Graco Inc.

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SEC Filings

10-Q
GRACO INC filed this Form 10-Q on 07/26/2017
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The Company recognized year-to-date share-based compensation of $13.5 million in 2017 and $12.7 million in 2016. As of June 30, 2017, there was $16.2 million of unrecognized compensation cost related to unvested options, expected to be recognized over a weighted average period of 2.2 years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:
 
Six Months Ended
 
June 30,
2017
 
June 24,
2016
Expected life in years
7.0

 
7.0

Interest rate
2.2
%
 
1.4
%
Volatility
26.7
%
 
30.1
%
Dividend yield
1.6
%
 
1.8
%
Weighted average fair value per share
$
24.23

 
$
19.00


Under the Company’s Employee Stock Purchase Plan, the Company issued 167,000 shares in 2017 and 170,000 shares in 2016. The fair value of the employees’ purchase rights under this Plan was estimated on the date of grant. The benefit of the 15 percent discount from the lesser of the fair market value per common share on the first day and the last day of the plan year was added to the fair value of the employees’ purchase rights determined using the Black-Scholes option-pricing model with the following assumptions and results:
 
Six Months Ended
 
June 30,
2017
 
June 24,
2016
Expected life in years
1.0

 
1.0

Interest rate
0.9
%
 
0.7
%
Volatility
22.3
%
 
24.6
%
Dividend yield
1.5
%
 
1.7
%
Weighted average fair value per share
$
21.97

 
$
19.14


4.Retirement Benefits

The components of net periodic benefit cost for retirement benefit plans were as follows (in thousands):
 
Three Months Ended
 
Six Months Ended
 
June 30,
2017
 
June 24,
2016
 
June 30,
2017
 
June 24,
2016
Pension Benefits
 
 
 
 
 
 
 
Service cost
$
1,754

 
$
1,915

 
$
3,815

 
$
3,912

Interest cost
3,673

 
3,846

 
7,603

 
7,863

Expected return on assets
(4,112
)
 
(4,368
)
 
(8,464
)
 
(9,005
)
Amortization and other
2,199

 
2,619

 
4,524

 
4,919

Net periodic benefit cost
$
3,514

 
$
4,012

 
$
7,478

 
$
7,689

Postretirement Medical
 
 
 
 
 
 
 
Service cost
$
126

 
$
121

 
$
301

 
$
271

Interest cost
271

 
280

 
546

 
542

Amortization
(55
)
 
(102
)
 
(5
)
 
(240
)
Net periodic benefit cost
$
342

 
$
299

 
$
842

 
$
573



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