Graco Inc.

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SEC Filings

10-K
GRACO INC filed this Form 10-K on 02/21/2017
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Amounts related to pension and postretirement medical adjustments are reclassified to pension cost, which is allocated to cost of products sold and operating expenses based on salaries and wages, approximately as follows (in thousands):
 
2016
 
2015
 
2014
Cost of products sold
$
3,379

 
$
3,370

 
$
1,701

Product development
1,334

 
1,352

 
714

Selling, marketing and distribution
3,033

 
3,109

 
1,371

General and administrative
1,586

 
1,543

 
820

Total before tax
$
9,332

 
$
9,374

 
$
4,606

Income tax (benefit)
(3,667
)
 
(3,353
)
 
(1,495
)
Total after tax
$
5,665

 
$
6,021

 
$
3,111


Subsequent event: On February 21, 2017, the Company entered into an accelerated share repurchase program with a financial institution. In exchange for an up-front payment of $90 million, the financial institution will deliver 850,000 shares of Company common stock. The total number of shares ultimately delivered will be determined at the end of the purchase period (up to five months, but not less than two months) based on the volume weighted average price of the Company’s common stock during that period. The up-front payment will reduce shareholders' equity, and shares received will be retired and reflected as a reduction of outstanding shares on the date delivered for purposes of calculating earnings per share.

H. Share-Based Awards, Purchase Plans and Compensation Cost

Stock Option and Award Plan. The Company has a stock incentive plan under which it grants stock options and share awards to directors, officers and other employees. Option price is the market price on the date of grant. Options become exercisable at such time, generally over three or four years, and in such installments as set by the Company, and expire ten years from the date of grant.

Restricted share awards have been made to certain key employees under the plan. The market value of restricted stock at the date of grant is charged to operations over the vesting period. The Company has a stock appreciation plan that provides for payments of cash to eligible foreign employees based on the change in the market price of the Company’s common stock over a period of time. Compensation cost for restricted shares and the stock appreciation plan is not significant.

Individual nonemployee directors of the Company may elect to receive, either currently or deferred, all or part of their retainer in the form of shares of the Company’s common stock instead of cash. Under this arrangement, the Company issued 6,882 shares in 2016, 5,963 shares in 2015 and 4,867 shares in 2014. The expense related to this arrangement is not significant.

Options on common shares granted and outstanding, as well as the weighted average exercise price, are shown below (in thousands, except exercise prices):
 
Option
Shares
 
Weighted Average
Exercise Price
 
Options
Exercisable
 
Weighted Average
Exercise Price
Outstanding, December 27, 2013
5,149

 
$
41.03

 
3,311

 
$
33.20

Granted
475

 
74.62

 
 
 
 
Exercised
(607
)
 
35.73

 
 
 
 
Canceled
(42
)
 
61.35

 
 
 
 
Outstanding, December 26, 2014
4,975

 
44.72

 
3,318

 
34.86

Granted
543

 
74.19

 
 
 
 
Exercised
(328
)
 
37.28

 
 
 
 
Canceled
(25
)
 
72.01

 
 
 
 
Outstanding, December 25, 2015
5,165

 
48.16

 
3,583

 
38.49

Granted
1,161

 
76.58

 
 
 
 
Exercised
(762
)
 
38.99

 
 
 
 
Canceled
(29
)
 
70.09

 
 
 
 
Outstanding, December 30, 2016
5,535

 
$
55.26

 
3,672

 
$
45.40



45

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