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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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, June 24, 2016
$
(67,876
)
 
$
(44,612
)
 
$
(112,488
)
Other comprehensive income (loss) before reclassifications

 
(6,642
)
 
(6,642
)
Amounts reclassified from accumulated other comprehensive income
1,088

 

 
1,088

Balance, September 23, 2016
$
(66,788
)
 
$
(51,254
)
 
$
(118,042
)
Balance, June 30, 2017
$
(74,125
)
 
$
(48,455
)
 
$
(122,580
)
Other comprehensive income (loss) before reclassifications

 
574

 
574

Amounts reclassified from accumulated other comprehensive income
1,453

 

 
1,453

Balance, September 29, 2017
$
(72,672
)
 
$
(47,881
)
 
$
(120,553
)
Balance, December 25, 2015
$
(69,922
)
 
$
(34,575
)
 
$
(104,497
)
Other comprehensive income (loss) before reclassifications

 
(16,679
)
 
(16,679
)
Amounts reclassified from accumulated other comprehensive income
3,134

 

 
3,134

Balance, September 23, 2016
$
(66,788
)
 
$
(51,254
)
 
$
(118,042
)
Balance, December 30, 2016
$
(76,426
)
 
$
(65,802
)
 
$
(142,228
)
Other comprehensive income (loss) before reclassifications

 
17,921

 
17,921

Amounts reclassified from accumulated other comprehensive income
3,754

 

 
3,754

Balance, September 29, 2017
$
(72,672
)
 
$
(47,881
)
 
$
(120,553
)

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
 
Nine Months Ended
 
September 29,
2017
 
September 23,
2016
 
September 29,
2017
 
September 23,
2016
Cost of products sold
$
765

 
$
611

 
$
2,093

 
$
1,776

Product development
331

 
241

 
887

 
706

Selling, marketing and distribution
703

 
578

 
1,865

 
1,633

General and administrative
451

 
277

 
1,189

 
842

Total before tax
$
2,250

 
$
1,707

 
$
6,034

 
$
4,957

Income tax (benefit)
(797
)
 
(619
)
 
(2,280
)
 
(1,823
)
Total after tax
$
1,453

 
$
1,088

 
$
3,754

 
$
3,134


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 was determined at the end of the purchase period based on the volume weighted-average price (“VWAP”) of the Company’s common stock during that period. The purchase period ended in the third quarter and the Company received an additional 31,499 shares to complete the ASR at an average realized price of $102.10 per share.

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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