Graco 2012 Annual Report Download - page 67

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Stock-Based Compensation
Stock-based compensation expense is adjusted for estimated forfeitures and is recognized on a straight-line basis over the requisite
service period of the award, which is generally three to five years for stock options and one to three years for restricted stock units
and performance-based restricted stock units. The Company estimates future forfeiture rates based on its historical experience.
See Footnote 15 for additional information.
Recent Accounting Pronouncements
Changes to U.S. Generally Accepted Accounting Principles (“US GAAP”) are established by the Financial Accounting Standards
Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The
Company considers the applicability and impact of all ASUs.
In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income,” which requires an entity to present the
total of comprehensive income, the components of net income, and the components of other comprehensive income either in a
single continuous statement of comprehensive income, or in two separate but consecutive statements. Additionally, ASU 2011-05
eliminates the option to present comprehensive income and its components as part of the statement of stockholders’ equity. Effective
January 1, 2012, the Company adopted ASU 2011-05 as amended by ASU 2011-12, “Deferral of the Effective Date for Amendments
to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update
No. 2011-05.” ASU 2011-12 defers the effective date of provisions in ASU 2011-05 that require presentation of reclassifications
out of comprehensive income by income statement line item on the statement of comprehensive income, with all other requirements
of ASU 2011-05 unaffected. The Company adopted ASU 2011-05 and ASU 2011-12 beginning January 1, 2012 and has elected
to present items of net income and other comprehensive income in two consecutive statements.
In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350): Testing Goodwill for
Impairment,” which amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If this is the case, a more detailed
two-step goodwill impairment test will need to be performed which is used to identify potential goodwill impairments and to
measure the amount of goodwill impairment losses to be recognized, if any. ASU 2011-08 is effective for annual and interim
goodwill impairment tests performed by the Company after January 1, 2012. The Company adopted the guidance in ASU 2011-08
for its annual goodwill impairment test performed during 2012, and the adoption of the guidance did not have a material impact
on the Company's goodwill impairment test.
In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment,” which amends existing
guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that an
indefinite-lived intangible asset is impaired. If this is the case, a more detailed fair value calculation will need to be performed
which is used to identify potential impairments and to measure the amount of impairment losses to be recognized, if any. To
perform a qualitative assessment, an entity must identify and evaluate changes in economic, industry and entity-specific events
and circumstances that could affect the significant inputs used to determine the fair value of an indefinite-lived intangible asset.
ASU 2012-02 is effective for annual and interim impairment tests performed by the Company for fiscal years beginning after
September 15, 2012, with early adoption permitted. The Company early adopted the provisions of ASU 2012-02 effective July 1,
2012, which coincided with its annual impairment tests for the year ended December 31, 2012. The adoption of ASU 2012-02 did
not have a material impact on the Company's indefinite-lived intangibles impairment test results.
In January 2013, the FASB issued ASU 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting
Assets and Liabilities.” ASU 2013-01 clarifies that ordinary trade receivables are not in the scope of ASU 2011-11, “Balance
Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” Specifically, ASU 2011-11 applies only to certain
derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions
that are either offset in accordance with specific criteria contained in the accounting standards or subject to a master netting
arrangement or similar agreement. Other types of financial assets and financial liabilities subject to a master netting arrangement
or similar agreement are no longer subject to the disclosure requirements in ASU 2011-11. ASU 2011-11 and ASU 2013-01 are
effective for annual and interim periods beginning after on or after January 1, 2013, and the Company is currently evaluating the
impacts the ASUs may have on its financial statement disclosures in future periods.
In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out
of Accumulated Other Comprehensive Income.” ASU 2013-02 finalizes the requirements of ASU 2011-05 that ASU 2011-12
deferred, clarifying how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU
2013-02 is to be applied prospectively. The Company does not anticipate that the adoption of this ASU will materially change the
presentation of its consolidated financial statements.