Grainger Reports Record Results For Year Ended December 31, 2013

       Grainger Reports Record Results For Year Ended December 31, 2013

Company Adjusts 2014 Guidance for Foreign Exchange Headwinds; Now Expects
$12.10 to $12.85 Earnings per Share

2013 Highlights

-- Sales of $9.4 billion, up 5 percent

-- Reported EPS of $11.13, up 17 percent

-- Adjusted EPS of $11.52, up 10 percent

-- Operating cash flow of $986 million, up 21 percent

PR Newswire

CHICAGO, Jan. 24, 2014

CHICAGO, Jan. 24, 2014 /PRNewswire/ --Grainger (NYSE: GWW) today reported
record results for the year ended December 31, 2013. Sales of $9.4 billion
increased 5percent versus $9.0 billion in 2012. Reported net earnings of
$797 million increased 16percent versus $690 million in 2012. Reported
earnings per share of $11.13 increased 17 percent versus $9.52 in 2012. The
years 2013 and 2012 included the following items:

                                         Twelve Months Ended

                                         December 31,
                                         2013     2012       % Change
 Diluted Earnings Per Share as reported: $11.13   $9.52      17%
  GSA/USPS settlement                           0.66
  Goodwill impairment                  0.29     0.04
  Restructuring                        0.10     0.18
  Charge for U.S. branch closures               0.03
  Subtotal                       0.39     0.91
 Diluted Earnings Per Share as adjusted: $11.52   $10.43     10%

Note: Information regarding the adjustments is detailed in the discussion of
the 2013 fourth quarter. 

"Despite a sluggish economic environment and aggressive investments in growth
and infrastructure, this was another record year for Grainger," said Chairman,
President and Chief Executive Officer JimRyan. "We made significant
investments aimed directly at increasing our scale and accelerating share
gains in the large and highly fragmented MRO market. Going forward, we will
continue to invest in areas such as eCommerce, sales force expansion,
inventory management solutions and distribution centers in order to drive
market share growth and deliver solid returns," Ryan added.

"As evidenced by the restructuring in the quarter, we have some areas of the
business that are not performing to our expectations. We are committed to
improving the results and are taking the appropriate steps to strengthen the
performance of these businesses," Ryan concluded.

The company also updated its 2014 earnings per share guidance to $12.10 to
$12.85 from $12.25 to $13.00 and its 2014 sales guidance to 5 to 9 percent
growth from 6 to 10 percent growth from the previous guidance issued on
November 13, 2013. This change is largely due to a weaker Canadian dollar in
recent months and the divestiture of a number of the direct marketing
Specialty Brands that were sold on December 31, 2013. 

During 2013, the company invested an incremental $132 million to drive growth
and scale, primarily in the United States, and reached the following
milestones:

  oeCommerce: Grainger surpassed $3 billion in eCommerce sales in 2013,
    representing 33 percent of total company sales. eCommerce represents the
    fastest growing and most profitable channel in the business. The company
    also transitioned to a new web platform, launched a Spanish website and
    introduced innovative mobile solutions.
  oSales Force Expansion: In the United States, Grainger added 180 new sales
    representatives in 2013. Since 2009, Grainger has added 930 new U.S. sales
    representatives who, in aggregate, contributed approximately 1 percentage
    point of company sales growth in 2013. In general, sales to customers with
    a sales representative grow at twice the rate of customers that are not
    covered.
  oInventory Management: Total U.S. KeepStock installations, including vendor
    managed inventory, customer managed inventory and vending machines, grew
    38 percent, ending the year at approximately 55,000 installations. Sales
    to customers with a KeepStock installation grow at twice the rate of
    non-KeepStock customers.
  oProduct Line Expansion: In the Grainger U.S. business, Grainger.com added
    more than 300,000 new products, bringing the total number of products to
    more than 1.2 million products online. In Canada, Acklands-Grainger
    announced the addition of 200,000 products to its online offering. A
    broader product line enables customers to increase productivity by
    consolidating their supplier base.
  oDistribution Network: Grainger enhanced its North America distribution
    center network to accommodate growth and increase scale. The company
    opened a 1 million square-foot highly automated distribution center in
    Illinois that serves as the company's new central stocking facility.
    Grainger also began construction on a 500,000 square-foot distribution
    center in the Toronto area.
  oSingle Channel Online Model: MonotaRO, the online business in Japan, grew
    nearly 20 percent in local currency in 2013 and was named to the Forbes^®
    Asia "Best Under A Billion" list, which highlights 200 of the best small
    and mid-sized companies in Asia Pacific. Revenue for the company's other
    online business, Zoro Tools, grew more than 150 percent in 2013.

For the full year, the company generated $986 million in operating cash flow
versus $816million in 2012. Capital expenditures for the year were $272
million versus $250 million in 2012, driven primarily by investments to expand
the distribution center network in North America. The company also funded
$154 million in acquisitions. For the full year, Grainger bought back
approximately 1.7 million shares of stock for $438 million and has 3.6million
shares remaining under the current repurchase authorization. Dividends paid
in 2013 totaled $255million. For the full year, Grainger returned $693
million in cash to shareholders in the form of dividends and share
repurchases.

2013 Fourth Quarter
Sales for the 2013 fourth quarter of $2.4 billion increased 7 percent versus
$2.2 billion in the 2012 fourth quarter. Net earnings of $157 million were
essentially flat versus $156 million in 2012. Fourth quarter earnings per
share of $2.20 increased 1 percent versus $2.17 in 2012. The 2013 and 2012
fourth quarters included the following items:

                                        Three Months Ended

                                        December 31,
                                        2013      2012     % Change
Diluted Earnings Per Share as reported: $ 2.20    $ 2.17   1%
 Goodwill impairment                  0.29      0.04
 Restructuring                        0.10      0.18
 Charge for U.S. branch closures                0.03
 Subtotal                       0.39      0.25
Diluted Earnings Per Share as adjusted: $2.59     $2.42    7%

During the quarter, the company recorded non-cash impairment charges primarily
for goodwill, totaling $0.29 per share, of which $0.18 per share related to
the business in Brazil and $0.11 per share related to Grainger Lighting
Services in the United States. As a result of lowered performance
expectations for these businesses, the fair value of these businesses was less
than the carrying value, resulting in an impairment charge. The company also
incurred restructuring charges of $0.10per share related to improving the
long-term performance of the businesses in Europe and China. These items
combined in the 2013 fourth quarter represented a $0.39 reduction to earnings
per share, resulting in adjusted EPS of $2.59. In the 2012 fourth quarter,
the company recorded impairment and restructuring charges totaling $0.25,
resulting in adjusted EPS of $2.42. Excluding items noted above from both
years, company net earnings for the quarter increased 6percent and earnings
per share increased 7percent versus the prior year.

Company sales in the 2013 fourth quarter increased 7 percent. There were 64
selling days in both the 2013 and 2012 fourth quarters. The 7 percent sales
growth for the quarter consisted of 5percentage points from volume,
4percentage points from acquisitions and 1 percentage point from sales of
seasonal products, partially offset by 2percentage points decline from
unfavorable foreign exchange and 1percentagepoint from sales related to
Hurricane Sandy in 2012.

The company's gross profit margin for the quarter decreased 130 basis points,
driven by lower gross margins from the acquired businesses, accounting for
approximately two-thirds of the decline, and faster growth with lower margin
customers.

Company operating earnings of $257 million for the 2013 fourth quarter were
down 1 percent versus the 2012 quarter. Excluding the items noted in the
table above from both years, company operating earnings increased 3 percent.
This increase was driven by the 7percent sales growth and operating expense
leverage as expenses, including $31 million in incremental growth-related
spending, grew at a slower rate than sales. E&R Industrial, acquired on
August23, 2013, outperformed original expectations and was slightly accretive
to earnings in the quarter. Acquisitions made in the United States during the
last 13months, including E&R, are contributing to Grainger's ability to reach
the plant floor and increase its share of wallet with customers in the
manufacturing space.

The company has two reportable business segments, the United States and
Canada, which represented approximately 89 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 10 percent in the 2013 fourth
quarter versus the prior year. The 10 percent sales growth was driven by
5percentage points from volume, 6percentage points from sales from the E&R
Industrial, Techni-Tool and Safety Solutions acquisitions and 1percentage
point from sales of seasonal products, partially offset by a 1percentage
point decline from price and 1 percentage point from unfavorable comparison to
sales related to Hurricane Sandy in 2012. Strong sales growth to customers in
the manufacturing, retail, natural resources and commercial customer end
markets contributed to the sales increase in the quarter.

Operating earnings for the United States segment increased 6 percent in the
quarter driven by the 10 percent sales growth and positive expense leverage,
partially offset by lower gross profit margins. Positive expense leverage was
driven by the 10 percent sales growth versus a 5percent increase in operating
expenses including $28million in incremental growth-related spending. Gross
profit margins for the quarter decreased 180basis points driven by lower
gross margins from the acquired businesses, which accounted for approximately
two-thirds of the decrease, and faster growth with lower margin customers.
Excluding the charges for the United States segment in the 2013 and 2012
fourth quarters, operating earnings increased 7 percent for the 2013 fourth
quarter.

Canada
Sales in the 2013 fourth quarter at Acklands-Grainger decreased 3 percent and
increased 3percent in local currency. The 3percent sales decline consisted
of 3 percentage points increase from volume offset by a 6 percentage points
decline from unfavorable foreign exchange. The sales increase in Canada was
led by growth to customers in the commercial, transportation, light
manufacturing and forestry end markets.

Operating earnings in Canada decreased 10 percent in the 2013 fourth quarter,
down 5 percent in local currency. This decrease was driven by lower gross
profit margins, unfavorable foreign exchange and negative expense leverage.
The gross profit margin in Canada declined 20 basis points versus the prior
year. The decline was primarily due to product cost inflation exceeding price
inflation driven by unfavorable foreign exchange. Contributing to the lower
operating performance was approximately $2million in incremental spending
related to IT system investments.

Other Businesses
Sales for the Other Businesses, which includes operations primarily in Asia,
Europe and Latin America, increased 3 percent for the 2013 fourth quarter
versus the prior year. This performance consisted of 11 percentage points of
growth from volume and price, partially offset by an 8 percentage point
decline from unfavorable foreign exchange. Sales growth in the
OtherBusinesses was driven by Zoro Tools and the business in Mexico. Strong
sales growth in Japan was offset by the weakness in the Japanese yen versus
the U.S. dollar. 

The Other Businesses posted a $20 million operating loss in the 2013 fourth
quarter versus a$10 million operating loss in the 2012 fourth quarter.
During the quarter, the company recorded impairment charges related to the
business in Brazil and implemented structural changes to the businesses in
Europe and China, resulting in a $23million charge. In the 2012 fourth
quarter, the company recognized restructuring charges of $14 million for the
Other Businesses. Excluding these charges from both years, the Other
Businesses would have generated $3million in operating earnings in both the
2013 and 2012 fourth quarters. Strong operating performance from Zoro Tools
offset lower performance from most of the other businesses. In addition, the
business in Japan generated strong earnings growth in local currency which was
more than offset by unfavorable foreign exchange.

Other
Other income and expense was a net expense of $2 million in the 2013 fourth
quarter versus net expense of $5million in the 2012 fourth quarter. This
decrease was primarily attributable to lower average borrowings and lower
average interest rates on the debt in the 2013 fourth quarter versus the 2012
quarter.

For the quarter, the effective tax rate in 2013 was 37.3 percent versus
37.6percent in 2012.Forthe full year 2013, the effective tax rate was 37.3
percent versus 37.5 percent in 2012. The company is currently projecting an
effective tax rate of 37.4 to 37.8 percent for the year 2014.

Cash Flow
Operating cash flow was $246 million in the 2013 fourth quarter versus $240
million in the 2012 fourth quarter. The company used the cash generated
during the quarter to invest in the business, fund acquisitions and return
cash to shareholders through share repurchase and dividends. Capital
expenditures were $124 million in the 2013 fourth quarter versus $95 million
in the fourth quarter of 2012. In the 2013 fourth quarter, Grainger returned
$226 million to shareholders through $67 million in dividends and $159 million
to buy back 606,000 shares of stock.

W.W. Grainger, Inc., with 2013 sales of $9.4 billion, is North America's
leading broad line supplier of maintenance, repair and operating products,
with operations in Asia, Europe and Latin America.

Visit www.grainger.com/investor to view information about the company,
including a history of sales by segment and a podcast regarding 2013 fourth
quarter results. The Grainger 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 "going
forward", "will continue", "plan", "earnings per share guidance", "sales
guidance", "currently projecting" 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,
                                                   2013          2012          2013          2012
Netsales                                          $ 2,377,232   $ 2,226,120   $ 9,437,758   $ 8,950,045
Costofmerchandisesold                           1,370,835     1,256,595     5,301,275     5,033,885
Grossprofit                                       1,006,397     969,525       4,136,483     3,916,160
Warehousing,marketingandadministrativeexpenses 749,635       711,087       2,839,629     2,785,035
Operatingearnings                                 256,762       258,438       1,296,854     1,131,125
Otherincomeand(expense)
Interestincome                                    719           756           3,234         2,660
Interestexpense                                   (3,123)       (5,360)       (13,225)      (16,078)
Other non-operating income and (expense)           (63)          (7)           736           82
Totalother income and(expense)                   (2,467)       (4,611)       (9,255)       (13,336)
Earningsbeforeincometaxes                      254,295       253,827       1,287,599     1,117,789
Income taxes                                       94,902        95,341        479,850       418,940
Netearnings                                       159,393       158,486       807,749       698,849
Net earnings attributable to noncontrolling        2,644         2,219         10,713        8,968
interest
Netearnings attributable to W.W. Grainger, Inc.   $ 156,749     $ 156,267     $ 797,036     $ 689,881
Earningspershare
                                                   $ 2.24        $ 2.21        $ 11.31       $ 9.71
-Basic
-Diluted                                         $ 2.20        $ 2.17        $ 11.13       $ 9.52
Averagenumberofsharesoutstanding
                                                   69,140        69,557        69,456        69,812
-Basic
-Diluted                                         70,191        70,809        70,576        71,182
Diluted Earnings Per Share
Net earnings as reported                           $ 156,749     $ 156,267     $ 797,036     $ 689,881
Earnings allocated to participating securities     (1,985)       (2,705)       (11,521)      (12,181)
Net earnings available to common shareholders      $ 154,764     $ 153,562     $ 785,515     $ 677,700
Weighted average shares adjusted for dilutive      70,191        70,809        70,576        71,182
securities
Diluted earnings per share                         $ 2.20        $ 2.17        $ 11.13       $ 9.52



SEGMENT RESULTS (Unaudited)
(In thousands of dollars)
                                Three Months Ended December   Twelve Months Ended December
                                31,                           31,
                                2013           2012           2013           2012
Sales
United States                   $ 1,871,510    $ 1,706,283    $ 7,413,712    $ 6,925,842
Canada                          271,839        280,339        1,114,285      1,105,782
Other Businesses                272,876        263,858        1,040,473      1,006,762
Intersegmentsales              (38,993)       (24,360)       (130,712)      (88,341)
Netsalestoexternalcustomers $ 2,377,232    $ 2,226,120    $ 9,437,758    $ 8,950,045
Operatingearnings
United States                   $ 291,984      $ 276,021      $ 1,304,175    $ 1,132,722
Canada                          26,815         29,910         128,768        127,412
Other Businesses                (19,634)       (10,448)       7,599          20,289
Unallocatedexpense             (42,403)       (37,045)       (143,688)      (149,298)
Operatingearnings              $ 256,762      $ 258,438      $ 1,296,854    $ 1,131,125
Company operatingmargin        10.8        %  11.6        %  13.7        %  12.6        %
ROIC*forCompany                                             31.8        %  29.1        %
ROIC*forUnited States                                       49.2        %  45.8        %
ROIC*forCanada                                              21.4        %  22.5        %

*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 $357.1 million), deferred taxes, and investments in
unconsolidated entities, plus the LIFO reserve (5-point average of $384.0
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                                              2013          2012
Cash and cash equivalents                           $ 430,644     $ 452,063
Accounts receivable – net (1)                       1,101,656     940,020
Inventories                                         1,305,520     1,301,935
Prepaid expenses and other assets                   138,104       150,655
Deferred income taxes                               75,511        55,967
Total current assets                                3,051,435     2,900,640
Property, buildings and equipment – net             1,208,562     1,144,573
Deferred income taxes                               11,812        51,536
Goodwill                                            525,467       543,670
Other assets and intangibles – net (2)              471,805       374,179
Total assets                                        $ 5,269,081   $ 5,014,598
Liabilities and Shareholders' Equity
Short-term debt                                     $ 66,857      $ 79,071
Current maturities of long-term debt                29,585        18,525
Trade accounts payable (3)                          504,129       428,782
Accrued compensation and benefits                   185,905       165,450
Accrued contributions to employees' profit sharing  176,800       170,434
plans
Accrued expenses                                    228,093       204,800
Income taxes payable                                6,330         12,941
Total current liabilities                           1,197,699     1,080,003
Long-term debt                                      446,357       467,048
Deferred income taxes and tax uncertainties         113,585       119,280
Employment-related and other non-current            184,604       230,901
liabilities
Shareholders' equity (4)                            3,326,836     3,117,366
Total liabilities and shareholders' equity          $ 5,269,081   $ 5,014,598

(1) Accounts receivable - net increased $162 million, or 17%, primarily due to
    increased sales and acquisitions.
(2) Other assets and intangibles - net increased $98 million, or 26%,
    primarily due to the acquisitions of E&R Industrial and Safety Solutions.
(3) Trade accounts payable increased $75 million, or 18%, primarily due to a
    year-end increase in inventory purchases and acquisitions.
(4) Common stock outstanding as of December 31, 2013 was 68,853,938 shares as
    compared with 69,478,495 shares at December 31, 2012.



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

                                                        December 31,
                                                        2013        2012
Cash flows from operating activities:
Net earnings                                            $ 807,749   $ 698,849
Provision for losses on accounts receivable             8,855       9,504
Deferred income taxes and tax uncertainties             15,573      12,343
Depreciation and amortization                           180,613     159,049
Impairment of goodwill and other intangible assets      26,284      4,945
(Gains) losses from sales of assets                     (22,155)    2,609
Stock-based compensation                                55,590      55,500
Change in operating assets and liabilities – net of
business acquisitions:
Accounts receivable                                     (126,465)   (45,953)
Inventories                                             (23,636)    (14,872)
Prepaid expenses and other assets                       9,416       8,346
Trade accounts payable                                  64,613      (54,314)
Other current liabilities                               8,551       (58,673)
Current income taxes payable                            (4,813)     (9,349)
Accrued employment-related benefits cost                (10,316)    45,795
Other – net                                             (3,361)     2,416
Net cash provided by operating activities               986,498     816,195
Cash flows from investing activities:
Additions to property, buildings and equipment          (272,145)   (249,860)
Proceeds from sales of property, buildings and          26,701      8,530
equipment
Cash paid for business acquisitions, net of cash        (153,915)   (64,808)
acquired
Other – net                                             (68)        482
Net cash used in investing activities                   (399,427)   (305,656)
Cash flows from financing activities:
Borrowings under lines of credit                        144,805     161,160
Payments against lines of credit                        (154,450)   (205,006)
Proceeds from issuance of long-term debt                —           300,000
Payments of long-term debt and commercial paper         (16,681)    (219,950)
Proceeds from stock options exercised                   69,412      72,084
Excess tax benefits from stock-based compensation       59,984      57,885
Purchase of treasury stock                              (438,473)   (340,532)
Cash dividends paid                                     (255,466)   (220,077)
Net cash used in financing activities                   (590,869)   (394,436)
Exchange rate effect on cash and cash equivalents       (17,621)    469
Net change in cash and cash equivalents                 (21,419)    116,572
Cash and cash equivalents at beginning of year          452,063     335,491
Cash and cash equivalents at end of period              $ 430,644   $ 452,063



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 reconciliations provided below reconcile 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 December      Twelve Months Ended
                  31,                              December 31,
                  2013            2012        %    2013        2012       %
Net earnings      $  156,749      $  156,267  — %  $ 797,036   $ 689,881  16 %
reported
GSA/USPS          —               —                —           47,310
settlement
Goodwill          20,421          3,030            20,421      3,030
impairment
Restructuring     7,326           12,550           7,326       12,550
Charge for U.S.   —               2,170            —           2,170
branch closures
Subtotal          27,747          17,750           27,747      65,060
Net earnings      $  184,496      $  174,017  6 %  $ 824,783   $ 754,941  9  %
adjusted
Diluted earnings
per share         $  2.20         $  2.17     1 %  $ 11.13     $ 9.52     17 %
reported
GSA/USPS          —               —                —           0.66
settlement
Goodwill          0.29            0.04             0.29        0.04
impairment
Restructuring     0.10            0.18             0.10        0.18
Charge for U.S.   —               0.03             —           0.03
branch closures
Subtotal          0.39            0.25             0.39        0.91
Diluted earnings
per share         $  2.59         $  2.42     7 %  $ 11.52     $ 10.43    10 %
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
                    December 31,                    31,
                    2013         2012        %      2013           2012          %
Operating earnings  $ 256,762    $ 258,438   (1) %  $ 1,296,854    $ 1,131,125   15 %
reported
GSA/USPS settlement —            —                  —              76,000
Goodwill impairment 25,758       4,850              25,758         4,850
Restructuring       9,815        16,050             9,815          16,050
Charge for U.S.     —            3,470              —              3,470
branch closures
Subtotal            35,573       24,370             35,573         100,370
Operating earnings  $ 292,335    $ 282,808   3   %  $ 1,332,427    $ 1,231,495   8  %
adjusted
Segment operating
earnings adjusted
United States       304,845      286,081            1,317,036      1,218,782
Canada              26,815       29,910             128,768        127,412
Other Businesses    3,079        3,222              30,312         33,959
Unallocatedexpense (42,404)     (36,405)           (143,689)      (148,658)
Segment operating   $ 292,335    $ 282,808   3   %  $ 1,332,427    $ 1,231,495   8  %
earnings adjusted
Company
operatingmargin    12.3      %  12.7      %        14.1        %  13.8        %
adjusted
ROIC*forCompany                                   32.6        %  31.5        %
ROIC*forUnited                                    49.6        %  48.9        %
States
ROIC*forCanada                                    21.4        %  22.5        %

*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: 847-535-0879, M:
847-830-5328, or Grainger Media Relations Hotline, 847-535-5678, or Investors,
Laura Brown, SVP, Communications & Investor Relations, O: 847-535-0409, M:
847-804-1383, or William Chapman, Sr. Director, Investor Relations, O:
847-535-0881, M: 847-456-8647, or Casey Darby, Sr. Manager, Investor
Relations, O: 847-535-0099, M: 847-964-3281
 
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