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Grainger Reports Record Results for Year Ended December 31, 2012



       Grainger Reports Record Results for Year Ended December 31, 2012

Company Reaffirms 2013 Earnings Per Share Guidance of $10.85 to $12.00

2012 Highlights

-Sales of $9.0 billion, up 11 percent

- Reported EPS of $9.52, up 5 percent

-Adjusted EPS of $10.43, up 15 percent

-Operating cash flow of $816 million, up 9 percent

-Named to 2013 FORTUNE 100 Best Companies to Work For® list

PR Newswire

CHICAGO, Jan. 24, 2013

CHICAGO, Jan. 24, 2013 /PRNewswire/ -- Grainger (NYSE: GWW) today reported
record results for the year ended December 31, 2012.  Sales of $9.0 billion
increased 11 percent versus $8.1 billion in 2011.  Net earnings of $690
million increased 5 percent versus $658 million in 2011.  Earnings per share
of $9.52 increased 5 percent versus $9.07 in 2011.  The years 2012 and 2011
included the following items:

                                         Twelve Months Ended

                                         December 31, 
                                         2012         2011    % Change
 Diluted Earnings Per Share as reported: $9.52        $9.07   5%
    GSA/USPS settlement                  0.66
    Restructuring                        0.18
    Alliance impairment                  0.04
    Charge for U.S. branch closures      0.03         0.16
    Settlement of prior year tax reviews              (0.12)
    Gain on sale of joint venture                     (0.07)
          Subtotal                       0.91         (0.03)
 Diluted Earnings Per Share as adjusted: $10.43       $9.04   15%

"It was a record year for Grainger," said Chairman, President and Chief
Executive Officer Jim Ryan.  "Despite a slowing of business activity in the
back half of the year, particularly in late December when uncertainty
surrounding the economy and the fiscal cliff virtually paralyzed many
businesses and government institutions, we achieved solid results while
continuing to invest for future growth.  For the full year, we invested an
additional $70 million in expanding our product line and sales force,
enhancing eCommerce capabilities, increasing inventory management services and
expanding our international presence," Ryan added.

Ryan concluded, "As we look forward to 2013, we remain confident in our
strategy and our ability to provide the best service and gain share in the MRO
industry.  While we were disappointed in our earnings leverage for the
quarter, we are encouraged by the strong sales rebound we've seen thus far in
January, despite a very difficult comparison with 2012."   The company
reiterated its 2013 earnings per share guidance of $10.85 to $12.00 and raised
its 2013 sales guidance to a new range of 3 to 9 percent growth.  The
company's previous 2013 sales guidance was 2 to 8 percent growth issued on
November 14, 2012.  The increase in sales guidance reflects the December 31,
2012, acquisition of Techni-Tool, Inc. which had sales in 2011 of $88 million.

During 2012, Grainger reached the following milestones relative to the
company's growth drivers:

  o eCommerce:  Posted $2.7 billion in eCommerce sales, representing 30
    percent of total company sales and an increase of 23 percent versus the
    prior year.
  o Sales Force Expansion:  Added 160 new sales representatives and
    contributed approximately 1 percentage point to company sales growth for
    the year.
  o Inventory Management:  Increased the number of U.S. customer KeepStock
    installations by 30 percent, ending the year at approximately 40,000
    installations.
  o Product Line Expansion:  Added more than 80,000 new products to the iconic
    Grainger U.S. catalog, bringing the total number of products in the 2012
    printed catalog to more than 413,000.
  o International:  Surpassed $1 billion in sales in Canada and expanded the
    company's presence in Latin America by entering Brazil with the
    acquisition of AnFreixo.

For the full year, the company generated $816 million in operating cash flow
versus $746 million in 2011.  Capital expenditures for the year were $250
million versus $197 million in 2011, driven primarily by investments to expand
the distribution center network in North America.  The company also used cash
to fund two acquisitions.  For the full year, Grainger bought back
approximately 1.7 million shares of stock for $341 million and has 5.3 million
shares remaining under the current repurchase authorization.  Dividends paid
in 2012 totaled $220 million.  For the full year, Grainger returned $561
million in cash to shareholders in the form of dividends and share
repurchases. 

2012 Fourth Quarter

Sales for the 2012 fourth quarter of $2.2 billion increased 7 percent versus
$2.1 billion in the 2011 fourth quarter.  Net earnings of $156 million
increased 5 percent versus $148 million in 2011.  Fourth quarter earnings per
share of $2.17 increased 6 percent versus $2.04 in 2011.   The 2012 and 2011
fourth quarters included the following items:

                                        Three Months Ended

                                        December 31,
                                        2012      2011     % Change
Diluted Earnings Per Share as reported: $ 2.17    $2.04    6%
   Restructuring                        0.18
   Alliance impairment                  0.04
   Charge for U.S. branch closures      0.03      0.16
   Gain on sale of joint venture                  (0.07)
         Subtotal                       0.25      0.09
Diluted Earnings Per Share as adjusted: $2.42     $2.13    14%

During the quarter, the company incurred restructuring charges of $0.18 per
share primarily related to improving the long-term performance of the
businesses in Europe, India and China and $0.03 per share related to branch
closures in the United States.  The company also recorded an impairment charge
of $0.04 per share related to Alliance Energy Solutions, an acquisition
completed in November 2009.  These items combined in the 2012 fourth quarter
represented a $0.25 reduction to earnings per share, resulting in adjusted EPS
of $2.42.  The 2011 fourth quarter included a $0.16 per share charge from the
closure of 27 branches in the U.S business, and a $0.07 per share gain from
the sale of the company's investment in MRO Korea.  These two items combined
in the 2011 fourth quarter represented a $0.09 net reduction to earnings per
share, resulting in adjusted EPS of $2.13.  Excluding the items noted above
from both years, net earnings for the quarter increased 12 percent and
earnings per share increased 14 percent versus the prior year.

There were 64 selling days in the 2012 fourth quarter versus 63 in the 2011
quarter.  On a daily basis, sales increased 6 percent with 6 percent daily
sales growth in October, 8 percent in November and 2 percent in December.  The
6 percent daily sales growth for the quarter consisted of 3 percentage points
from price, 2 percentage points from volume, 1 percentage point from Hurricane
Sandy-related sales, 1 percentage point from acquisitions, offset by a
1 percentage point decline attributable to the timing of the December
holidays.  As part of its customer service promise, Grainger was open for
business on Monday, December 24^th and Monday, December 31^st.  Although sales
activity was light on these two days, they are included in the 64 selling days
for the quarter and the 20 selling days for the month of December.  In
addition to the timing of the holidays, concerns regarding the fiscal cliff
led many businesses and institutions to implement extended facility shutdowns
and employee furloughs in late December and early January.  

Company operating earnings of $258 million for the 2012 fourth quarter
increased 17 percent versus $221 million in the 2011 quarter.  Excluding the
items noted in the table above from both years, company operating earnings
increased 18 percent.  The increase in operating earnings was driven by the
7 percent sales increase and operating expense leverage as expenses grew at a
slower rate than sales.  Net earnings and earnings per share for the 2012
fourth quarter reflected a higher tax rate versus the prior year.  The
effective tax rate for the quarter was 37.6 percent versus 32.9 percent in the
2011 fourth quarter.  The lower tax rate in 2011 is discussed later in this
release.

The company has two reportable business segments, the United States and
Canada, which represented approximately 88 percent of company sales for the
quarter.  The remaining operating units located primarily in Asia, Europe, and
Latin America are included in Other Businesses and are not reportable
segments.  

United States

Sales in the United States segment increased 5 percent, 4 percent on a daily
basis, in the 2012 fourth quarter versus the prior year.  The 4 percent daily
sales growth was driven by 3 percentage points from price, 1 percentage point
from volume, 1 percentage point from Hurricane Sandy-related sales, offset by
a 1 percentage point decline from the timing of the holidays in December as
noted above.  Daily sales increased 4 percent in October, 6 percent in
November and declined 1 percent in December.  The manufacturing, commercial
and government customer end markets contributed to the sales growth in the
quarter.

Operating earnings for the United States segment increased 17 percent in the
quarter driven by the 5 percent sales growth, higher gross profit margins and
positive expense leverage.  Gross profit margins for the quarter increased
50 basis points driven by price inflation exceeding product cost inflation,
partially offset by negative customer mix.  Positive expense leverage was
driven by the 5 percent sales growth versus a 1 percent increase in operating
expenses. Excluding $10 million in restructuring and impairment charges
related to the United States in the 2012 fourth quarter and $18 million in
charges related to branch closures in the 2011 fourth quarter, operating
earnings for the United States segment increased 12 percent.

Canada

Sales in the 2012 fourth quarter at Acklands-Grainger increased 14 percent, 13
percent on a daily basis.  The 13 percent daily sales growth consisted of 8
percentage points from volume,  4 percentage points from foreign exchange, 1
percentage point from price, 1 percentage point from sales of seasonal
products, offset by a 1 percentage point decline from December holiday
timing.  In local currency, sales increased 11 percent, 9 percent on a daily
basis.  Daily sales in local currency increased 12 percent in October,
8 percent in November and 5 percent in December.  The sales increase for the
quarter in Canada was led by strong growth to customers in the commercial,
construction, oil and gas, and utilities end markets.

Operating earnings in Canada increased 2 percent in the 2012 fourth quarter. 
This increase was driven by favorable foreign exchange, modest expense
leverage, partially offset by lower gross profit margins.  The gross profit
margin in Canada declined 150 basis points versus the prior year.  The decline
was primarily due to an unfavorable customer and product mix.

Other Businesses

Sales for the Other Businesses, which includes operations primarily in Asia,
Europe and Latin America, increased 16 percent, 14 percent on a daily basis,
for the 2012 fourth quarter versus the prior year.  This increase was
primarily due to strong revenue growth in Japan and the incremental sales from
the acquired business in Brazil.  Excluding Brazil, daily sales for the Other
Businesses increased 10 percent. 

The Other Businesses posted a $10.4 million operating loss in the 2012 fourth
quarter versus a $5 million profit in the 2011 fourth quarter.  During the
quarter, the company announced structural changes to the businesses in Europe,
India and China to improve long-term performance, resulting in $13.7 million
in restructuring charges.  Excluding these charges, the Other Businesses would
have generated $3.3 million in operating earnings in the 2012 fourth quarter
driven by the businesses in Japan and Mexico. This was partially offset by
modest operating losses from the businesses in Brazil and Europe, before the
restructuring charges.

Other

Other income and expense was a net expense of $5 million in the 2012 fourth
quarter versus net income of $5 million in the 2011 fourth quarter.  In 2011,
other income and expense included a $8 million pre-tax gain on the sale of
Grainger's 49 percent ownership in the MRO Korea joint venture that was
recognized in the 2011 fourth quarter. 

For the quarter, the effective tax rate in 2012 was 37.6 percent versus
32.9 percent in 2011.  The fourth quarter of 2011 included a benefit from the
tax law change in Japan.   For the year, the effective tax rate in 2012 was
37.5 percent versus 36.6 percent in 2011.  In addition to the 2011 fourth
quarter favorability, the company settled various tax reviews providing
further benefit to the 2011 effective tax rate.  Excluding these benefits in
2011, the effective tax rate was 38.1 percent. The effective tax rate in 2012
benefited primarily from a lower blended state tax rate.  The company is
currently projecting an effective tax rate of 37.3 to 37.7 percent for the
year 2013.

Cash Flow

Operating cash flow was $240 million in the 2012 fourth quarter versus $186
million in the 2011 fourth quarter.  The company used cash from operations to
fund capital expenditures of $95 million in the quarter versus $66 million in
the fourth quarter of 2011.  In the 2012 fourth quarter, Grainger returned
$102 million to shareholders through $58 million in dividends and $44 million
to buy back 228,000 shares of stock.  

W.W. Grainger, Inc. with 2012 sales of $9.0 billion is North America's leading
broad line supplier of maintenance, repair and operating products, with
expanding global operations.

Visit www.grainger.com/investor to view information about the company,
including a history of daily sales by segment and a podcast regarding 2012
fourth quarter results. The Grainger Industrial Supply  website also includes
more information on Grainger's proven growth drivers, including product line
expansion, sales force expansion, eCommerce, inventory services and
international expansion.

Forward-Looking Statements

This document contains forward-looking statements under the federal securities
law.  Forward-looking statements relate to the company's expected future
financial results and business plans, strategies and objectives and are not
historical facts.  They are generally identified by qualifiers such as
"projecting", "earnings per share guidance", "EPS guidance", "sales guidance",
or similar expressions. There are risks and uncertainties, the outcome of
which could cause the company's results to differ materially from what is
projected.  The forward-looking statements should be read in conjunction with
the company's most recent annual report, as well as the company's Form 10-K,
Form 10-Q and other reports filed with the Securities & Exchange Commission,
containing a discussion of the company's business and various factors that may
affect it.

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands, except for per share amounts)
                                                   Three Months Ended          Twelve Months Ended
                                                   December 31,                December 31,
                                                   2012          2011          2012          2011
Net sales                                          $ 2,226,120   $ 2,076,904   $ 8,950,045   $ 8,078,185
Cost of merchandise sold                           1,256,595     1,171,119     5,033,885     4,567,393
Gross profit                                       969,525       905,785       3,916,160     3,510,792
Warehousing, marketing and administrative expenses 711,087       684,292       2,785,035     2,458,363
Operating earnings                                 258,438       221,493       1,131,125     1,052,429
Other income and (expense)
Interest income                                    756           508           2,660         2,068
Interest expense                                   (5,360)       (2,654)       (16,078)      (9,091)
Equity in net income of unconsolidated entity      —             53            —             314
Gain on sale of investment in unconsolidated       —             7,639         —             7,639
entity
Other non-operating income and (expense)           (7)           (961)         82            (1,832)
Total other income and (expense)                   (4,611)       4,585         (13,336)      (902)
Earnings before income taxes                       253,827       226,078       1,117,789     1,051,527
Income taxes                                       95,341        74,370        418,940       385,115
Net earnings                                       158,486       151,708       698,849       666,412
Net earnings attributable to noncontrolling        2,219         3,224         8,968         7,989
interest
Net earnings attributable to W.W. Grainger, Inc.   $ 156,267     $ 148,484     $ 689,881     $ 658,423
Earnings per share
                                                   $ 2.21        $ 2.08        $ 9.71        $ 9.26
  -Basic
  -Diluted                                         $ 2.17        $ 2.04        $ 9.52        $ 9.07
Average number of shares outstanding
                                                   69,557        69,895        69,812        69,691
  -Basic
  -Diluted                                         70,809        71,385        71,182        71,176
Diluted Earnings Per Share
Net earnings as reported                           $ 156,267     $ 148,484     $ 689,881     $ 658,423
Earnings allocated to participating securities     (2,705)       (2,724)       (12,181)      (12,654)
Net earnings available to common shareholders      $ 153,562     $ 145,760     $ 677,700     $ 645,769
Weighted average shares adjusted for dilutive      70,809        71,385        71,182        71,176
securities
Diluted earnings per share                         $ 2.17        $ 2.04        $ 9.52        $ 9.07

 

 

SEGMENT RESULTS (Unaudited)
(In thousands of dollars)
                                Three Months Ended            Twelve Months Ended

                                December 31,                   December 31,
                                2012           2011           2012           2011
Sales
United States                   $ 1,706,283    $ 1,622,761    $ 6,925,842    $ 6,501,343
Canada                          280,339        245,140        1,105,782      992,823
Other Businesses                263,858        226,898        1,006,762      647,666
Intersegment sales              (24,360)       (17,895)       (88,341)       (63,647)
Net sales to external customers $ 2,226,120    $ 2,076,904    $ 8,950,045    $ 8,078,185
Operating earnings
United States                   $ 276,021      $ 236,458      $ 1,132,722    $ 1,066,324
Canada                          29,910         29,388         127,412        107,582
Other Businesses                (10,448)       5,408          20,289         30,984
Unallocated expense             (37,045)       (49,761)       (149,298)      (152,461)
Operating earnings              $ 258,438      $ 221,493      $ 1,131,125    $ 1,052,429
Company operating margin        11.6        %  10.7        %  12.6        %  13.0        %
ROIC* for Company                                             29.1        %  31.9        %
ROIC* for United States                                       45.8        %  46.9        %
ROIC* for Canada                                              22.5        %  20.8        %
*The GAAP financial statements are the source for all amounts used in the Return on
Invested Capital (ROIC) calculation. ROIC is calculated using operating earnings divided
by net working assets (a 5-point average for the year). Net working assets are working
assets minus working liabilities defined as follows: working assets equal total assets
less cash equivalents (5-point average of $220.8 million), deferred taxes, and investments
in unconsolidated entities, plus the LIFO reserve (5-point average of $367.1 million).
Working liabilities are the sum of trade payables, accrued compensation and benefits,
accrued contributions to employees' profit sharing plans, and accrued expenses.

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Preliminary
(In thousands of dollars)
                                                    At December 31,
Assets                                              2012          2011
Cash and cash equivalents (1)                       $ 452,063     $ 335,491
Accounts receivable – net                           940,020       888,697
Inventories                                         1,301,935     1,268,647
Prepaid expenses and other assets                   150,655       154,655
Deferred income taxes                               55,967        47,410
Total current assets                                2,900,640     2,694,900
Property, buildings and equipment – net             1,144,573     1,060,295
Deferred income taxes                               51,536        100,830
Goodwill                                            543,670       509,183
Other assets and intangibles – net                  374,179       350,854
Total assets                                        $ 5,014,598   $ 4,716,062
Liabilities and Shareholders' Equity
Short-term debt                                     $ 79,071      $ 119,970
Current maturities of long-term debt (2)            18,525        221,539
Trade accounts payable                              428,782       477,648
Accrued compensation and benefits                   165,450       207,010
Accrued contributions to employees' profit sharing  170,434       159,950
plans
Accrued expenses                                    204,800       178,652
Income taxes payable                                12,941        23,156
Total current liabilities                           1,080,003     1,387,925
Long-term debt (2)                                  467,048       175,055
Deferred income taxes and tax uncertainties         119,280       100,218
Employment-related and other non-current            230,901       328,585
liabilities (3)
Shareholders' equity (4)                            3,117,366     2,724,279
Total liabilities and shareholders' equity          $ 5,014,598   $ 4,716,062

(1) Cash and cash equivalents increased $117 million, or 35%, primarily due
    to strong operating cash flow.
    The decrease in current maturities of long-term debt and the corresponding
(2) increase in long-term debt were due to the refinancing of an existing bank
    term loan.
    Accrued employment-related benefits decreased $98 million, or 30%,
(3) primarily due to amendment changes to the company's retiree benefit plan
    resulting in a lower liability.
(4) Common stock outstanding as of December 31, 2012 was 69,478,495 shares as
    compared with 69,962,852 shares at December 31, 2011.

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Preliminary
(In thousands of dollars)
                                                        Twelve Months Ended

                                                        December 31,
                                                        2012        2011
Cash flows from operating activities:
Net earnings                                            $ 698,849   $ 666,412
Provision for losses on accounts receivable             9,504       4,761
Deferred income taxes and tax uncertainties             12,343      1,666
Depreciation and amortization                           159,049     149,200
Stock-based compensation                                55,500      54,020
Gain on sale of investment of unconsolidated entity     —           (7,639)
Change in operating assets and liabilities – net of
business acquisitions
Accounts receivable                                     (45,953)    (85,083)
Inventories                                             (14,872)    (219,680)
Prepaid expenses and other assets                       8,346       (24,228)
Trade accounts payable                                  (54,314)    86,395
Other current liabilities                               (58,673)    50,718
Current income taxes payable                            (9,349)     16,827
Accrued employment-related benefits cost                45,795      45,680
Other – net                                             9,970       7,059
Net cash provided by operating activities               816,195     746,108
Cash flows from investing activities:
Additions to property, buildings and equipment          (249,860)   (196,942)
Proceeds from sale of property, buildings and equipment 8,530       7,278
Net cash paid for business acquisitions                 (64,808)    (359,296)
Other – net                                             482         13,892
Net cash used in investing activities                   (305,656)   (535,068)
Cash flows from financing activities:
Borrowings under lines of credit                        161,160     218,885
Payments against lines of credit                        (205,006)   (194,325)
Proceeds from issuance of long-term debt                300,000     172,464
Payments of long-term debt and commercial paper         (219,950)   (179,296)
Proceeds from stock options exercised                   72,084      84,337
Excess tax benefits from stock-based compensation       57,885      52,098
Purchase of treasury stock                              (340,532)   (151,082)
Cash dividends paid                                     (220,077)   (180,527)
Net cash used in financing activities                   (394,436)   (177,446)
Exchange rate effect on cash and cash equivalents       469         (11,557)
Net change in cash and cash equivalents                 116,572     22,037
Cash and cash equivalents at beginning of year          335,491     313,454
Cash and cash equivalents at end of period              $ 452,063   $ 335,491

 

 

SUPPLEMENTAL INFORMATION - CONSOLIDATED STATEMENTS OF EARNINGS
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands of dollars)

The company supplemented the reporting of financial information determined
under U.S. generally accepted accounting principles (GAAP) with certain
non-GAAP financial measures, which the company refers to as "adjusted"
measures, including adjusted operating earnings, adjusted segment operating
earnings, adjusted net earnings and adjusted diluted earnings per share. 
Adjusted measures exclude items that may not be indicative of core operating
results.  The company believes that these non-GAAP measures provide meaningful
information to assist shareholders in understanding financial results and
assessing prospects for future performance.  Management believes adjusted
operating earnings, adjusted net earnings and adjusted diluted earnings per
share are important indicators of operations because they exclude items that
may not be indicative of our core operating results, and provide a better
baseline for analyzing trends in our underlying businesses.  Because non-GAAP
financial measures are not standardized, it may not be possible to compare
these financial measures with other companies' non-GAAP financial measures
having the same or similar names.  These adjusted financial measures should
not be considered in isolation or as a substitute for reported results.  These
non-GAAP financial measures reflect an additional way of viewing aspects of
operations that, when viewed with GAAP results, provide a more complete
understanding of the business.  The company strongly encourages investors and
shareholders to review company financial statements and publicly-filed reports
in their entirety and not to rely on any single financial measure.

The reconciliation provided below reconciles the non-GAAP financial measures
adjusted net earnings, adjusted diluted earnings per share, adjusted operating
earnings, and adjusted segment operating earnings with GAAP financial
measures:

 

                      Three Months Ended           Twelve Months Ended

                      December 31,                 December 31,
                      2012        2011       %     2012        2011       %
Net earnings reported $ 156,267   $ 148,484  5  %  $ 689,881   $ 658,423  5  %
GSA/USPS settlement
                      —           —                47,310      —
 
Restructuring         12,550      —                12,550      —
Alliance impairment   3,030       —                3,030       —
Charge for U.S.       2,170       11,430           2,170       11,430
branch closures
Settlement of prior   —           —                —           (8,580)
year tax reviews
Gain on sale of joint —           (4,730)          —           (4,730)
venture
Subtotal              17,750      6,700            65,060      (1,880)
Net earnings adjusted $ 174,017   $ 155,184  12 %  $ 754,941   $ 656,543  15 %
Diluted earnings per  $ 2.17      $ 2.04     6  %  $ 9.52      $ 9.07     5  %
share reported
GSA/USPS settlement
                      —           —                0.66        —
 
Restructuring         0.18        —                0.18        —
Alliance impairment   0.04        —                0.04        —
Charge for U.S.       0.03        0.16             0.03        0.16
branch closures
Settlement of prior   —           —                —           (0.12)
year tax reviews
Gain on sale of joint —           (0.07)           —           (0.07)
venture
Subtotal              0.25        0.09             0.91        (0.03)
Diluted earnings per  $ 2.42      $ 2.13     14 %  $ 10.43     $ 9.04     15 %
share adjusted

 

 

SUPPLEMENTAL INFORMATION - CONSOLIDATED STATEMENTS OF EARNINGS
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands of dollars)
                    Three Months Ended             Twelve Months Ended

                    December 31,                   December 31,
                    2012         2011        %     2012           2011          %
Operating earnings  $ 258,438    $ 221,493   17 %  $ 1,131,125    $ 1,052,429   7  %
reported
GSA/USPS settlement —            —                 76,000         —
Restructuring       16,050       —                 16,050         —
Alliance impairment 4,850        —                 4,850          —
Charge for U.S.     3,470        18,480            3,470          18,480
branch closures
Subtotal            24,370       18,480            100,370        18,480
Operating earnings  $ 282,808    $ 239,973   18 %  $ 1,231,495    $ 1,070,909   15 %
adjusted
Segment operating
earnings adjusted
United States       286,081      254,938           1,218,782      1,084,804
Canada              29,910       29,388            127,412        107,582
Other Businesses    3,222        5,408             33,959         30,984
Unallocated expense (36,405)     (49,761)          (148,658)      (152,461)
Segment operating   $ 282,808    $ 239,973   18 %  $ 1,231,495    $ 1,070,909   15 %
earnings adjusted
Company
operating margin    12.7      %  11.6      %       13.8        %  13.3        %
adjusted
ROIC* for Company                                  31.5        %  32.4        %
ROIC* for United                                   48.9        %  47.6        %
States
ROIC* for Canada                                   22.5        %  20.8        %
*Adjusted ROIC is calculated as defined on page 9, excluding the items
adjusting operating earnings as noted above.

 

SOURCE W.W. Grainger, Inc.

Website: http://www.grainger.com
Contact: Media, Joseph Micucci, Director, Media Relations, O, +1-847-535-0879,
M, +1-847-830-5328, Grainger Media Relations Hotline, +1-847-535-5678; or
Investors, Laura Brown, SVP, Communications & Investor Relations, O,
+1-847-535-0409, M, +1-847-804-1383, or William Chapman, Sr. Director,
Investor Relations, O, +1-847-535-0881, M, +1-847-456-8647
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