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Graco Reports Record Fourth Quarter And Annual Sales - Fourth Quarter Profitability And EPS Growth Driven By Strong Operating Performance

A real-time Webcast of the conference call will be broadcast live over the Internet. Individuals wanting to listen and view slides can access the call at the Company’s website at www.graco.com/ir. Listeners should go to the website at least 15 minutes prior to the live conference call to install any necessary audio software.

For those unable to listen to the live event, a replay will be available soon after the conference call at Graco’s website, or by telephone beginning at approximately 2:00 p.m. ET on January 29, 2013, by dialing 800-406-7325, Conference ID #4587286, if calling within the U.S. or Canada. The dial-in number for international participants is 303-590-3030, with the same Conference ID #. The replay by telephone will be available through February 1, 2013.

Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and coating materials. A recognized leader in its specialties, Minneapolis-based Graco serves customers around the world in the manufacturing, processing, construction and maintenance industries. For additional information about Graco Inc., please visit us at www.graco.com/ir.
 
GRACO INC. AND SUBSIDIARIES
Consolidated Statement of Earnings (Unaudited)
         
Quarter Ended Year Ended
(in thousands, except per share amounts) Dec 28, Dec 30, Dec 28, Dec 30,
2012 2011 2012 2011
Net Sales $ 253,678 $ 215,594 $ 1,012,456 $ 895,283
Cost of products sold   114,790     98,581     461,926     395,078  
Gross Profit 138,888 117,013 550,530 500,205
Product development 12,296 10,846 48,921 41,554
Selling, marketing and distribution 41,720 37,538 163,523 151,276
General and administrative   26,970     21,241     113,409     87,861  
Operating Earnings 57,902 47,388 224,677 219,514
Interest expense 4,992 3,658 19,273 9,131
Other expense (income), net   (5,752 )   6     (11,922 )   655  
Earnings Before Income Taxes 58,662 43,724 217,326 209,728
Income taxes   16,400     13,300     68,200     67,400  
Net Earnings $ 42,262   $ 30,424   $ 149,126   $ 142,328  
 
Net Earnings per Common Share
Basic $ 0.70 $ 0.51 $ 2.47 $ 2.36
Diluted $ 0.68 $ 0.50 $ 2.42 $ 2.32
 
Weighted Average Number of Shares
Basic 60,697 59,723 60,451 60,286
Diluted 61,920 60,635 61,711 61,370
 
Segment Information (Unaudited)
 
Quarter Ended Year Ended
Dec 28, Dec 30, Dec 28, Dec 30,
2012 2011 2012 2011
Net Sales
Industrial $ 156,371 $ 125,205 $ 603,398 $ 501,841
Contractor 69,868 62,068 298,811 290,732
Lubrication   27,439     28,321     110,247     102,710  
Total $ 253,678   $ 215,594   $ 1,012,456   $ 895,283  
 
Operating Earnings
Industrial $ 47,483 $ 40,698 $ 186,129 $ 173,694
Contractor 10,971 6,342 54,310 50,581
Lubrication 5,547 5,276 22,535 18,928
Unallocated Corporate expenses   (6,099 )   (4,928 )   (38,297 )   (23,689 )
Total $ 57,902   $ 47,388   $ 224,677   $ 219,514  
 
 
GRACO INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In thousands)
  Dec 28,   Dec 30,
2012 2011
ASSETS

Current Assets
Cash and cash equivalents $ 31,120 $ 303,150
Accounts receivable, less allowances of $6,600 and $5,500 172,143 150,912
Inventories 121,549 105,347
Deferred income taxes 17,742 17,674
Investment in businesses held separate 426,813 -
Other current assets   7,629   5,887
Total current assets 776,996 582,970
 
Property, Plant and Equipment
Cost 389,067 358,235
Accumulated depreciation   (237,523)   (219,987)
Property, plant and equipment, net 151,544 138,248
 
Goodwill 181,228 93,400
Other Intangible Assets, net 151,773 18,118
Deferred Income Taxes 38,550 29,752
Other Assets   21,643   11,821
Total Assets $ 1,321,734 $ 874,309
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $ 8,133 $ 8,658
Trade accounts payable 28,938 27,402
Salaries and incentives 34,001 32,181
Dividends payable 15,206 13,445
Other current liabilities   65,393   49,596
Total current liabilities 151,671 131,282
 
Long-term Debt 556,480 300,000
Retirement Benefits and Deferred Compensation 137,779 120,287
Deferred Income Taxes 21,690 -
 
Shareholders' Equity
Common stock 60,767 59,747
Additional paid-in-capital 287,795 242,007
Retained earnings 189,297 97,467
Accumulated other comprehensive income (loss)   (83,745)   (76,481)
Total shareholders' equity   454,114   322,740
Total Liabilities and Shareholders' Equity $ 1,321,734 $ 874,309
 
 
GRACO INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
  Year Ended
Dec 28,   Dec 30,
2012 2011
Cash Flows From Operating Activities
Net Earnings $ 149,126 $ 142,328

Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization 38,762 32,483
Deferred income taxes (10,786 ) (1,814 )
Share-based compensation 12,409 10,994
Excess tax benefit related to share-based payment arrangements (4,217 ) (2,195 )
Change in
Accounts receivable (2,752 ) (26,767 )
Inventories 5,941 (13,440 )
Trade accounts payable (952 ) 5,974
Salaries and incentives (4,251 ) (3,469 )
Retirement benefits and deferred compensation 3,209 7,228
Other accrued liabilities 3,288 8,148
Other   (95 )   2,574  
Net cash provided by operating activities   189,682     162,044  
Cash Flows From Investing Activities
Property, plant and equipment additions (18,234 ) (23,854 )
Acquisition of businesses, net of cash acquired (240,068 ) (2,139 )
Investment in businesses held separate (426,813 ) -
Other   (9,405 )   (2,004 )
Net cash used in investing activities   (694,520 )   (27,997 )
Cash Flows From Financing Activities
Borrowings (payments) on short-term lines of credit, net (619 ) 497
Borrowings on long-term notes and line of credit 649,325 402,175
Payments on long-term line of credit (392,845 ) (172,430 )
Payments of debt issuance costs (1,921 ) (1,131 )
Excess tax benefit related to share-based payment arrangements 4,217 2,195
Common stock issued 30,194 22,231
Common stock repurchased (1,378 ) (43,250 )
Cash dividends paid   (54,302 )   (50,646 )
Net cash provided by (used in) financing activities   232,671     159,641  
Effect of exchange rate changes on cash   137     (129 )
Net increase (decrease) in cash and cash equivalents (272,030 ) 293,559
Cash and cash equivalents:
Beginning of year   303,150     9,591  
End of year $ 31,120   $ 303,150  
 

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