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GRACO REPORTS 1991 OPERATING RESULTS

 GRACO REPORTS 1991 OPERATING RESULTS
 MINNEAPOLIS, Feb. 18 /PRNewswire/ -- Graco Inc. (NYSE: GGG) today


announced operating results for its fiscal year (52 weeks) ended Dec. 27, 1991. Consolidated net sales for the year amounted to $311,874,000, a decline of 3 percent from $321,263,000 last year. Net earnings for the year were $8,946,000 or $1.18 per share compared with $17,713,000 or $2.44 per share last year, a decline in net earnings of 49 percent.
 Company Chairman and Chief Executive Officer David A. Koch said, "Our sales decline in 1991 results principally from the sale of the Company's spray painting robot business at mid-year. Excluding from the comparison approximately $9 million of GRI 1990 sales revenues not replaced in 1991, sales in 1991 were about even with last year. The effects of the U.S. recession on our principal domestic markets and flat sales in Europe offset generally healthy growth trends in other international markets. Lower earnings for 1991 reflect our loss on the sale of the robotics business, higher product costs as a result of reduced manufacturing levels, and increased operating expenses," Koch said.
 On June 28, 1991, the company sold certain assets of its wholly owned subsidiary, Graco Robotics, Inc. (GRI). A $2,400,000 loss on the sale of the GRI business is reflected in operating results for the year. While no longer a manufacturer of spray painting robots, Graco continues to supply a broad range of equipment and systems to the product finishing industry.
 Sales to customers in the U.S. in 1991 amounted to $160,515,000, down from $182,008,000 last year, a decline of 12 percent. In addition to the reduction of approximately $4 million of robotics revenues in the U.S., the company's sales to the construction-related painting contractor equipment market posted a substantial decline. While sales of equipment to most other U.S. industrial markets were down from the prior year, automotive systems sales experienced an improvement from 1990 levels.
 International sales in 1991 increased 9 percent to $151,359,000 from $139,255,000 last year. Strong automotive systems sales in Japan and improved sales in other markets in the Pacific, Canada, and Latin America were partially offset by flat sales in Europe and a reduction of approximately $5 million in robotic systems revenues. International sales represented 49 percent of consolidated net sales for the year.
 Operating profit declined 41 percent to $19,331,000 from $32,951,000 last year. A reduction in the gross profit margin to 49 percent of net sales from last year's 50 percent level contributed to reduced profitability. Higher product costs resulting from lower production levels and the related unabsorbed manufacturing burden exceeded price increases during the year. Operating expenses increased 5 percent to $132,013,000 in 1991 from $126,147,000 in 1990.
 During the fourth quarter (13 weeks) ended Dec. 27, 1991, consolidated net sales were $78,034,000, a decline of 18 percent from $95,409,000 last year. Sales to customers in the U.S. were $33,739,000 compared with $53,070,000 in the 1990 period, a decline of 36 percent from unusually strong sales in last year's fourth quarter resulting from a successful domestic sales promotion program. International sales increased 5 percent and amounted to $44,295,000, up from $42,339,000 last year, and represented 57 percent of consolidated net sales during the period. Net earnings for the fourth quarter were $2,230,000, or 29 cents per share compared with $6,015,000, or 83 cents per share last year, a decline in net earnings of 63 percent.
 Consolidated backlog at Dec. 27, 1991, declined to approximately $32 million from $36 million at the end of 1990, including a reduction of robotics backlog of $6 million. Backlog was unchanged from the end of the prior quarter.
 Chairman Koch said, "We have experienced a difficult year in many of our major markets, but enter 1992 in a strong financial position and with renewed focus on our core businesses. We expect to see a gradual recovery in our principal U.S. markets during the course of 1992. An improved domestic economy and continued expansion overseas should permit us to resume growth of our core businesses and achieve increased profitability."
 Graco Inc. supplies technology and expertise for the management of fluids in both industrial and commercial applications. It designs, manufactures and markets systems and equipment to move, measure, control, dispense and apply fluid materials. A recognized leader in its specialties, Minneapolis-based Graco serves customers around the world in the manufacturing, processing, construction and maintenance industries.
 GRACO INC. AND SUBSIDIARIES
 Consolidated Statements of Earnings
 (In thousands, except per share amounts)
 12 Months Ended Fourth Quarter Ended
 12/27/91 12/28/90 12/27/91 12/28/90
 Net sales $311,874 $321,263 $78,034 $95,409
 Cost of products sold 160,530 162,165 39,321 50,362
 Gross profit 151,344 159,098 38,713 45,047
 Product development 11,979 11,715 2,924 3,043
 Selling 80,087 74,810 20,928 19,621
 General and
 administrative (Note) 39,947 39,622 10,046 11,756
 Operating profit 19,331 32,951 4,815 10,627
 Interest expense 3,723 3,492 956 969
 Other expense, net 262 446 129 543
 Earnings before income
 taxes 15,346 29,013 3,730 9,115
 Income taxes 6,400 11,300 1,500 3,100
 Net earnings $ 8,946 $ 17,713 $ 2,230 $ 6,015
 Net earnings per common
 share $1.18 $2.44 $.29 $.83
 Weighted average number
 of common shares 7,506 7,223 7,507 7,215
 Included in 1991 general and administrative expenses is $2,400,000 in costs associated with the sale of the robotics business.
 -0- 2/18/92
 /CONTACT: Roger L. King, 612-623-6700, or David L. Schoeneck, 612-623-6679, both of Graco/
 (GGG) CO: Graco, Inc. ST: Minnesota IN: SU: ERN


AL -- MN007 -- 9850 02/18/92 10:45 EST
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Date:Feb 18, 1992
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