
Comprehensive Income | $ 98,366 | $ 77,487 | $ 270,184 | $ 237,695 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Receivables allowances | $ 5.2 | $ 4.3 |
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
---|---|---|---|---|---|
Beginning Balance at Dec. 30, 2016 | $ 573,820 | $ 55,834 | $ 453,394 | $ 206,820 | $ (142,228) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Shares issued | 42,973 | 1,164 | 41,809 | 0 | 0 |
Shares repurchased | (90,159) | (883) | (7,172) | (82,104) | 0 |
Stock compensation cost | 16,326 | 0 | 16,326 | 0 | 0 |
Restricted stock cancelled (issued) | (285) | 0 | (285) | 0 | 0 |
Net Earnings | 216,020 | 0 | 0 | 216,020 | 0 |
Dividends declared | (60,381) | 0 | 0 | (60,381) | 0 |
Other comprehensive income (loss) | 21,675 | 0 | 0 | 0 | 21,675 |
Ending Balance at Sep. 29, 2017 | 719,989 | 56,115 | 504,072 | 280,355 | (120,553) |
Beginning Balance at Jun. 30, 2017 | 651,562 | 55,991 | 493,329 | 224,822 | (122,580) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Shares issued | 6,733 | 155 | 6,578 | 0 | 0 |
Shares repurchased | (2) | (31) | (255) | (288) | 0 |
Stock compensation cost | 4,422 | 0 | 4,422 | 0 | 0 |
Restricted stock cancelled (issued) | (2) | 0 | (2) | 0 | 0 |
Net Earnings | 75,460 | 0 | 0 | 75,460 | 0 |
Dividends declared | (20,215) | 0 | 0 | (20,215) | 0 |
Other comprehensive income (loss) | 2,027 | 0 | 0 | 0 | 2,027 |
Ending Balance at Sep. 29, 2017 | 719,989 | 56,115 | 504,072 | 280,355 | (120,553) |
Beginning Balance at Dec. 29, 2017 | 723,063 | 169,319 | 499,934 | 181,599 | (127,789) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Shares issued | 8,092 | 1,592 | 6,500 | 0 | 0 |
Shares repurchased | (155,601) | (3,502) | (10,340) | (141,759) | 0 |
Stock compensation cost | 18,321 | 0 | 18,321 | 0 | 0 |
Restricted stock cancelled (issued) | (772) | 0 | (772) | 0 | 0 |
Net Earnings | 267,331 | 0 | 0 | 267,331 | 0 |
Dividends declared | (66,725) | 0 | 0 | (66,725) | 0 |
Reclassified to retained earnings from AOCI | 0 | 0 | 0 | 15,453 | (15,453) |
Other comprehensive income (loss) | 2,853 | 0 | 0 | 0 | 2,853 |
Ending Balance at Sep. 28, 2018 | 796,562 | 167,409 | 513,643 | 255,899 | (140,389) |
Beginning Balance at Jun. 29, 2018 | 711,805 | 167,130 | 505,342 | 185,407 | (146,074) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Shares issued | 3,419 | 279 | 3,140 | 0 | 0 |
Shares repurchased | 0 | 0 | 0 | 0 | 0 |
Stock compensation cost | 5,161 | 0 | 5,161 | 0 | 0 |
Net Earnings | 92,681 | 0 | 0 | 92,681 | 0 |
Dividends declared | (22,189) | 0 | 0 | (22,189) | 0 |
Other comprehensive income (loss) | 5,685 | 0 | 0 | 0 | 5,685 |
Ending Balance at Sep. 28, 2018 | $ 796,562 | $ 167,409 | $ 513,643 | $ 255,899 | $ (140,389) |
Consolidated Statements of Shareholders' Equity (Unaudited) Consolidated Statements of Shareholders' Equity (Unaudited) Parenthetical - $ / shares |
3 Months Ended | 9 Months Ended | ||
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Sep. 29, 2017 |
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Statement of Stockholders' Equity [Abstract] | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.1325 | $ 0.1200 | $ 0.3975 | $ 0.3600 |
Basis of Presentation |
9 Months Ended |
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Sep. 28, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated balance sheet of Graco Inc. and Subsidiaries (the “Company”) as of September 28, 2018 and the related statements of earnings and comprehensive income for the three and nine months ended September 28, 2018 and September 29, 2017, and cash flows for the nine months ended September 28, 2018 and September 29, 2017 have been prepared by the Company and have not been audited. In the opinion of management, these consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 28, 2018, and the results of operations and cash flows for all periods presented. Certain prior year disclosures have been revised to conform to current year reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Therefore, these statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year. |
Revenue Recognition (Notes) |
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Sep. 28, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue Recognition Adoption of New Accounting Standard In May 2014, the Financial Accounting Standards Board (FASB) issued a final standard on revenue from contracts with customers, contained in Accounting Standards Codification Topic 606 (“ASC 606”). The new standard sets forth a single comprehensive model for recognizing and reporting revenue. ASC 606 was effective for the Company as of December 30, 2017, the beginning of our fiscal year 2018. The Company adopted the new accounting standard using the modified retrospective transition approach. Application of the transition requirements had no material impact on operations or beginning retained earnings. We record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. Under ASC 606, rights of return are recorded as a refund liability and a recovery asset is established for the value of product expected to be returned. We previously classified rights of return, net of amounts expected to be recovered, as an allowance reducing accounts receivable. We reclassified prior period balance sheet amounts to conform to ASC 606 requirements. This resulted in an increase in accounts receivable of $9.7 million, a recovery asset of $1.7 million included in other current assets and $11.4 million of refund liability included in other current liabilities as of December 29, 2017. Accounting Policy Revenue is recognized upon the satisfaction of performance obligations, which occurs when control of the good or service transfers to the customer. This is generally on the date of shipment; however certain sales have terms requiring recognition when received by the customer. In cases where there are specific customer acceptance provisions, revenue is recognized at the later of customer acceptance or shipment (subject to shipping terms). Payment terms are established based on the type of product, distributor capabilities and competitive market conditions. We generally determine standalone selling prices based on the prices charged to customers for all material performance obligations. Variable consideration is accounted for as a price adjustment (sales adjustment). Following are examples of variable consideration that affect the Company's reported revenue. Early payment discounts are provided to certain customers and within certain regions. Rights of return are typically contractually limited, amounts are estimable, and the Company records provisions for anticipated returns at the time revenue is recognized. This includes promotions when, from time to time, the Company may promote the sale of new products by agreeing to accept returns of superseded products. Trade promotions are offered to distributors and end users through various programs, generally with terms of one year or less. Such promotions include rebates based on annual purchases and sales growth, coupons and reimbursement for competitive products. Payment of incentives may take the form of cash, trade credit, promotional merchandise or free product. Rebates are accrued based on the program rates and progress toward the probability weighted estimate of annual sales amount and sales growth. Additional promotions include cooperative advertising arrangements. Under cooperative advertising arrangements, the Company reimburses the distributor for a portion of its advertising costs related to the Company’s products; estimated costs are accrued at the time of sale and classified as selling, marketing and distribution expense. The estimated costs related to coupon programs are accrued at the time of sale and classified as selling, marketing and distribution expense or cost of products sold, depending on the type of incentive offered. The considerations payable to customers are deemed as broad based and are not recorded against net sales. Shipping and handling costs incurred for the delivery of goods to customers are included in cost of goods sold. Amounts billed to customers for shipping and handling are included in net sales. Deferred Revenues We defer revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. This is also the case for services associated with certain product sales. The balance in the deferred revenue and customer advances was $45.1 million as of September 28, 2018 and $22.6 million as of December 29, 2017. The increase from year-end 2017 includes $21.6 million related to a business acquired in 2018. Net sales for the year to date included $21.8 million that was in deferred revenue and customer advances as of December 29, 2017. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Practical Expedients and Exemptions We have made an accounting policy election to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. We have made an accounting policy election to exclude from the transaction price all sales taxes related to revenue producing transactions collected from the customer for a governmental authority. We apply the new revenue standard requirements to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. We have made an accounting policy election to not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. If the revenue related to a performance obligation that includes goods or services that are immaterial in the context of the contract is recognized before those immaterial goods or services are transferred to the customer, then the related costs to transfer those goods or services are accrued. We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. These costs primarily relate to sales commissions and are recorded in selling, marketing and distribution expense. We disclose disaggregated revenues by reporting segment and geography in accordance with the revenue standard. See Note 7 Segment Information. |
Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
Stock options to purchase 435,000 and 18,000 shares were not included in the September 28, 2018 and September 29, 2017 computations of diluted earnings per share, respectively, because they would have been anti-dilutive. |
Share-Based Awards |
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Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Awards | Share-Based Awards Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
The Company recognized year-to-date share-based compensation of $22.0 million in 2018 and $19.2 million in 2017. As of September 28, 2018, there was $10.5 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 2.1 years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:
Under the Company’s Employee Stock Purchase Plan, the Company issued 480,000 shares in 2018 and 500,000 shares in 2017. The fair value of the employees’ purchase rights under this Plan was estimated on the date of grant. The benefit of the 15 percent discount from the lesser of the fair market value per common share on the first day and the last day of the plan year was added to the fair value of the employees’ purchase rights determined using the Black-Scholes option-pricing model with the following assumptions and results:
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Retirement Benefits |
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Retirement Benefits | Retirement Benefits The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):
In March 2017, the FASB issued a final standard that changes the presentation of net periodic benefit cost related to defined benefit plans. The Company adopted the standard effective for the first quarter of 2018, and the Company has applied the change retrospectively to all periods presented. Under the new standard, net periodic benefit costs are disaggregated between service costs presented as operating expenses and other components of pension costs presented as non-operating expenses. The Company previously charged service costs to segment operations and included other components of pension cost in unallocated corporate operating expenses. Under the new standard, unallocated corporate operating expenses decreased, operating earnings increased and other expense increased by the amount of non-service components of pension cost, including the amount of changes in cash surrender value of insurance contracts used to fund certain non-qualified pension and deferred compensation arrangements. There was no impact on reported net earnings or earnings per share. The retrospective application of the new standard resulted in increases of $1.8 million and $5.1 million to previously reported operating earnings and other non-operating expense for the quarter and year to date ended September 29, 2017, respectively. In the third quarter of 2018, the Company made a $40 million voluntary contribution to one of its U.S. qualified defined benefit plans. |
Shareholders' Equity |
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Shareholders' Equity | Shareholders’ Equity Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
Amounts related to pension and postretirement medical adjustments are reclassified to non-service components of pension cost that are included within other non-operating expenses. In February 2018, FASB issued a new standard related to reclassification of certain tax effects from accumulated other comprehensive income (AOCI). We early-adopted the new standard in the first quarter of 2018. We elected to reclassify $15.5 million from accumulated other comprehensive income to retained earnings, representing the amount of "stranded" tax effects resulting from the change in the U.S. federal tax rate and the consequent revaluation of deferred tax assets related to pension and postretirement medical expense. On April 30, 2018, the Company repurchased 0.7 million shares of its common stock for $28.2 million from the President and Chief Executive Officer of the Company. The $43.33 per share purchase price represented a discount of 3 percent from the closing price of the Company’s stock immediately prior to the date of the transaction. The repurchase is expected to be accretive to earnings per share and yield a rate of return to remaining shareholders that will exceed the Company’s equity cost of capital. The Company used available cash balances and borrowings under its revolving line of credit to fund the repurchase. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has three reportable segments: Industrial, Process and Contractor. Sales and operating earnings by segment were as follows (in thousands):
Assets by segment were as follows (in thousands):
Geographic information follows (in thousands):
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Inventories |
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Inventories | Inventories Major components of inventories were as follows (in thousands):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Components of other intangible assets were (dollars in thousands):
Amortization of intangibles for the quarter was $3.8 million in 2018 and $3.8 million in 2017 and for the year to date was $11.8 million in 2018 and $11.0 million in 2017. Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):
Changes in the carrying amount of goodwill for each reportable segment were (in thousands):
The Company completed business acquisitions in 2018 that were not material to the consolidated financial statements. |
Other Current Liabilities |
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Other Current Liabilities | Other Current Liabilities Components of other current liabilities were (in thousands):
The Company previously managed certain self-insured loss exposures through a wholly-owned captive insurance subsidiary. Cash balances of $9.2 million as of December 29, 2017 were restricted for funding the captive's loss reserves and included within other current assets on the Company's Consolidated Balance Sheets. The Company dissolved the captive insurance subsidiary in the third quarter of 2018 and there were no restricted cash balances as of September 28, 2018. A liability is established for estimated future warranty and service claims that relate to current and prior period sales. The Company estimates warranty costs based on historical claim experience and other factors including evaluating specific product warranty issues. Following is a summary of activity in accrued warranty and service liabilities (in thousands):
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds. Contingent consideration liability represents the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of an acquired business based on future revenues. Long-term notes payable with fixed interest rates have a carrying amount of $225 million and an estimated fair value of $235 million as of September 28, 2018 and $245 million as of December 29, 2017. The fair value of variable rate borrowings approximates carrying value. The Company uses significant other observable inputs to estimate fair value (level 2 of the fair value hierarchy) based on the present value of future cash flows and rates that would be available for issuance of debt with similar terms and remaining maturities. |
Income Taxes (Notes) |
9 Months Ended |
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Sep. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes The effective income tax rate was 14 percent for the quarter and 17 percent for the year to date, down 8 percentage points and 4 percentage points from the comparable periods last year, respectively. U.S. federal income tax reform legislation (the "Tax Act") passed at the end of 2017 decreased the 2018 effective tax rate by 10 percentage points for the quarter and 9 percentage points for the year to date. Excess tax benefits related to stock option exercises reduced the effective tax rate by 2 percentage points and 3 percentage points in the third quarter of 2018 and 2017, respectively. Year-to-date excess tax benefits related to stock option exercises reduced the effective tax rate by 3 percentage points in 2018 and 7 percentage points in 2017. The benefit from a $40 million contribution to a pension plan reduced the 2018 effective tax rate by 5 percentage points for the quarter and 2 percentage points for the year to date. The benefits from certain tax planning activities reduced the 2017 effective tax rate by 6 percentage points for the quarter and 2 percentage points for the year to date. Our accounting for certain income tax effects of the Tax Act related to the transition tax is complete. Based on the Proposed Treasury Regulation issued on August 1, 2018, we have concluded that the provisional amounts recorded in our previously issued financial statements are now considered final as of September 28, 2018. Adjustments to the provisional amounts were not material to the consolidated financial statements. |
Debt (Notes) |
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Sep. 28, 2018 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Debt On September 24, 2018, the Company entered into a revolving credit agreement with a sole lender that expires in September 2020. The new credit agreement provides up to $50 million of committed credit, available for general corporate purposes, working capital needs, share repurchases and acquisitions. Under the terms of the revolving credit agreement, loans may be denominated in U.S. dollars or Chinese renminbi. Loans denominated in U.S. dollars bear interest, at the Company’s option, at either a base rate or a LIBOR-based rate. Loans denominated in Chinese renminbi bear interest at a LIBOR-based rate based on the Chinese offshore rate. Other terms of the new revolving credit agreement are substantially similar to those of the Company’s pre-existing $500 million revolving credit agreement that expires in December 2021. |
Recent Accounting Pronouncements |
9 Months Ended |
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Sep. 28, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements Not yet Adopted | Recent Accounting Pronouncements In February 2016, FASB issued a final standard on leases contained in Accounting Standards Codification Topic 842 (“ASC 842”). The new standard is effective for the Company in the first quarter of 2019 and requires most leases to be recorded on the balance sheet. The Company plans to adopt the new accounting standard using the modified retrospective transition approach and will elect to use the package of practical expedients. The modified retrospective transition approach will recognize any changes from the beginning of the year of initial application through retained earnings with no restatement of comparative periods. We have established an implementation team that has gathered and analyzed a significant portion of our lease contracts. Based on preliminary results of the process, which has not been completed, nothing has come to our attention that would indicate that adoption of the new standard will have a material impact on our earnings or shareholders equity. We expect that the recording of right-of-use assets and associated lease liabilities will have an effect on our consolidated balance sheet; however, we are unable to determine an amount at this time. The final balance sheet impact will be determined once we finalize our conclusions on the treatment of certain lease incentives and vehicle lease contracts. We are in the process of evaluating changes to our business processes, systems and controls needed to support recognition and disclosure under the new standard. Further, we are continuing to assess any incremental disclosures that will be required in our consolidated financial statements. |
Revenue Recognition (Policies) |
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Sep. 28, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition, Policy [Policy Text Block] | Adoption of New Accounting Standard In May 2014, the Financial Accounting Standards Board (FASB) issued a final standard on revenue from contracts with customers, contained in Accounting Standards Codification Topic 606 (“ASC 606”). The new standard sets forth a single comprehensive model for recognizing and reporting revenue. ASC 606 was effective for the Company as of December 30, 2017, the beginning of our fiscal year 2018. The Company adopted the new accounting standard using the modified retrospective transition approach. Application of the transition requirements had no material impact on operations or beginning retained earnings. We record revenue under ASC 606 at a single point in time, when control is transferred to the customer, which is consistent with past practice. Under ASC 606, rights of return are recorded as a refund liability and a recovery asset is established for the value of product expected to be returned. We previously classified rights of return, net of amounts expected to be recovered, as an allowance reducing accounts receivable. We reclassified prior period balance sheet amounts to conform to ASC 606 requirements. This resulted in an increase in accounts receivable of $9.7 million, a recovery asset of $1.7 million included in other current assets and $11.4 million of refund liability included in other current liabilities as of December 29, 2017. Accounting Policy Revenue is recognized upon the satisfaction of performance obligations, which occurs when control of the good or service transfers to the customer. This is generally on the date of shipment; however certain sales have terms requiring recognition when received by the customer. In cases where there are specific customer acceptance provisions, revenue is recognized at the later of customer acceptance or shipment (subject to shipping terms). Payment terms are established based on the type of product, distributor capabilities and competitive market conditions. We generally determine standalone selling prices based on the prices charged to customers for all material performance obligations. Variable consideration is accounted for as a price adjustment (sales adjustment). Following are examples of variable consideration that affect the Company's reported revenue. Early payment discounts are provided to certain customers and within certain regions. Rights of return are typically contractually limited, amounts are estimable, and the Company records provisions for anticipated returns at the time revenue is recognized. This includes promotions when, from time to time, the Company may promote the sale of new products by agreeing to accept returns of superseded products. Trade promotions are offered to distributors and end users through various programs, generally with terms of one year or less. Such promotions include rebates based on annual purchases and sales growth, coupons and reimbursement for competitive products. Payment of incentives may take the form of cash, trade credit, promotional merchandise or free product. Rebates are accrued based on the program rates and progress toward the probability weighted estimate of annual sales amount and sales growth. Additional promotions include cooperative advertising arrangements. Under cooperative advertising arrangements, the Company reimburses the distributor for a portion of its advertising costs related to the Company’s products; estimated costs are accrued at the time of sale and classified as selling, marketing and distribution expense. The estimated costs related to coupon programs are accrued at the time of sale and classified as selling, marketing and distribution expense or cost of products sold, depending on the type of incentive offered. The considerations payable to customers are deemed as broad based and are not recorded against net sales. Shipping and handling costs incurred for the delivery of goods to customers are included in cost of goods sold. Amounts billed to customers for shipping and handling are included in net sales. Deferred Revenues We defer revenue when cash payments are received or due in advance of our performance, including amounts which are refundable. This is also the case for services associated with certain product sales. The balance in the deferred revenue and customer advances was $45.1 million as of September 28, 2018 and $22.6 million as of December 29, 2017. The increase from year-end 2017 includes $21.6 million related to a business acquired in 2018. Net sales for the year to date included $21.8 million that was in deferred revenue and customer advances as of December 29, 2017. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Practical Expedients and Exemptions We have made an accounting policy election to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. We have made an accounting policy election to exclude from the transaction price all sales taxes related to revenue producing transactions collected from the customer for a governmental authority. We apply the new revenue standard requirements to a portfolio of contracts (or performance obligations) with similar characteristics for transactions where it is expected that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. We have made an accounting policy election to not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. If the revenue related to a performance obligation that includes goods or services that are immaterial in the context of the contract is recognized before those immaterial goods or services are transferred to the customer, then the related costs to transfer those goods or services are accrued. We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. These costs primarily relate to sales commissions and are recorded in selling, marketing and distribution expense. We disclose disaggregated revenues by reporting segment and geography in accordance with the revenue standard. See Note 7 Segment Information. |
Income Taxes (Policies) |
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Sep. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
Accounting Changes [Text Block] | Adjustments to the provisional amounts were not material to the consolidated financial statements. |
Earnings per Share (Tables) |
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Computation of Basic and Diluted EPS | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
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Share-Based Awards (Tables) |
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Options Activity and Outstanding | Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
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Options Fair Value Inputs | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:
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ESPP Fair Value Inputs | The benefit of the 15 percent discount from the lesser of the fair market value per common share on the first day and the last day of the plan year was added to the fair value of the employees’ purchase rights determined using the Black-Scholes option-pricing model with the following assumptions and results:
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Retirement Benefits (Tables) |
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Components of Net Periodic Benefit Cost | The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):
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Shareholders' Equity (Tables) |
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Changes in AOCI | Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
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Segment Information (Tables) |
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting - Operations and Assets | Sales and operating earnings by segment were as follows (in thousands):
Assets by segment were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting - Geographic | Geographic information follows (in thousands):
|
Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventories | Major components of inventories were as follows (in thousands):
|
Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Intangible Assets | Components of other intangible assets were (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Amortization Expense | Estimated annual amortization expense based on the current carrying amount of other intangible assets is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill Rollforward | Changes in the carrying amount of goodwill for each reportable segment were (in thousands):
|
Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Current Liabilities | Components of other current liabilities were (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Warranty Activity | Following is a summary of activity in accrued warranty and service liabilities (in thousands):
|
Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Schedule | Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
|
Revenue Recognition (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 28, 2018 |
Dec. 29, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||
Reserve for Sales Returns | $ 9,700 | |
Right to Recover Product, Current | 1,700 | |
Right of return refund liability | $ 12,289 | 11,412 |
Contract with Customer, Liability | 45,100 | $ 22,600 |
Increase (Decrease) in Deferred Revenue | 21,600 | |
Deferred Revenue, Revenue Recognized | $ 21,800 |
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net earnings available to common shareholders | $ 92,681 | $ 75,460 | $ 267,331 | $ 216,020 |
Weighted average shares outstanding for basic earnings per share | 167,247,000 | 168,069,000 | 167,860,000 | 167,592,000 |
Dilutive effect of stock options computed using the treasury stock method and the average market price | 5,790,000 | 6,544,000 | 6,124,000 | 6,252,000 |
Weighted average shares outstanding for diluted earnings per share | 173,037,000 | 174,613,000 | 173,984,000 | 173,844,000 |
Basic earnings per share | $ 0.55 | $ 0.45 | $ 1.59 | $ 1.29 |
Diluted earnings per share | $ 0.54 | $ 0.43 | $ 1.54 | $ 1.24 |
Antidilutive securities excluded from the computation of diluted earnings per share | 435,000 | 18,000 |
Share-Based Awards - Options Activity and Outstanding (Details) - $ / shares shares in Thousands |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Dec. 29, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Beginning (in shares) | 13,290 | |
Options granted (in shares) | 1,163 | |
Options exercised (in shares) | (2,020) | |
Options canceled (in shares) | (69) | |
Ending (in shares) | 12,364 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Beginning (dollars per share) | $ 21.99 | |
Granted (dollars per share) | 44.05 | |
Exercised (dollars per share) | 18.23 | |
Canceled (dollars per share) | 27.43 | |
Ending (dollars per share) | $ 24.64 | |
Options exercisable (in shares) | 7,366 | 7,729 |
Weighted average exercise price of exercisable options (dollars per share) | $ 20.13 | $ 18.33 |
Share-Based Awards - Options Fair Value Inputs (Details) - Stock Option - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Fair Value Assumptions and Methodology [Abstract] | ||
Expected life in years | 7 years 6 months | 7 years |
Interest rate | 2.80% | 2.20% |
Volatility | 25.50% | 26.70% |
Dividend yield | 1.20% | 1.60% |
Weighted average fair value per share (in dollars per share) | $ 12.84 | $ 8.08 |
Share-Based Awards - ESPP Fair Value Inputs (Details) - Employee Stock Purchase Plan - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life in years | 1 year | 1 year |
Interest rate | 2.10% | 0.90% |
Volatility | 21.30% | 22.30% |
Dividend yield | 1.20% | 1.50% |
Weighted average fair value per share (in dollars per share) | $ 10.28 | $ 7.32 |
Share-Based Awards - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based compensation expense | $ 22.0 | $ 19.2 |
Unrecognized compensation cost | $ 10.5 | |
Weighted average recognition period | 2 years 1 month | |
Employee Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee stock purchase plan shares issued | 480,000 | 500,000 |
Stock purchase plan discount from market value | 15.00% |
Retirement Benefits (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 13, 2018 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||||
Increase in operating earnings and non-operating expense | $ (15,500) | ||||
Defined Benefit Plan, Contributions by Employer | $ 40,000 | ||||
Pension | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | $ 2,165 | $ 1,917 | 6,376 | $ 5,732 | |
Interest cost | 3,227 | 3,874 | 10,072 | 11,477 | |
Expected return on assets | (4,369) | (4,236) | (13,087) | (12,700) | |
Amortization and other | 2,077 | 2,408 | 6,252 | 6,932 | |
Net periodic benefit cost | 3,100 | 3,963 | 9,613 | 11,441 | |
Postretirement Medical | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | 127 | 150 | 477 | 451 | |
Interest cost | 284 | 274 | 813 | 820 | |
Amortization | 213 | (2) | 485 | (7) | |
Net periodic benefit cost | $ 624 | 422 | $ 1,775 | 1,264 | |
Accounting Standards Update 2017-07 [Member] | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Increase in operating earnings and non-operating expense | $ 1,800 | $ 5,100 |
Shareholders' Equity - Accelerated Share Repurchase (Details) $ / shares in Units, shares in Millions, $ in Millions |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
$ / shares
shares
| |
Accelerated Share Repurchases [Line Items] | |
Stock Repurchased During Period, Shares | shares | 0.7 |
Proceeds from (Repurchase of) Equity | $ | $ (28.2) |
Share Repurchases, Final Price Paid Per Share | $ / shares | $ 43.33 |
Discount for Stock Repurchase | 3.00% |
Shareholders' Equity New Accounting Pronouncement (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
| |
Reclassification from accumulated other comprehensive income [Abstract] | |
New Accounting Pronouncement or Change in Accounting Principle, Reclassified from Accumulated Other Comprehensive Income, ASU 2018-02 | $ (15.5) |
Segment Reporting Information - Operations and Assets (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 28, 2018
USD ($)
|
Sep. 29, 2017
USD ($)
|
Sep. 28, 2018
USD ($)
segment
|
Sep. 29, 2017
USD ($)
|
Dec. 29, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Revenues | $ 415,936 | $ 379,812 | $ 1,246,854 | $ 1,099,885 | |
Number of reportable segments | segment | 3 | ||||
Operating Earnings | 114,779 | 101,435 | $ 339,853 | 289,280 | |
Total Assets | 1,485,501 | 1,485,501 | $ 1,390,617 | ||
Operating Segments | Industrial | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 195,855 | 178,461 | 581,510 | 509,719 | |
Operating Earnings | 70,572 | 61,790 | 206,727 | 177,121 | |
Total Assets | 633,922 | 633,922 | 572,436 | ||
Operating Segments | Process | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 84,556 | 73,656 | 249,650 | 217,084 | |
Operating Earnings | 17,862 | 12,088 | 52,629 | 38,969 | |
Total Assets | 349,071 | 349,071 | 345,572 | ||
Operating Segments | Contractor | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 135,525 | 127,695 | 415,694 | 373,082 | |
Operating Earnings | 32,739 | 33,471 | 102,532 | 93,249 | |
Total Assets | 300,712 | 300,712 | 255,615 | ||
Unallocated corporate | |||||
Segment Reporting Information [Line Items] | |||||
Operating Earnings | (6,394) | $ (5,914) | (22,035) | $ (20,059) | |
Total Assets | $ 201,796 | $ 201,796 | $ 216,994 |
Segment Reporting Information - Geographic (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Dec. 29, 2017 |
|
Geographic Information [Line Items] | |||||
Revenues | $ 415,936 | $ 379,812 | $ 1,246,854 | $ 1,099,885 | |
Long-lived Assets | 220,164 | 220,164 | $ 204,298 | ||
United States | |||||
Geographic Information [Line Items] | |||||
Revenues | 208,269 | 190,178 | 614,592 | 559,651 | |
Long-lived Assets | 169,286 | 169,286 | 163,416 | ||
Other countries | |||||
Geographic Information [Line Items] | |||||
Revenues | 207,667 | $ 189,634 | 632,262 | $ 540,234 | |
Long-lived Assets | $ 50,878 | $ 50,878 | $ 40,882 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Finished products and components | $ 145,077 | $ 124,327 |
Products and components in various stages of completion | 75,706 | 61,274 |
Raw materials and purchased components | 113,349 | 103,407 |
Inventory gross | 334,132 | 289,008 |
Reduction to LIFO cost | (56,406) | (49,659) |
Total | $ 277,726 | $ 239,349 |
Intangible Assets - Future Amortization Expense (Details) $ in Thousands |
Sep. 28, 2018
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Estimated amortization expense 2018 | $ 15,608 |
Estimated amortization expense 2019 | 15,251 |
Estimated amortization expense 2020 | 15,038 |
Estimated amortization expense 2021 | 14,840 |
Estimated amortization expense 2022 | 14,743 |
Estimated amortization expense thereafter | $ 52,491 |
Intangible Assets - Goodwill Rollforward (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 278,789 |
Additions, adjustments from business acquisitions | 18,123 |
Foreign currency translation | (613) |
Ending balance | 296,299 |
Industrial | |
Goodwill [Roll Forward] | |
Beginning balance | 161,673 |
Additions, adjustments from business acquisitions | 17,544 |
Foreign currency translation | (222) |
Ending balance | 178,995 |
Process | |
Goodwill [Roll Forward] | |
Beginning balance | 97,971 |
Additions, adjustments from business acquisitions | 170 |
Foreign currency translation | (391) |
Ending balance | 97,750 |
Contractor | |
Goodwill [Roll Forward] | |
Beginning balance | 19,145 |
Additions, adjustments from business acquisitions | 409 |
Foreign currency translation | 0 |
Ending balance | $ 19,554 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 3.8 | $ 3.8 | $ 11.8 | $ 11.0 |
Other Current Liabilities - Components of Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Other Current Liabilities Details [Abstract] | ||
Accrued self-insurance retentions | $ 7,870 | $ 7,956 |
Accrued warranty and service liabilities | 11,087 | 10,535 |
Accrued trade promotions | 10,461 | 10,588 |
Payable for employee stock purchases | 8,868 | 10,053 |
Contract with Customer, Liability, Current | 45,074 | 22,632 |
Income taxes payable | 2,003 | 7,564 |
Right of return refund liability | 12,289 | 11,412 |
Other | 32,433 | 31,628 |
Total | $ 130,085 | $ 112,368 |
Other Current Liabilities - Accrued Warranty Activity (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2018
USD ($)
| |
Activity In Accrued Warranty And Service Liabilities Abstract | |
Balance, beginning of year | $ 10,535 |
Charged to expense | 6,116 |
Margin on parts sales reversed | 2,047 |
Reductions for claims settled | (7,611) |
Balance, end of period | $ 11,087 |
Other Current Liabilities - Narrative (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
---|---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted Cash and Cash Equivalents | $ 0 | $ 7,880 | |
Other Current Assets | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted Cash and Cash Equivalents | $ 0 | $ 9,200 |
Fair Value (Details) - USD ($) $ in Thousands |
Sep. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Assets | ||
Total assets at fair value | $ 16,459 | $ 16,128 |
Liabilities | ||
Total liabilities at fair value | 10,083 | 8,434 |
Long term debt, carrying amount | 225,000 | 225,000 |
Long term debt, fair value | 235,000 | 245,000 |
Level 2 | ||
Assets | ||
Cash surrender value of life insurance | 16,404 | 16,128 |
Forward exchange contracts | 55 | 0 |
Liabilities | ||
Deferred compensation | 4,383 | 3,836 |
Forward exchange contracts | 0 | 517 |
Level 3 | ||
Liabilities | ||
Contingent consideration | $ 5,700 | $ 4,081 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 13, 2018 |
Sep. 28, 2018 |
Sep. 29, 2017 |
Sep. 28, 2018 |
Sep. 29, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Effective Income Tax Rate | 14.00% | 17.00% | |||
Effective Income Tax Rate Reconciliation,Total Decrease | (8.00%) | (4.00%) | |||
Effective Income Tax Rate Reconciliation, Impact of 2017 Tax Cuts and Jobs Act | (10.00%) | (9.00%) | |||
Effective Income Tax Rate Reconciliation, Share-based Compensation, Excess Tax Benefit, Percent | (2.00%) | (3.00%) | (3.00%) | (7.00%) | |
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 40 | ||||
Effective Income Tax Rate Reconciliation, Other Adjustments, Percent | (5.00%) | (6.00%) | (2.00%) | (2.00%) |
Debt (Details) - Revolving Credit Facility [Member] $ in Millions |
Sep. 28, 2018
USD ($)
|
---|---|
Line of Credit Facility [Line Items] | |
Chinese Renminbi Facility Maximum Borrowing Capacity | $ 50 |
Pre-existing Line of Credit Facility, Maximum Borrowing Capacity | $ 500 |
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