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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Assumptions used to determine the Company’s net periodic benefit cost are shown below:
 
 
Pension Benefits
 
Postretirement Medical Benefits
Weighted average assumptions            
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
U.S. Plans
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
 
4.7
%
 
4.2
%
 
5.0
%
 
4.7
%
 
4.2
%
 
5.0
%
Rate of compensation increase
 
3.0
%
 
3.0
%
 
3.0
%
 
N/A

 
N/A

 
N/A

Expected return on assets
 
7.5
%
 
7.8
%
 
8.5
%
 
N/A

 
N/A

 
N/A

Non-U.S. Plans
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
 
1.1
%
 
1.4
%
 
2.5
%
 
N/A

 
N/A

 
N/A

Rate of compensation increase
 
1.3
%
 
1.3
%
 
1.3
%
 
N/A

 
N/A

 
N/A

Expected return on assets
 
2.0
%
 
2.0
%
 
2.0
%
 
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 6.8 percent for 2017, decreasing each year to a constant rate of 4.5 percent for 2038 and thereafter, subject to the plan’s annual increase limitation.

At December 30, 2016, 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 $1.0 million to its unfunded pension plans and $1.4 million to the postretirement medical plan in 2017. The Company will not be required to make contributions to the funded pension plan under minimum funding requirements for 2017. Estimated future benefit payments are as follows (in thousands):
 
Pension
Benefits
 
Postretirement
Medical Benefits
2017
$
15,968

 
$
1,387

2018
16,804

 
1,486

2019
17,376

 
1,580

2020
18,907

 
1,694

2021
19,564

 
1,748

Years 2022-2026
112,333

 
9,369


K. Commitments and Contingencies

Lease Commitments. Aggregate annual rental commitments under operating leases with noncancelable terms of more than one year were as follows at December 30, 2016 (in thousands):
 
Buildings
 
Vehicles &
Equipment
 
Total
2017
$
4,799

 
$
2,521

 
$
7,320

2018
4,373

 
1,814

 
6,187

2019
3,936

 
1,280

 
5,216

2020
3,417

 
736

 
4,153

2021
2,025

 
550

 
2,575

Thereafter
5,128

 
499

 
5,627

Total
$
23,678

 
$
7,400

 
$
31,078



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