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| GWW > SEC Filings for GWW > Form 10-Q/A on 7-Nov-2008 | All Recent SEC Filings |
7-Nov-2008
Quarterly Report
Item 2.
Overview
General
Grainger is the leading broad-line supplier of facilities maintenance and other
related products in North America. Grainger distributes a wide range of products
used by businesses and institutions to keep their facilities and equipment up
and running. Grainger uses a multichannel business model to provide customers
with a range of options for finding and purchasing products through a network of
branches, sales representatives, direct marketing including catalogs, and a
variety of electronic and Internet channels. Grainger serves customers through a
network of more than 600 branches, 18 distribution centers and multiple Web
sites.
Grainger's three reportable segments are Grainger Branch-based, Acklands - Grainger Branch-based (Acklands - Grainger) and Lab Safety Supply, Inc. (Lab Safety). Grainger Branch-based is an aggregation including the following business units: Grainger Industrial Supply, Grainger, S.A. de C.V. (Mexico), Grainger Caribe Inc. (Puerto Rico), Grainger China LLC (China) and Grainger Panama S.A. (Panama). Acklands - Grainger is the Company's Canadian branch-based distribution business. Lab Safety is a direct marketer of safety and other industrial products.
Business Environment
Several economic factors and industry trends shape Grainger's business
environment. Historically, Grainger's sales trends have tended to correlate
positively with industrial production growth, particularly manufacturing output,
as well as employment growth, particularly non-farm payrolls. According to the
Federal Reserve, overall industrial production decreased 4.5% from September
2007 to September 2008. Manufacturing output decreased 4.8% from September 2007
to September 2008, and manufacturing employment levels declined 3.2%. Non-farm
employment was essentially flat from September 2007 to September
2008. Grainger's sales to manufacturing customers, as well as to most other
customer-end markets, continued to grow in the third quarter of 2008. This
reflects the success of Grainger's on-going market expansion and product line
expansion initiatives, as well as Grainger's growing diversification into
markets other than manufacturing. Current economic growth projections for 2008
industrial production and GDP are (0.4%) and 1.4%, respectively.
For the first nine months of 2008, the Company had $142.0 million of capital expenditures, of which $35.3 million related to its U.S. market expansion program. The Company is targeting completion of its investments in the U.S. market expansion program in 2008.
Matters Affecting Comparability
There were 64 sales day in the third quarter of 2008 compared to 63 sales days
in the third quarter of 2007. There were 192 sales days in the first nine months
of 2008 compared to 191 sales days in the first nine months of 2007.
Grainger's operating results for the first nine months of 2008 include the operating results of the Highsmith acquisition made by Lab Safety in July 2008. Since the acquisition date, those results have been included in the Lab Safety segment. See the Segment Analysis in the following Management's Discussion and Analysis.
Results of Operations - Three Months Ended September 30, 2008 The following table is included as an aid to understanding the changes in Grainger's Condensed Consolidated Statements of Earnings:
Three Months Ended September 30, Items in Condensed Consolidated Statements of Earnings
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