39 Pages Complete
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934For the period ended March 31, 2001
or
[ ] Transition Report Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934For the transition period from
________to________
__________________
Commission file number 1-5684
I.R.S. Employer Identification Number 36-1150280
W.W. Grainger, Inc.(An Illinois Corporation)
100 Grainger ParkwayLake Forest, Illinois 60045-5201Telephone: (847) 535 -1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 94,958,462 shares of the Company's Common Stock were outstanding as of April 30, 2001.
The Exhibit Index appears on page 19 in the sequential numbering system.
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Part I - FINANCIAL INFORMATION
W.W. Grainger, Inc., and SubsidiariesCONSOLIDATED STATEMENTS OF EARNINGS(In thousands of dollars except for per share amounts)(Unaudited)
Three Months Ended March 31, ---------------------------------- 2001 2000 ------------ ------------ Net sales ............................... $ 1,219,420 $ 1,222,449 Cost of merchandise sold ................ 824,509 840,001 ------------ ------------ Gross profit ......................... 394,911 382,448 Warehousing, marketing, and administrative expenses .............. 311,222 307,671 ------------ ------------ Operating earnings ................... 83,689 74,777 Other income or (deductions) Interest income ...................... 545 497 Interest expense ..................... (4,001) (6,102) Equity in loss of unconsolidated entities ............................ (5,801) - Unclassified-net ..................... 373 91 ------------ ------------ (8,884) (5,514) ------------ ------------ Earnings before income taxes ............ 74,805 69,263 Income taxes ............................ 32,630 28,052 ------------ ------------ Net earnings ......................... $ 42,175 $ 41,211 ============ ============ Earnings per share: Basic ................................ $ 0.45 $ 0.44 ============ ============ Diluted .............................. $ 0.45 $ 0.44 ============ ============ Weighted average number of shares outstanding: Basic ................................ 93,026,308 92,917,780 ============ ============ Diluted .............................. 94,297,365 94,416,374 ============ ============ Cash dividends paid per share ........... $ 0.17 $ 0.16 ============ ============
The accompanying notes are an integral part of these financial statements.
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W.W. Grainger, Inc., and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS(In thousands of dollars)(Unaudited)
Three Months Ended March 31, ---------------------------------- 2001 2000 ------------ ------------ Net Earnings ..................................... $ 42,175 $ 41,211 Other comprehensive earnings (loss), net of tax: Foreign currency translation adjustments ....... (13,876) (1,090) Gain (loss) in investment securities: Unrealized holding (loss) ..................... (4,376) (10,381) Reclassification adjustments for realized gains included in net earnings ..................... - - ------------ ------------ Comprehensive earnings ........................... $ 23,923 $ 29,740 ============ ============
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W.W. Grainger, Inc., and SubsidiariesCONSOLIDATED BALANCE SHEETS(In thousands of dollars)(Unaudited)
ASSETS March 31, 2001 Dec. 31, 2000 - ------------------------------------------------------------- -------------- ------------- CURRENT ASSETS Cash and cash equivalents ................................. $ 68,974 $ 63,384 Accounts receivable, less allowance for doubtful accounts of $24,691 in 2001 and $23,436 in 2000 ......... 595,105 608,297 Inventories ............................................... 685,823 704,071 Prepaid expenses .......................................... 55,706 25,173 Deferred income tax benefits .............................. 82,915 82,077 ------------ ------------ Total current assets .................................... 1,488,523 1,483,002 PROPERTY, BUILDINGS, AND EQUIPMENT .......................... 1,321,621 1,308,027 Less accumulated depreciation and amortization ............ 648,149 631,630 ------------ ------------ Property, buildings, and equipment-net .................... 673,472 676,397 DEFERRED INCOME TAXES ....................................... 7,348 8,820 INVESTMENTS IN UNCONSOLIDATED ENTITIES ...................... 21,801 23,838 OTHER ASSETS ................................................ 261,219 267,544 ------------ ------------ TOTAL ASSETS ................................................ $ 2,452,363 $ 2,459,601 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------- CURRENT LIABILITIES Short-term debt ........................................... $ 115,310 $ 173,538 Current maturities of long-term debt ...................... 22,755 22,770 Trade accounts payable .................................... 255,664 220,924 Accrued expenses .......................................... 271,656 300,740 Income taxes .............................................. 46,199 29,352 ------------ ------------ Total current liabilities ............................... 711,584 747,324 LONG-TERM DEBT (less current maturities) .................... 119,355 125,258 ACCRUED EMPLOYMENT RELATED BENEFITS COSTS ................... 50,743 49,537 MINORITY INTEREST ........................................... 94 96 SHAREHOLDERS' EQUITY Cumulative Preferred Stock - $5 par value - authorized, 12,000,000 shares, issued and outstanding, none ....... -- -- Common Stock - $0.50 par value - authorized, 300,000,000 shares; issued 108,258,170 shares, 2001 and 108,037,082 shares, 2000 .............................. 54,129 54,017 Additional contributed capital ............................ 282,648 276,819 Retained earnings ......................................... 1,855,062 1,837,298 Unearned restricted stock compensation .................... (26,749) (22,720) Accumulated other comprehensive (loss) .................... (37,084) (18,832) Treasury stock, at cost - 13,348,192 shares, 2001 and 14,104,212 shares, 2000 ............................... (557,419) (589,196) ------------ ------------ Total shareholders' equity ................................ 1,570,587 1,537,386 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................ $ 2,452,363 $ 2,459,601 ============ ============
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W.W. Grainger, Inc., and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands of dollars)(Unaudited)
Three Months Ended March 31, --------------------------- 2001 2000 ------------ ------------ Cash flows from operating activities: Net earnings ............................................. $ 42,175 $ 41,211 Provision for losses on accounts receivable .............. 4,590 3,553 Depreciation and amortization: Property, buildings, and equipment ..................... 19,577 21,458 Intangibles and goodwill ............................... 1,361 4,002 Amortization of capitalized software ................... 4,534 3,492 Loss on unconsolidated entities .......................... 5,801 -- Change in operating assets and liabilities - net of business acquisition: Decrease (increase) in accounts receivable ............. 6,910 (42,898) Decrease (increase) in inventories ..................... 16,297 (11,088) (Increase) in prepaid expenses ......................... (30,024) (18,808) Decrease (increase) in deferred income taxes ........... 444 (1,548) Increase in trade accounts payable ..................... 34,763 35,150 (Decrease) in other current liabilities ................ (29,722) (21,939) Increase in current income taxes payable ............... 15,552 32,534 Increase in accrued employment related benefits costs ....................................... 1,206 707 Other - net .............................................. 349 2,222 ------------ ------------ Net cash provided by operating activities .................. 93,813 48,048 ------------ ------------ Cash flows from investing activities: Additions to property, buildings, and equipment - net of dispositions ........................ (15,305) (12,103) Expenditures for capitalized software .................... (2,364) (9,635) Net cash paid for business acquisition ................... (13,250) -- Investments in unconsolidated entities ................... (3,764) -- Other - net .............................................. (1,669) (743) ------------ ------------ Net cash (used in) investing activities .................... (36,352) (22,481) ------------ ------------ Cash flows from financing activities: Net (decrease) in short-term debt ........................ (58,228) (13,317) Long-term debt payments .................................. (15) (17) Stock incentive plan ..................................... 1,139 5,155 Proceeds from sale of treasury stock ..................... 24,366 -- Purchase of treasury stock-net ........................... (1,072) (346) Cash dividends paid ...................................... (16,000) (14,955) ------------ ------------ Net cash (used in) financing activities .................... (49,810) (23,480) ------------ ------------ Exchange rate effect on cash and cash equivalents .......... (2,061) (85) ------------ ------------ Net increase in cash and cash equivalents .................. 5,590 2,002 Cash and cash equivalents at beginning of year ............. 63,384 62,683 ------------ ------------ Cash and cash equivalents at end of period ................. $ 68,974 $ 64,685 ============ ============
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W.W. Grainger, Inc., and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)
1. BASIS OF STATEMENT PRESENTATION
The financial statements and the related notes are condensed and should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2000, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions are eliminated.
Inventories are valued at the lower of cost or market. Cost is determined primarily by the last-in, first-out (LIFO) method.
The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the statements contained herein.
2. DIVIDEND
On April 25, 2001, the Board of Directors declared a quarterly dividend of 17 1/2 cents per share, payable June 1, 2001 to shareholders of record on May 7, 2001.
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W.W. Grainger, Inc., and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)
3. SEGMENT INFORMATION (In thousands of dollars)
Three Months Ended March 31, 2001 ---------------------------------------------------------------------------- Lab Branch-based Safety Distribution Digital Supply Other Totals ------------ ---------- --------- ---------- ---------- (In thousands of dollars) Total net sales ...................... $1,091,693 $ 17,303 $ 87,625 $ 42,156 $1,238,777 Intersegment net sales ............... 3,486 15,548 323 -- 19,357 Net sales to external customers ...... 1,088,207 1,755 87,302 42,156 1,219,420 Segment operating earnings (loss) .... 90,079 (10,157) 16,134 371 96,427 Three Months Ended March 31, 2000 ---------------------------------------------------------------------------- Lab Branch-based Safety Distribution Digital Supply Other Totals ------------ ---------- --------- ---------- ---------- (In thousands of dollars) Total net sales ...................... $1,098,623 $ 6,416 $ 86,865 $ 41,003 $1,232,907 Intersegment net sales ............... 2,654 6,209 223 1,372 10,458 Net sales to external customers ...... 1,095,969 207 86,642 39,631 1,222,449 Segment operating earnings (loss) .... 84,508 (10,933) 14,608 (3,106) 85,077 Lab Branch-based Safety Distribution Digital Supply Other Totals ------------ ---------- --------- ---------- ---------- (In thousands of dollars) Segment assets At March 31, 2001 .................... $1,994,517 $ 14,766 $ 143,712 $ 42,297 $2,195,292 ========== ========== ========== ========== ========== At December 31, 2000 ................. $2,016,220 $ 9,933 $ 111,961 $ 54,095 $2,192,209 ========== ========== ========== ========== ==========
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A reconciliation of segment information to consolidated information is as follows:
Three Months Ended March 31, ----------------------------- 2001 2000 ---------- ---------- Total operating earnings for reportable segments $ 96,427 $ 85,077 Unallocated expenses ........................... (12,738) (10,300) Elimination of intersegment profits ............ -- -- ---------- ---------- Total consolidated operating earnings ........ $ 83,689 $ 74,777 ========== ========== March 31, 2001 December 31, 2000 -------------- ----------------- Assets: Total assets for reportable segments ........... $ 2,195,292 $ 2,192,209 Unallocated assets ............................. 257,071 267,392 -------------- ----------------- Total consolidated assets .................... $ 2,452,363 $ 2,459,601 ============== =================
4. ADOPTION OF ACCOUNTING STANDARDS
The Company adopted Statement of Financial Accounting Standards No. 133 (SFAS No. 133), “Accounting for Certain Derivative Instruments and Hedging Activities,” effective January 1, 2001. The Company uses non-derivative financial instruments to help hedge its exposure for certain investments in foreign subsidiaries in which the net assets are exposed to currency exchange rate volatility. Adoption of SFAS No. 133 requires the Company to report the net amounts of gains and losses that arise from qualifying non-derivative hedging instruments in the cumulative translation adjustment during the reporting period. The Company’s accounting treatment of SFAS No. 133 is consistent with the method previously used under Statement of Financial Accounting Standards No. 52 (SFAS 52), “Foreign Currency Translation.”
Currency exposure related to the Company’s investment in the net assets of its Canadian subsidiary, Acklands-Grainger Inc. (AGI), is managed primarily by means of a foreign currency denominated debt obligation of the parent. Gains and losses associated with the debt obligation offset gains and losses in the net investment in AGI.
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For the period ended March 31, 2001, $5,903,000 of net gain related to the foreign currency denominated debt obligation and was included in the cumulative translation adjustment. For the same period of 2000, $457,000 of net gain related to the obligation and was included in the cumulative translation adjustment.
5. ACQUISITION
On February 26, 2001, Lab Safety Supply, Inc., the Company’s wholly owned subsidiary, acquired The Ben Meadows Co., Inc. (Ben Meadows), of Canton, Georgia, for approximately $13.3 million. Ben Meadows, a privately held corporation with annual sales of more than $20,000,000, is a business-to-business direct marketer specializing in equipment for the environmental and forestry management markets. The acquisition was accounted for under the purchase method of accounting. Results for Ben Meadows are included in the Company’s results since the date of its acquisition. Given the size of the acquisition, no accretion or dilution of the Company’s earnings per share is projected.
6. EXECUTIVE STOCK PURCHASE PROGRAM
On March 26, 2001, a group of 83 executives bought approximately 787,000 treasury shares from the Company. Cash proceeds from the sale, which amounted to $24,366,000, will be used by the Company to repurchase shares of the Company’s stock on the open market. Executives who met a threshold purchase requirement of one times their annual base salary received a grant of restricted stock that will vest if they remain with the Company and hold their purchased shares for a minimum of two years. The total number of restricted shares granted was approximately 192,000 shares.
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7. SUBSEQUENT EVENTS
On April 23, 2001, the Company announced it will discontinue the operations of Material Logic, the digital unit the Company formed to seek other equity participants. As a result of this action, the Company will shut down all of Material Logic’s branded e-commerce sites except FindMRO.com, which will remain an integrated sourcing service for the Company’s customers.
The Company will provide a comprehensive separation package, including outplacement services, for the 178 Material Logic employees whose jobs will be eliminated.
In connection with the closing of Material Logic, the Company has taken a non-recurring, after-tax charge of $24 million, or $0.25 per share. In addition, the Company wrote down its investments in other digital enterprises and took an after-tax charge of $14 million, or $0.15 per share. This included divestiture of the Company’s 40 percent investment in Works.com, Inc. The Company acquired its 40 percent interest in Works.com, Inc., an unrelated third party, on August 1, 2000, when OrderZone.com was combined with Works.com.
The total effect of both non-recurring charges amounted to an after-tax cost of $38 million, or $0.40 per share, in the 2001 second quarter. The charges will be partially offset by elimination of the on-going losses relating to Material Logic and the Company’s equity investment in Works.com, which losses were projected at $0.29 per share for the remainder of 2001.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND THE RESULTS OF OPERATIONSRESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 2000:
Company Net Sales
The Company’s net sales of $1,219,420,000 in the 2001 first quarter were essentially flat with sales of $1,222,449,000 for the comparable 2000 period. Sales performance in the first quarter of 2001 was affected by relatively flat sales in most of the Company’s businesses combined with the effect of 1 less selling day versus the first quarter of 2000. The sales decline was primarily the result of a progressively slowing economy and a difficult comparison with the 2000 first quarter.
There were 64 sales days in the 2001 first quarter versus 65 sales days in the 2000 quarter. On a daily basis the Company’s net sales increased 1.3%. The full year 2001 will have 255 sales days, the same number of sales days as the year 2000.
Sales processed through the Company’s digital businesses plus the sales that originated through Grainger.com were $100 million, up more than 60% from the $62 million achieved in the first quarter 2000.
Segment Net Sales
The following comments at the segment level include external and intersegment net sales; those comments at the business unit level include external and inter- and intrasegment net sales. For segment information see Note 3 to the Consolidated Financial Statements included in this report.
Branch-based Distribution Businesses
Net sales of $1,091,693,000 for the first quarter of 2001 decreased 0.6% when compared with net sales of $1,098,623,000 in the first quarter of 2000. Average daily net sales increased 0.9% for the 2001 first quarter compared with the 2000 first quarter.
Daily sales in the United States were relatively flat, tempered by a slowdown in the U.S. economy and a difficult comparison with the 2000 first quarter. Sales to national, government and to education accounts increased by the mid-single digits while sales to other customer categories declined. Sales were favorably affected by the Company’s Internet initiative. Sales through Grainger.com were $75 million, a 36% increase over first quarter 2000 sales of $55 million.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND THE RESULTS OF OPERATIONSRESULTS OF OPERATIONS (Continued)
Daily sales growth in Canada was in the low-single digits during the first quarter of 2001. Growth was driven by continued strength in the oil and gas, forestry, and mining sectors of the Canadian economy. This growth was partially offset by a slowdown in the manufacturing sector in Eastern Canada and an unfavorable change in the Canadian exchange rate.
The Mexican operation experienced a mid-single digit decline in net sales. The decrease in sales was attributable to weakness in the automotive and electronics manufacturing industries.
Digital Businesses
Net sales for the first quarter of 2001 were $17,303,000, an increase of 169.7% compared with $6,416,000 for the same period in 2000. Net sales for this segment primarily represents product sales for FindMRO.com and service fee revenues for the rest of Material Logic. The large increase in sales for this business segment is largely attributable to the intersegment sales from FindMRO.com to the Branch-based Distribution segment.
On January 26, 2001, the Company announced that it had consolidated FindMRO.com, MROverstocks.com, and TotalMRO.com into one organization, Material Logic. Material Logic also includes related consulting, implementation, and content services. See Note 7 to the Consolidated Financial Statements, “Subsequent Events,” for information concerning the Company’s decision to shut down all of Material Logic’s branded e-commerce sites except FindMRO.com, which will remain an integrated sourcing service for the Company’s customers.
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Lab Safety Supply
Net sales for Lab Safety Supply were $87,625,000, an increase of 0.9% compared with $86,865,000 for the same period in 2000. Net sales for the first quarter of 2001 includes net sales for Ben Meadows Co., a direct marketer specializing in equipment for the environmental and forestry management markets, since its acquisition on February 26, 2001. Excluding acquired sales, sales performance for Lab Safety Supply was relatively flat on a daily basis. This performance was the result of a small increase in the sales of industrial products offset by a decline in the sales of safety products. Sales were affected by the slowing of the industrial economy of North America.
Other Businesses
Net sales for the first quarter of 2001 were $42,156,000, an increase of 2.8% compared with $41,003,000 for the same period of 2000. Sales growth for this segment is primarily attributable to increased sales at Grainger Integrated Supply. Sales for this business unit include product sales and management fees.
Company Net Earnings
The Company’s net earnings of $42,175,000 in the first quarter of 2001 increased 2% compared with the net earnings of $41,211,000 for the comparable 2000 period. This increase resulted from improved operating earnings at all of the Company’s business segments and from lower interest expense. Partially offsetting these improvements were higher losses from equity interests in unconsolidated entities.
Segment Operating Earnings
The following comments at the segment level include external and intersegment operating earnings; those comments at the business unit level include external and inter- and intrasegment operating earnings. For segment information see Note 3 to the Consolidated Financial Statements included in this report.
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Operating earnings of $90,079,000 for the first quarter of 2001 increased 6.6% compared with operating earnings of $84,508,000 in the first quarter of 2000. This improvement resulted from higher gross profit margins partially offset by slightly higher operating expenses.
Gross profit margins increased 1.09 percentage points from the comparable quarter in 2000. The improvement in gross profit margins was primarily attributable to selected pricing actions intended to recover freight and supplier cost increases. Partially offsetting this improvement were higher sales of sourced products (not inventoried) which, in general, carry lower than average gross profit margins.
Operating expenses increased 2% for the quarter versus a 1% decline in net sales. The increase in operating expenses primarily related to employee benefits costs. Other operating expenses declined proportionately more than sales.
The Digital Businesses incurred operating losses of $10,157,000 compared with operating losses of $10,933,000 for the first quarter of 2000. The decrease in the operating losses primarily relates to the elimination of OrderZone.com operating losses that were included in first quarter 2000 results.
On August 1, 2000, OrderZone.com was combined with Works.com, Inc., an unrelated third party. For its contribution, the Company received a 40% interest in Works.com. The Company recognizes its proportionate share of earnings or losses as part of Equity in Loss of Unconsolidated Entities.
Partially offsetting the above improvement were increased losses at Material Logic. On April 23, 2001, the Company announced it will discontinue the operations of Material Logic and took a charge relating to the divestiture of its investment in Works.com. For additional information, see Note 7 to the Consolidated Financial Statements included in this report.
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Lab Safety Supply had operating earnings of $16,134,000 for the first quarter of 2001, an increase of 10% compared with operating earnings of $14,608,000 for the first quarter of 2000. The increase was primarily due to lower amortization of intangibles partially offset by other operating expenses growing at a faster rate than sales.
Other Businesses had operating earnings of $371,000 in the first quarter of 2001 compared with operating losses of $3,106,000 in the comparable period of 2000. The significant improvement in operating earnings primarily relates to Grainger Integrated Supply, which has improved profitability by eliminating or restructuring unprofitable contracts and reducing its cost structure.
Other Income or (Deductions)
The majority of the increase in other deductions is attributable to losses of unconsolidated entities accounted for on the equity method. These losses primarily related to the Company’s investment in Works.com, which was acquired during the 2000 third quarter. Partially offsetting the increase in other deductions was lower interest expense, which primarily resulted from lower average borrowings.
Income Taxes
The Company’s effective tax rate was 43.6% for the first quarter of 2001 and 40.5% for the first quarter of 2000. The increase in the effective tax rate relates to losses of unconsolidated entities accounted for on the equity method, which losses are net of tax. Excluding the effect of these losses, the effective rate is 40.5% for both periods.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND THE RESULTS OF OPERATIONSLIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2001, working capital increased by $41,261,000. The ratio of current assets to current liabilities was 2.1 at March 31, 2001 and 2.0 at December 31, 2000. The Consolidated Statements of Cash Flows, included in this report, detail the sources and uses of cash and cash equivalents.
The Company maintains a debt ratio and liquidity position that provides flexibility in funding working capital needs and long-term cash requirements. In addition to internally generated funds, the Company has various sources of financing available, including commercial paper sales and bank borrowings under lines of credit and otherwise. Total debt as a percent of Shareholders’ Equity was 16% at March 31, 2001 and 21% at December 31, 2000. For the first three months of 2001, $21,175,000 was expended for property, buildings, and equipment, and $2,364,000 was expended for capitalized software, for a total of $23,539,000.
On February 26, 2001, Lab Safety Supply, Inc., the Company's wholly owned subsidiary, acquired The Ben Meadows Co., Inc. for approximately $13.3 million. See Note 5, "Acquisition," to the Notes to Consolidated Financial Statements for additional information.
On March 26, 2001, a group of 83 executives bought $24,366,000 in shares of common stock from the Company. The proceeds will be used to repurchase shares on the open market. See Note 6, “Executive Stock Purchase Program,” to the Notes to Consolidated Financial Statements for additional information.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND THE RESULTS OF OPERATIONSFORWARD-LOOKING STATEMENTS
Throughout this Form 10-Q are forward-looking statements, i.e., not historical facts, about the Company’s expected future financial results and business plans, strategies, and objectives. These forward-looking statements are often identified by qualifiers such as: “will seek to,” “expects,” “plans,” “anticipates,” “intends,” 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.
Factors that may affect forward-looking statements include the following: higher product costs or other expenses; a major loss of customers; increased competitive pricing pressure on the Company’s businesses; failure to develop, implement, or commercialize successfully new Internet technologies or other business strategies; the outcome of pending and future litigation and governmental proceedings; changes in laws and regulations; facilities disruptions or shutdowns due to accidents, natural acts or governmental action; unanticipated weather conditions; and other difficulties in improving margins or financial performance.
Trends and projections could also be affected by general industry and market conditions, gross domestic product growth rates, general economic conditions, including interest rate and currency rate fluctuations and other factors.
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W.W. Grainger, Inc., and SubsidiariesPART II - OTHER INFORMATION
Items 1, 2, 3, and 5 not applicable.
Item 4 Submission of Matters to a Vote of Security Holders.
An annual meeting of shareholders of the Company was held on April 25, 2001. At that meeting:
Shares as to Which Voting Name Shares Voted for Election Authority Withheld ------------------------ ------------------------- ------------------------- B. P. Anderson 81,127,369 241,442 W. H. Gantz 81,125,020 243,791 D. W. Grainger 81,033,863 334,948 R. L. Keyser 81,120,750 248,061 J. W. McCarter, Jr. 81,134,053 234,758 N. S. Novich 81,129,667 239,144 J. D. Slavik 81,135,401 233,410 H. B. Smith 81,131,188 237,623 F. L. Turner 81,126,200 242,611 J. S. Webb 81,137,000 231,811
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Exhibit 11
W.W. Grainger, Inc., and SubsidiariesCOMPUTATIONS OF EARNINGS PER SHARE
Three Months Ended March 31, -------------------------------- BASIC: 2001 2000 ------------ ------------- Weighted average number of shares outstanding during the year ................................................ 93,026,308 92,917,780 ============ ============ Net earnings ...................................................... $ 42,175,000 $ 41,211,000 ============ ============ Earnings per share ................................................ $ 0.45 $ 0.44 ============ ============ DILUTED: Weighted average number of shares outstanding during the year (basic) ........................................ 93,026,308 92,917,780 Potential Shares: Shares issuable under outstanding options .................. 1,615,030 2,541,850 Shares which could have been purchased based on the average market value for the period ............... 1,379,518 1,737,022 ------------ ------------ 235,512 804,828 Dilutive effect of exercised options prior to being exercised ................................................ 10,270 77,266 ------------ ------------ Shares for the portion of the period that the options were outstanding ......................................... 245,782 882,094 Contingently issuable shares ............................... 1,025,275 616,500 ------------ ------------ 1,271,057 1,498,594 ------------ ------------ Adjusted weighted average number of shares outstanding during the year ................................................. 94,297,365 94,416,374 ============ ============ Net earnings ...................................................... $ 42,175,000 $ 41,211,000 ============ ============ Earnings per share ................................................ $ 0.45 $ 0.44 ============ ============
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