Washington, D.C. 20549
Quarterly Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 27, 2003
Commission File Number: 001-9249
| GRACO INC. | ||
|---|---|---|
(Exact name of Registrant as specified in its charter) |
| Minnesota | 41-0285640 | |
(State of incorporation) |
(I.R.S. Employer Identification Number) |
| 88 - 11th Avenue N.E. | ||
| Minneapolis, Minnesota | 55413 | |
(Address of principal executive offices) |
(Zip Code) |
| (612) 623-6000 | ||
(Registrant's telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
| Yes | X | No | ||||
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
| Yes | X | No | ||||
45,800,000 common shares were outstanding as of July 25, 2003.
INDEX
Page Number
| PART I | FINANCIAL INFORMATION | ||
|---|---|---|---|
| Item 1. | Financial Statements | ||
| Consolidated Statements of Earnings | 3 | ||
| Consolidated Balance Sheets | 4 | ||
| Consolidated Statements of Cash Flows | 5 | ||
| Notes to Consolidated Financial Statements | 6-9 | ||
| Item 2. | Management's Discussion and Analysis | ||
| of Financial Condition and | |||
| Results of Operations | 10-12 | ||
| Item 4. | Controls and Procedures | 13 | |
| PART II | OTHER INFORMATION | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 14 | |
| Item 6. | Exhibits and Reports on Form 8-K | 14 | |
| SIGNATURES | 15 | ||
| EXHIBITS | |||
| GRACO INC. AND SUBSIDIARIES | ||
|---|---|---|
| Item I. | CONSOLIDATED STATEMENTS OF EARNINGS | |
| (Unaudited) | ||
| (In thousands except per share amounts) |
| Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||
| June 27, 2003 | June 28, 2002 | June 27, 2003 | June 28, 2002 | |||||||||||
| Net Sales | $ | 146,364 | $ | 132,796 | $ | 266,024 | $ | 240,653 | ||||||
| Cost of products sold | 70,432 | 65,655 | 127,089 | 118,349 | ||||||||||
| Gross Profit | 75,932 | 67,141 | 138,935 | 122,304 | ||||||||||
| Product development | 4,328 | 4,527 | 8,801 | 8,688 | ||||||||||
| Selling, marketing and distribution | 25,288 | 22,096 | 48,185 | 41,888 | ||||||||||
| General and administrative | 10,057 | 8,785 | 18,569 | 16,502 | ||||||||||
| Operating Earnings | 36,259 | 31,733 | 63,380 | 55,226 | ||||||||||
| Interest expense | 112 | 110 | 240 | 260 | ||||||||||
| Other expense (income), net | 84 | 207 | (17 | ) | 204 | |||||||||
| Earnings Before Income Taxes | 36,063 | 31,416 | 63,157 | 54,762 | ||||||||||
| Income taxes | 11,600 | 9,900 | 20,500 | 17,700 | ||||||||||
| Net Earnings | $ | 24,463 | $ | 21,516 | $ | 42,657 | $ | 37,062 | ||||||
| Basic Net Earnings | ||||||||||||||
| Per Common Share | $ | .54 | $ | .45 | $ | .92 | $ | .78 | ||||||
| Diluted Net Earnings | ||||||||||||||
| Per Common Share | $ | .53 | $ | .44 | $ | .90 | $ | .77 | ||||||
| Cash Dividends Declared | ||||||||||||||
| Per Common Share | $ | .08 | $ | .07 | $ | .17 | $ | .15 | ||||||
See notes to consolidated financial statements.
| GRACO INC. AND SUBSIDIARIES | ||
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited) | ||
| (In thousands) |
| June 27, 2003 | Dec. 27, 2002 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 58,746 | $ | 103,333 | ||||
| Accounts receivable, less allowances of $6,100 and $5,600 | 103,556 | 93,617 | ||||||
| Inventories | 36,549 | 30,311 | ||||||
| Deferred income taxes | 13,446 | 12,022 | ||||||
| Other current assets | 1,568 | 1,241 | ||||||
| Total current assets | 213,865 | 240,524 | ||||||
| Property, Plant and Equipment: | ||||||||
| Cost | 224,799 | 219,427 | ||||||
| Accumulated depreciation | (130,088 | ) | (124,474 | ) | ||||
| 94,711 | 94,953 | |||||||
| Intangible Assets, net | 20,996 | 11,860 | ||||||
| Other Assets | 7,658 | 8,513 | ||||||
| $ | 337,230 | $ | 355,850 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Notes payable to banks | $ | 6,015 | $ | 13,204 | ||||
| Trade accounts payable | 12,662 | 13,031 | ||||||
| Salaries, wages and commissions | 12,185 | 14,490 | ||||||
| Accrued insurance liabilities | 10,318 | 10,251 | ||||||
| Accrued warranty and service liabilities | 6,730 | 6,294 | ||||||
| Income taxes payable | 8,232 | 5,583 | ||||||
| Dividends payable | 3,773 | 3,922 | ||||||
| Other current liabilities | 12,712 | 13,439 | ||||||
| Total current liabilities | 72,627 | 80,214 | ||||||
| Retirement Benefits and Deferred Compensation | 29,349 | 28,578 | ||||||
| Deferred Income Taxes | 1,788 | 1,652 | ||||||
| Shareholders' Equity | ||||||||
| Common stock | 45,727 | 47,533 | ||||||
| Additional paid-in capital | 75,503 | 71,277 | ||||||
| Retained earnings | 113,336 | 128,125 | ||||||
| Other, net | (1,100 | ) | (1,529 | ) | ||||
| Total shareholders' equity | 233,466 | 245,406 | ||||||
| $ | 337,230 | $ | 355,850 | |||||
See notes to consolidated financial statements.
| GRACO INC. AND SUBSIDIARIES | ||
|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (Unaudited) | ||
| (In thousands) |
| Twenty-six Weeks Ended | ||||||||
| June 27, 2003 | June 28, 2002 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Earnings | $ | 42,657 | $ | 37,062 | ||||
| Adjustments to reconcile net earnings to net cash provided | ||||||||
| by operating activities | ||||||||
| Depreciation and amortization | 9,199 | 9,416 | ||||||
| Deferred income taxes | (1,214 | ) | (719 | ) | ||||
| Tax benefit related to stock options exercised | 1,200 | 3,300 | ||||||
| Change in: | ||||||||
| Accounts receivable | (6,472 | ) | (9,197 | ) | ||||
| Inventories | (3,042 | ) | 1,677 | |||||
| Trade accounts payable | (1,779 | ) | 1,551 | |||||
| Salaries, wages and commissions | (2,547 | ) | (970 | ) | ||||
| Retirement benefits and deferred compensation | 1,459 | (189 | ) | |||||
| Other accrued liabilities | 1,852 | (2,886 | ) | |||||
| Other | (89 | ) | (275 | ) | ||||
| 41,224 | 38,770 | |||||||
| Cash Flows from Investing Activities | ||||||||
| Property, plant and equipment additions | (7,298 | ) | (3,926 | ) | ||||
| Proceeds from sale of property, plant and equipment | 102 | 271 | ||||||
| Acquisition of business | (13,514 | ) | -- | |||||
| (20,710 | ) | (3,655 | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Borrowings on notes payable and lines of credit | 9,625 | 11,736 | ||||||
| Payments on notes payable and lines of credit | (16,947 | ) | (12,329 | ) | ||||
| Payments on long-term debt | -- | (50 | ) | |||||
| Common stock issued | 6,772 | 11,567 | ||||||
| Common | ||||||||