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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offered and markets served within the segments. Prior year segment information has been restated to conform to 2015 reporting. A summary of the Company’s reportable segments follows.

The Industrial segment includes our Industrial Products and Applied Fluid Technologies divisions. The Industrial segment markets equipment and pre-engineered packages for moving and applying paints, coatings, sealants, adhesives and other fluids. Markets served include automotive and vehicle assembly and components production, wood and metal products, rail, marine, aerospace, farm, construction, bus, recreational vehicles, and various other industries.

The Process segment includes our Process, Oil and Natural Gas, and Lubrication divisions. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food, lubricants and other fluids. Markets served include food and beverage, dairy, oil and natural gas, pharmaceutical, cosmetics, electronics, wastewater, mining, fast oil change facilities, service garages, fleet service centers, automobile dealerships and industrial lubrication applications.

The Contractor segment remains unchanged. The Contractor segment markets sprayers for architectural coatings for painting, corrosion control, texture, and line striping.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The cost of manufacturing for each segment is based on product cost, and expenses are based on actual costs incurred along with cost allocations of shared and centralized functions based on activities performed, sales or space utilization. Depreciation expense is charged to the manufacturing or operating cost center that utilizes the asset, and is then allocated to segments on the same basis as other expenses within that cost center.

Reportable segments are defined by product. Segments are responsible for development, manufacturing, marketing and sales of their products. This allows for focused marketing and efficient product development. The segments share common purchasing, certain manufacturing, distribution and administration functions.
Reportable Segments (in thousands)
2015
 
2014
 
2013
Net Sales
 
 
 
 
 
Industrial
$
616,069

 
$
622,343

 
$
581,503

Process
273,631

 
223,213

 
179,975

Contractor
396,785

 
375,574

 
342,546

Total
$
1,286,485

 
$
1,221,130

 
$
1,104,024

Operating Earnings
 
 
 
 
 
Industrial
$
201,749

 
$
203,910

 
$
188,641

Process
43,833

 
47,830

 
45,136

Contractor
86,447

 
81,892

 
72,245

Unallocated corporate (expense)
(29,904
)
 
(24,707
)
 
(26,253
)
Total
$
302,125

 
$
308,925

 
$
279,769

Assets
 
 
 
 
 
Industrial
$
558,799

 
$
548,868

 
 
Process
481,677

 
304,903

 
 
Contractor
205,632

 
176,757

 
 
Unallocated corporate
145,244

 
514,250

 
 
Total
$
1,391,352

 
$
1,544,778

 
 

Unallocated corporate (expense) is not included in management’s measurement of segment performance and includes such items as stock compensation, divestiture and certain acquisition transaction costs, bad debt expense, charitable contributions, certain portions of pension expense and certain central warehouse expenses. Unallocated assets include cash, allowances and valuation reserves, deferred income taxes, certain capital items and other assets. Unallocated assets decreased in 2015 due to the sale of the Liquid Finishing business assets (see Note M, Divestiture).

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