Graco 2012 Annual Report Download - page 104

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98
because there are numerous other parties who will likely share in any costs of remediation and/or damages. However, in the event
of one or more adverse determinations related to this matter, it is possible that the ultimate liability resulting from this matter and
the impact on the Company's results of operations could be material.
Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company
could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the
possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by
the Company may vary from the Company’s estimates.
Although management of the Company cannot predict the ultimate outcome of these proceedings with certainty, it believes that
the ultimate resolution of the Company’s proceedings, including any amounts it may be required to pay in excess of amounts
reserved, will not have a material effect on the Company’s consolidated financial statements, except as otherwise described above.
In the normal course of business and as part of its acquisition and divestiture strategy, the Company may provide certain
representations and indemnifications related to legal, environmental, product liability, tax or other types of issues. Based on the
nature of these representations and indemnifications, it is not possible to predict the maximum potential payments under all of
these agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in
each particular agreement. Historically, payments made by the Company under these agreements did not have a material effect
on the Company’s business, financial condition or results of operations.
As of December 31, 2012, the Company had $45.7 million in standby letters of credit primarily related to the Company’s self-
insurance programs, including workers’ compensation, product liability and medical.
FOOTNOTE 21
Subsequent Events
In January 2013, the Company contributed $100.0 million to its primary U.S. defined benefit pension plan.
In February 2013, the exchange rate for Bolivar Fuertes declined to 6.3 Bolivar Fuertes to U.S. Dollar, and as a result, the Company
expects to record a charge to other expense to reduce the value of the net monetary assets of its Venezuelan operations that are
denominated in Bolivar Fuertes.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. As of December 31, 2012, an evaluation was performed by the Company’s
management, under the supervision and with the participation of the Company’s chief executive officer and chief financial
officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the chief executive
officer and the chief financial officer concluded that the Company’s disclosure controls and procedures were effective.
(b) Management’s Report on Internal Control Over Financial Reporting. The Company’s management’s annual report on internal
control over financial reporting is set forth under Item 8 of this annual report and is incorporated herein by reference.
(c) Attestation Report of the Independent Registered Public Accounting Firm. The attestation report of Ernst & Young LLP, the
Company’s independent registered public accounting firm, on the Company’s internal control over financial reporting is set
forth under Item 8 of this annual report and is incorporated herein by reference.
(d) Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial
reporting that occurred during the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting. The Company is in the process of replacing various
business information systems worldwide with an enterprise resource planning system from SAP. Implementation will continue
to occur in phases, primarily focused on geographic region and segment. This activity involves the migration of multiple
legacy systems and users to a common SAP information platform. In addition, this conversion will impact certain interfaces
with the Company’s customers and suppliers, resulting in changes to the tools the Company uses to take orders, procure
materials, schedule production, remit billings, make payments and perform other business functions.