Graco Inc.

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SEC Filings

10-Q
GRACO INC filed this Form 10-Q on 10/25/2017
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9.
Other Current Liabilities
Components of other current liabilities were (in thousands):
 
September 29,
2017
 
December 30,
2016
Accrued self-insurance retentions
$
7,164

 
$
7,105

Accrued warranty and service liabilities
9,876

 
8,934

Accrued trade promotions
8,126

 
6,007

Payable for employee stock purchases
7,188

 
9,328

Customer advances and deferred revenue
21,097

 
9,400

Income taxes payable
9,778

 
8,608

Other
27,454

 
22,505

Total
$
90,683

 
$
71,887


The Company manages certain self-insured loss exposures through a wholly-owned captive insurance subsidiary. Cash balances of $7.9 million as of September 29, 2017 and $9.2 million as of December 30, 2016 were restricted to funding of the captive's loss reserves and are included within other current assets on the Company's Consolidated Balance Sheets.

A liability is established for estimated future warranty and service claims that relate to current and prior period sales. The Company estimates warranty costs based on historical claim experience and other factors including evaluating specific product warranty issues. Following is a summary of activity in accrued warranty and service liabilities (in thousands):
Balance, December 30, 2016
$
8,934

Charged to expense
5,708

Margin on parts sales reversed
1,977

Reductions for claims settled
(6,743
)
Balance, September 29, 2017
$
9,876


10.Fair Value

Assets and liabilities measured at fair value on a recurring basis and fair value measurement level were as follows (in thousands):
 
Level   
 
September 29,
2017
 
December 30,
2016
Assets
 
 
 
 
 
Cash surrender value of life insurance
2
 
$
15,480

 
$
13,785

Forward exchange contracts
2
 
513

 
571

Total assets at fair value
 
 
$
15,993

 
$
14,356

Liabilities
 
 
 
 
 
Contingent consideration
3
 
$
4,081

 
$
4,081

Deferred compensation
2
 
3,640

 
3,265

Forward exchange contracts
2
 

 

Total liabilities at fair value
 
 
$
7,721

 
$
7,346


Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.

Contingent consideration liability represents the estimated value (using a probability-weighted expected return approach) of future payments to be made to previous owners of an acquired business based on future revenues.


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