CHICAGO, Jan. 31 /PRNewswire/ -- W.W. Grainger, Inc. (NYSE: GWW) today
reported results for the fourth quarter and year ended December 31, 1999. For
the year 1999, earnings per diluted share declined 21 percent to $1.92 versus
$2.44 in 1998. Net earnings for 1999 were $180.7 million, down 24 percent
compared to $238.5 million for the prior year. Sales increased 4 percent in
1999 to $4,533.9 million versus $4,341.3 million in 1998.
For the 1999 fourth quarter, earnings per diluted share were $0.30 versus
$0.69 in the fourth quarter of 1998, a 57 percent decline. Fourth quarter net
earnings were $28.2 million, compared to $66.0 million in the prior year
quarter. Sales increased 7 percent in the fourth quarter to $1,121.4 million
versus $1,045.2 million in the prior year quarter.
"Our earnings are in line with the guidance we provided in a press release
earlier this month," said Grainger's Chairman and Chief Executive Officer,
Richard L. Keyser. "Although we are disappointed by these results, Grainger
faced a particularly difficult year due to the installation of the new
Enterprise Resource Planning (ERP) system. We also continued to invest
heavily in implementing our digital strategy."
Sales growth in the fourth quarter was attributable to strong performances
from Grainger Integrated Supply, Acklands-Grainger Inc. (Canada), and Grainger
S.A. de C.V. (Mexico). Fourth quarter sales of $42.3 million through the
Internet for Grainger showed an 820 percent increase. Grainger also estimates
that $15 million of sales in the quarter were related to concerns about Y2K.
In the fourth quarter Grainger recorded an adjustment to inventory
following the physical inventory count conducted in October. During 1999, the
Company installed a new ERP system and, as a result of problems with the
installation, experienced substantial systems and transaction processing
disruptions including system slowdowns and outages. The transaction
processing failures during the systems installation resulted in an inventory
shrinkage adjustment that exceeded expectation.
The Company experienced no material disruptions with the new ERP system
during the fourth quarter. Related operating expenses, however, were
substantially higher in 1999 than in 1998. These higher costs were largely
attributable to the installation of the new system, the cost of taking the
inventory count, and the replacement of all personal computers in the field
locations for Grainger's U.S. Branch-based business.
Ongoing investments in Grainger's Web-based businesses were $44.4 million
for the year. During 1999, the Company launched OrderZone.com, FindMRO.com,
and Grainger Auction. In 1999, the Company processed sales of $102 million
through the Internet and ended the year with an annualized run rate of more
than $200 million. Total Internet spending in the year 2000 is expected to
range between $110 and $120 million.
W.W. Grainger, Inc. (GWW), with 1999 sales of $4.5 billion, is the leading
North American provider of maintenance, repair, and operating (MRO) supplies,
services, and related information to businesses and institutions. GWW shares
are traded on the New York and Chicago stock exchanges. For more information,
visit Grainger on-line at http://www.grainger.com .
This document contains statements that are not historical facts and are
forward-looking. The forward-looking statements are based on the Company's
current expectations and some of them are subject to risks and uncertainties
the outcome of which could result in actual future performance being
materially different from the performance indicated. They should be read in
conjunction with the Company's most recent annual report, as well as the
Company's Form 10-K and other reports filed with the Securities and Exchange
Commission, containing a discussion of the Company's business and of various
factors that may affect it.
W.W. Grainger, Inc. - 1999 fourth quarter/full year results
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(In thousands of dollars except for per share amounts)
Three Months Twelve Months
ended Dec 31 ended Dec 31
1999 1998 1999 1998
Net sales $1,121,442 $1,045,154 $4,533,853 $4,341,269
Cost of
merchandise sold 710,421 639,908 2,881,219 2,743,598
Gross profit 411,021 405,246 1,652,634 1,597,671
Warehousing,
marketing, and
administrative
expenses 357,912 291,864 1,335,406 1,189,689
Operating earnings 53,109 113,382 317,228 407,982
Other income or
(deductions)
Interest income 486 408 1,606 1,560
Interest expense (5,644) (1,805) (15,596) (6,652)
Unclassified-net (626) (1,073) 512 (2,043)
(5,784) (2,470) (13,478) (7,135)
Earnings before
income taxes 47,325 110,912 303,750 400,847
Income taxes 19,167 44,919 123,019 162,343
Net earnings $28,158 $65,993 $180,731 $238,504
Net earnings per share
- Basic $0.31 $0.70 $1.95 $2.48
- Diluted $0.30 $0.69 $1.92 $2.44
Average number of shares
outstanding
- Basic 92,851,864 93,936,869 92,836,696 96,231,829
- Diluted 94,186,558 95,332,970 94,315,479 97,846,658
Earnings per share and the average number of shares outstanding reflect
the 2-for-1 stock split effective at the close of business on May 11,
1998.
(Supplemental financial information concerning the Quarter and Twelve
Months ended December 31, 1999 is available upon request. Contact
William D. Chapman, Director, Investor Relations, 847-535-0881.)
SOURCE W.W. Grainger, Inc.
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Related links:
http://www.Grainger.com
Company News On-Call:
http://www.prnewswire.com/comp/953850.html or fax,
800-758-5804, ext. 953850
CONTACT:
William D. Chapman, Director, Investor
Relations of W.W. Grainger, Inc., 847-535-0881
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