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GRACO REPORTS IMPROVED SALES AND OPERATING PROFIT

 MINNEAPOLIS, Oct. 13 /PRNewswire/ -- Graco Inc. (NYSE: GGG) today announced that net sales for the third quarter ended Sept. 24, 1993 were $81,751,000, an increase of 7 percent from last year's third quarter sales of $76,311,000. Operating profit was $5,948,000, an 8 percent improvement over the $5,501,000 for the third quarter of 1992. Net earnings were $3,463,000, or 45 cents per share, equal to $3,462,000, or 45 cents per share for the same period last year.
 Company Chairman and Chief Executive Officer David A. Koch said, "We are pleased with the rebound in the Company's sales in the Americas and the Pacific, and it's improved operating profit. Offsetting these improvements are sales declines in Europe and Japan, resulting from their poor economies."
 GRACO INC. AND SUBSIDIARIES
 (In thousands, except per share amounts)
 3rd Quarter Ended 9 Months Ended
 (13 Weeks) (39 Weeks)
 9/24/93 9/25/92 9/24/93 9/25/92
 Net Sales $81,751 $76,311 $238,977 $235,314
 NET EARNINGS BEFORE
 CHANGES IN ACCOUNTING
 PRINCIPLES 3,463 3,462 10,149 10,206
 Cumulative Effect
 of Change in Accounting
 Principle Relating to
 Postretirement Benefits -- -- -- (6,768)
 Cumulative Effect of
 Change in Accounting
 Principle Relating to
 Income Taxes -- -- -- 924
 NET EARNINGS $3,463 $3,462 $10,149 $4,362
 NET EARNINGS (LOSS) PER
 COMMON SHARE:
 Before Changes in
 Accounting Principles $.45 $.45 $1.32 $1.34
 Changes in Accounting
 Principles -- -- -- (.77)
 Net Earnings $.45 $.45 $1.32 $.57
 Third quarter sales in the Americas increased 15 percent to $52,416,000, led by unit sales increases in the Industrial/Automotive Equipment Division and the Vehicle Services Business Unit, when compared to the same period in 1992. Sales in Europe declined 15 percent to $15,177,000, principally as the result of translation of foreign currency sales at less favorable exchange rates. Sales in the Pacific increased by 11 percent to $14,158,000, with substantially higher unit sales in all countries in this region other than Japan. Unit volume declines in Japan were offset by the stronger yen.
 Gross profit margins decreased to 48 percent of sales in the quarter from 50 percent in the same quarter of 1992 as the result of translation of European sales at less favorable exchange rates.
 Third quarter operating expenses increased slightly from the same period in 1992 as product development expenses increased by 17 percent. Operating profit for the third quarter increased 8 percent when compared to the same quarter in 1992, slightly greater than the increase in sales.
 Other (income) expense, net was unfavorable in the quarter principally due to foreign exchange losses in 1993 as compared to gains in 1992. In spite of the increase in U.S. tax rates, the company's overall tax rate has declined to 32 percent for 1993 because of reduced tax requirements related to foreign earnings.
 Sales for the nine months were $238,977,000, an increase of 2 percent from the same period last year. Sales to customers in the Americas increased 11 percent to $156,884,000. Sales in Europe declined 20 percent to $42,681,000, while sales in the Pacific declined 2 percent to $39,412,000. Backlog at Sept. 24, 1993 was $20 million, a decrease of $3 million from the beginning of the quarter, and down from $29 million at Sept. 25, 1992.
 Results for the first nine months of 1992 reflect the company's adoption of Statements of Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and SFAS 109, Accounting for Income Taxes, effective as of the first day of the 1992 fiscal year. After provisions for cumulative effect of these changes, the company had net earnings of $4,362,000, or 57 cents per share, in the period ended Sept. 25, 1992.
 Koch said, "We are encouraged by the improved tempo of business in the Americas, but remain concerned by the lack of progress in the economies of Europe and Japan. We are taking important steps to increase our rate of new product development while continuing our efforts to control expenses and improve efficiencies. With the current outlook for business conditions in the Americas, we expect to achieve a reasonable level of performance in the fourth quarter."
 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)
 3rd Quarter Ended 9 Months Ended
 (13 Weeks) (39 Weeks)
 9/24/93 9/25/92 9/24/93 9/25/92
 NET SALES $81,751 $76,311 $238,977 $235,314
 Cost of products sold 42,414 38,111 124,110 118,682
 GROSS PROFIT 39,337 38,200 114,867 116,632
 Product development 3,167 2,702 8,809 7,894
 Selling 20,830 20,558 61,061 62,125
 General and administrative 9,392 9,439 27,848 29,437
 OPERATING PROFIT 5,948 5,501 17,149 17,176
 Interest expense 542 626 1,685 2,044
 Other (income) expense,
 net (Note) 343 (837) 615 (1,874)
 EARNINGS BEFORE INCOME
 TAXES AND CHANGES IN
 ACCOUNTING PRINCIPLES 5,063 5,712 14,849 17,006
 Income taxes 1,600 2,250 4,700 6,800
 EARNINGS BEFORE CHANGES IN
 ACCOUNTING PRINCIPLES 3,463 3,462 10,149 10,206
 Cumulative effect of
 change in accounting
 principle relating to
 postretirement benefits -- -- -- (6,768)
 Cumulative effect of change
 in accounting principle
 relating to income taxes -- -- -- 924
 NET EARNINGS $3,463 $3,462 $10,149 $4,362
 EARNINGS (LOSS) PER
 COMMON SHARE:
 Before changes in
 accounting principles $.45 $.45 $1.32 $1.34
 Cumulative effect of change
 in accounting principle
 relating to postretirement
 benefits -- -- -- (.90)
 Cumulative effect of change
 in accounting principle
 relating to income taxes -- -- -- .13
 Net earnings $.45 $.45 $1.32 $.57
 WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES 7,653 7,585 7,636 7,569
 Note: Included in 1992 other (income) is a gain of $1,700,000 resulting from the April 1992 sale of the Company's wholly owned subsidiary, Lockwood Technical, Inc., and a related Japanese joint venture affiliate.
 All figures are subject to audit and adjustment at the end of the fiscal year.
 -0- 10/13/93
 /CONTACT: James A. Graner, 612-623-6635, or David L. Schoeneck, 612-623-6679, both of Graco/
 (GGG)


CO: Graco, Inc. ST: Minnesota IN: SU: ERN

AL-DS -- MN005 -- 1688 10/13/93 12:43 EDT
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Date:Oct 13, 1993
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