Graco Inc.

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SEC Filings

10-Q
GRACO INC filed this Form 10-Q on 04/26/2017
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5.Shareholders’ Equity

Changes in components of accumulated other comprehensive income (loss), net of tax were (in thousands):
 
Pension and
Postretirement
Medical
 
Cumulative
Translation
Adjustment
 
Total
Balance, December 25, 2015
$
(69,922
)
 
$
(34,575
)
 
$
(104,497
)
Other comprehensive income before reclassifications

 
(2,402
)
 
(2,402
)
Amounts reclassified from accumulated other comprehensive income
904

 

 
904

Balance, March 25, 2016
$
(69,018
)
 
$
(36,977
)
 
$
(105,995
)
Balance, December 30, 2016
$
(76,426
)
 
$
(65,802
)
 
$
(142,228
)
Other comprehensive income before reclassifications

 
6,318

 
6,318

Amounts reclassified from accumulated other comprehensive income
1,234

 

 
1,234

Balance, March 31, 2017
$
(75,192
)
 
$
(59,484
)
 
$
(134,676
)

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):
 
Three Months Ended
 
March 31,
2017
 
March 25,
2016
Cost of products sold
$
708

 
$
528

Product development
298

 
204

Selling, marketing and distribution
646

 
486

General and administrative
348

 
255

Total before tax
$
2,000

 
$
1,473

Income tax (benefit)
(766
)
 
(569
)
Total after tax
$
1,234

 
$
904


On February 21, 2017, the Company entered into an accelerated share repurchase arrangement (“ASR”) with a financial institution. In exchange for an up-front payment of $90 million, the financial institution delivered 850,000 shares of Company common stock with a fair value of $78 million. The total number of shares ultimately delivered under the ASR 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 (“VWAP”) of the Company’s common stock during that period. If there were no change in the market price of the Company’s stock during the purchase period, the Company would receive approximately 135,000 additional shares at the end of the purchase period.

The Company accounted for the up-front payment as a reduction of shareholders’ equity in the period made. Shares received under the ASR were retired and reflected as a reduction of outstanding shares on the date delivered for purposes of calculating earnings per share. The forward contract aspect of the ASR met all of the applicable criteria for equity classification, and therefore, was accounted for as a derivative indexed to the Company's equity.


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