lenders and is available for general corporate purposes, working capital needs, share repurchases and
acquisitions. The Company may borrow up to $50 million under the swingline portion of the facility for daily working capital needs.
Under the amended
agreement, the base rate applied to borrowings is an annual rate equal to a margin ranging from zero percent to 0.875 percent (down from zero to 1 percent under the prior agreement), depending on the Companys cash flow leverage ratio, plus the
highest of (i) the banks prime rate, (ii) the federal funds rate plus 0.5 percent or (iii) one-month LIBOR plus 1.5 percent. In general, LIBOR-based loans bear interest at LIBOR plus 1 percent to 1.875 percent (down from 1 to 2
percent), depending on the Companys cash flow leverage ratio. Fees on the undrawn amount of the loan commitment decreased to a range of 0.15 percent to 0.30 percent (down from 0.15 percent to 0.40 percent), depending on the Companys cash
flow leverage ratio.
On October 1, 2014, the Company used proceeds from its revolving line of credit to acquire the stock of Alco Valves Group for
£72 million cash, subject to normal post-closing purchase price adjustments. Alco is a United Kingdom based manufacturer of high quality, high pressure valves used in the oil and natural gas industry and in other industrial processes.
Alcos products and business relationships will enhance Gracos position in the oil and natural gas industry and complement Gracos core competencies of designing and manufacturing advanced flow control technologies. Alco revenues for
the most recent trailing twelve months were approximately £19 million. Results of Alco operations have been included in the Companys Industrial segment starting from the date of acquisition.
Pursuant to a final order from the FTC that became effective on October 9, 2014, Graco must sell the Liquid Finishing business assets acquired in 2012
within 180 days of the effective date. Graco will continue to hold the Liquid Finishing businesses separate and maintain them as viable and competitive until a sale process is complete. The Liquid Finishing business assets are held as a cost-method
investment on Gracos balance sheet, and income is recognized based on dividends received from current earnings. Since the date of acquisition, the Company received $68 million of dividends from current earnings of the Liquid Finishing
businesses, including $28 million in 2014. Once the Company completes the sale of its investment, there will be no further dividends from Liquid Finishing.
On October 8, 2014, the Company announced it had signed a definitive agreement to sell the Liquid Finishing business assets for $590 million cash,
subject to regulatory approval and other customary closing conditions. The sale transaction is expected to close in the first half of 2015, in compliance with the FTCs final decision and order. Graco expects to use the proceeds from the sale
of the Liquid Finishing assets for reduction of outstanding debt, ongoing share repurchases, and to make investments in strategic acquisitions that provide synergistic opportunities.
On December 26, 2014, the Company had $550 million in lines of credit, including the $500 million revolving credit agreement noted above, of which $200
million was unused. Internally generated funds and unused financing sources are expected to provide the Company with the flexibility to meet its liquidity needs in 2015, including its capital expenditure plan of approximately $35 million, planned
dividends (estimated at $70 million) and acquisitions. In January 2015, the Company used proceeds from its revolving line of credit to acquire High Pressure Equipment Holdings, LLC (HiP) for $160 million. The Company completed two additional
business acquisitions in January 2015, for cash consideration totaling approximately $20 million. If acquisition opportunities increase, the Company believes that reasonable financing alternatives are available for the Company to execute on those
In December 2014, the Companys Board of Directors increased the Companys regular common dividend from an annual rate of $1.10
to $1.20 per share, a 9 percent increase.