Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/16/2016
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In 2014, sales in EMEA increased by 8 percent. Sales in the Industrial segment increased by 6 percent, 20 percent in the Process segment and 5 percent in the Contractor segment. Growth in EMEA came primarily from the developed economies in the West. The emerging markets increased slightly over 2013, with gains in Eastern Europe and the Middle East partially offset by declines in Russia.

In 2014, sales in Asia Pacific grew by 3 percent. Sales increased by 2 percent in the Industrial segment, 5 percent in the Process segment and 3 percent in the Contractor segment. Sales in China grew by 3½ percent, with good growth in the automotive industry. However, we saw a lack of growth in a number of other markets throughout the region and also saw variability in bookings and billings by country and product line.

The following table presents components of net sales change:
 
2015
 
Segment
 
Region
 
 
 
Industrial
 
Process
 
Contractor
 
Americas
 
Europe
 
Asia Pacific
 
Consolidated
Volume and Price
3
 %
 
1
 %
 
9
 %
 
7
 %
 
1
 %
 
 %
 
4
 %
Acquisitions
2
 %
 
26
 %
 
 %
 
5
 %
 
8
 %
 
6
 %
 
6
 %
Currency
(6
)%
 
(4
)%
 
(3
)%
 
(1
)%
 
(13
)%
 
(5
)%
 
(5
)%
Total
(1
)%
 
23
 %
 
6
 %
 
11
 %
 
(4
)%
 
1
 %
 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Segment
 
Region
 
 
 
Industrial
 
Process
 
Contractor
 
Americas
 
Europe
 
Asia Pacific
 
Consolidated
Volume and Price
5
 %
 
8
 %
 
10
 %
 
10
 %
 
5
 %
 
2
 %
 
7
 %
Acquisitions
2
 %
 
17
 %
 
 %
 
6
 %
 
2
 %
 
2
 %
 
4
 %
Currency
 %
 
(1
)%
 
 %
 
(1
)%
 
1
 %
 
(1
)%
 
 %
Total
7
 %
 
24
 %
 
10
 %
 
15
 %
 
8
 %
 
3
 %
 
11
 %

The following table presents an overview of components of operating earnings as a percentage of net sales:
 
2015
 
2014
 
2013
Net Sales
100.0
 %
 
100.0
 %
 
100.0
 %
Cost of products sold
46.8

 
45.4

 
45.0

Gross profit
53.2

 
54.6

 
55.0

Product development
4.5

 
4.4

 
4.7

Selling, marketing and distribution
15.7

 
16.0

 
16.1

General and administrative
9.5

 
8.9

 
8.9

Operating earnings
23.5

 
25.3

 
25.3

Interest expense
1.4

 
1.5

 
1.6

Held separate investment (income), net
(14.9
)
 
(2.1
)
 

Other expense (income), net
0.1

 
0.1

 
(2.5
)
Earnings before income taxes
36.9

 
25.8

 
26.2

Income taxes
10.0

 
7.3

 
7.1

Net Earnings
26.9
 %
 
18.5
 %
 
19.1
 %

2015 Compared to 2014

Operating earnings as a percentage of sales were lower than the prior year, mostly due to changes in currency translation rates and lower margins from acquired operations.

Gross profit margin as a percentage of sales decreased from 2014, mostly due to changes in currency translation rates. Favorable effects of realized pricing and lower material costs offset the impact of lower average gross margin rates of acquired operations.

19

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