Graco Aligns Operations with Market Conditions
Fourth-Quarter Charges Include Workforce Reduction and Intangible Asset Impairment
MINNEAPOLIS -- Graco Inc. (NYSE: GGG) today announced a workforce reduction as part of its efforts to align operations with current market and economic conditions.
Patrick McHale, Graco's president and chief executive officer, said, "It is impossible to ignore the impact of the global recession on our business and the challenging market that we anticipate in the year ahead. The company's fourth-quarter incoming order rates remain 15 percent to 20 percent below the comparable 2007 period (measured at consistent exchange rates). As a result, we must take the difficult step of reducing our workforce and adjusting our cost structure to meet the current realities of our business. We regret the impact on our employees."
The workforce reduction will affect approximately 150 people, or 6 percent of Graco's global employee base. The company expects to take a pretax charge of $5 million related to severance and early retirement costs in the fourth quarter of 2008. The workforce reduction is expected to be complete by early 2009 and is expected to lower the Company's cost structure $9 million. The Company is also reducing capital expenditures and discretionary spending to further control costs.
The Company anticipates impairment charges up to $4 million in the fourth quarter as the decline in business levels is reflected in the review of intangible assets.
As previously announced, the fourth quarter results also include additional expenses of $3 million associated with the roll-out of entry-level paint sprayers to additional paint and home center stores in the fourth quarter.
McHale commented further that, "we believe our long-term prospect for growth is strong and that we will be well-positioned to respond to customer requirements when economic conditions improve. Graco continues to be committed to making strategic investments in new product development, distribution expansion, new markets and strategic acquisitions."
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 spray fluid materials. A recognized leader in its specialties, Minneapolis-based Graco serves customers around the world in the manufacturing, processing, automotive, construction and maintenance industries. For additional information about Graco Inc., please visit us at www.graco.com.
Contacts
Graco Inc.
James A. Graner,
612-623-6635
