Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/17/2015
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Assumptions used to determine the Company’s net periodic benefit cost are shown below:

 

  Pension Benefits   Postretirement Medical Benefits  

Weighted average assumptions            

    2014           2013           2012           2014           2013           2012      

U.S. Plans

Discount rate

  5.0    4.2    4.6    5.0    4.2    4.6 

Rate of compensation increase

  3.0    3.0    3.0    N/A      N/A      N/A   

Expected return on assets

  8.5    8.5    8.5    N/A      N/A      N/A   

Non-U.S. Plans

Discount rate

  2.5    2.3    2.9    N/A      N/A      N/A   

Rate of compensation increase

  1.3    1.2    1.2    N/A      N/A      N/A   

Expected return on assets

  2.0    3.0    3.0  %   N/A      N/A      N/A   

Several sources of information are considered in determining the expected rate of return assumption, including the allocation of plan assets, the input of actuaries and professional investment advisors, and historical long-term returns. In setting the return assumption, the Company recognizes that historical returns are not always indicative of future returns and also considers the long-term nature of its pension obligations.

The Company’s U.S. retirement medical plan limits the annual cost increase that will be paid by the Company to 3 percent. In measuring the accumulated postretirement benefit obligation (APBO), the annual trend rate for health care costs was assumed to be 7.0 percent for 2015, decreasing each year to a constant rate of 4.5 percent for 2026 and thereafter, subject to the plan’s annual increase limitation.

At December 26, 2014, a one percent change in assumed health care cost trend rates would not have a significant impact on the service and interest cost components of net periodic postretirement health care benefit cost or the APBO for health care benefits.

The Company expects to contribute $2.3 million to its unfunded pension plans and $1.2 million to the postretirement medical plan in 2015. The Company will not be required to make contributions to the funded pension plan under minimum funding requirements for 2015. Estimated future benefit payments are as follows (in thousands):

 

  Pension
Benefits
  Postretirement
Medical
Benefits
 

2015

$ 15,290   $ 1,165  

2016

  17,085     1,259  

2017

  16,299     1,310  

2018

  17,417     1,373  

2019

  18,248     1,440  

Years 2020 - 2024

  105,418     7,873  

 

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