Graco 2012 Annual Report Download - page 41

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35
of common stock and paid cash consideration of $52.0 million to holders accepting the Exchange Offer. The Company made
payments on medium-term notes and other debt of $108.6 million and made payments of $200.0 million on its Term Loan during
2010.
Aggregate dividends paid were $125.9 million, $84.9 million and $55.4 million for 2012, 2011 and 2010, respectively. The
Company’s Board of Directors approved a 25% increase in the Company’s quarterly dividend from $0.08 per share to $0.10 per
share, effective with the quarterly dividend paid in June 2012, and further increased the quarterly dividend by 50% from $0.10
per share to $0.15 per share, effective with the Company's dividend paid in December 2012.
In August 2011, the Company announced a $300.0 million share repurchase program (the “SRP”). The SRP is authorized to run
for a period of three years ending in August 2014. During 2012, the Company repurchased and retired 4.9 million shares pursuant
to the SRP for $91.5 million.
Capital expenditures were $177.2 million, $222.9 million and $164.7 million for 2012, 2011 and 2010, respectively. The largest
single capital project in all periods was the implementation of SAP, which represented $36.2 million, $65.4 million and $45.3
million of capital expenditures for 2012, 2011 and 2010, respectively.
During 2012 and 2011, the Company paid $26.5 million and $20.0 million, respectively, in connection with acquisitions and
acquisition-related activity.
Cash used for restructuring activities was $48.6 million, $39.5 million and $72.8 million for 2012, 2011 and 2010, respectively,
and is included in the cash provided by operating activities. These payments relate primarily to employee severance, termination
benefits and relocation costs.
In 2012 and 2011, the Company made contributions of $100.8 million and $59.7 million, respectively, to its defined benefit plans.
In 2013, the Company expects to make contributions of $144 million, including $100 million in January 2013 to its primary U.S.
defined benefit pension plan.
Cash Conversion Cycle
The Company defines its cash conversion cycle as the sum of inventory and accounts receivable days outstanding (based on cost
of products sold and net sales, respectively, for the most recent three-month period, including discontinued operations) minus
accounts payable days outstanding (based on cost of products sold for the most recent three-month period, including discontinued
operations) at the end of the year. The following table depicts the Company’s cash conversion cycle at December 31, (in number
of days):
2012 2011 2010
Accounts receivable 67 61 62
Inventory 66 68 69
Accounts payable (50)(46)(47)
Cash conversion cycle 83 83 84
The Company’s cash conversion cycle is impacted by the seasonality of its businesses and generally tends to be longer in the first
and second quarters, based on historical trends, due to inventory build-ups early in the year for seasonal sales activity and credit
terms provided to customers. For 2012, the increase in accounts receivable days is attributable to the timing of sales in the fourth
quarter of 2012 compared to the fourth quarter of 2011, and this increase was offset by the combined improvements in inventory
and accounts payable days. The Company’s cash conversion cycle at December 31, 2012 approximated its cash conversion cycle
at December 31, 2011 and 2010. The Company has leveraged the implementation of SAP in North America to improve working
capital over the past several years, with a focus on reducing the number of days of inventory on hand.
Financial Position
The Company is committed to maintaining a strong financial position through maintaining sufficient levels of available liquidity,
managing working capital, and monitoring the Company’s overall capitalization.
• Cash and cash equivalents at December 31, 2012 were $183.8 million, and the Company had $800.0 million of borrowing
capacity under its revolving credit facility.
• Working capital at December 31, 2012 was $700.3 million compared to $487.1 million at December 31, 2011, and the
current ratio at December 31, 2012 was 1.45:1 compared to 1.29:1 at December 31, 2011. The increase in working capital