SEC Comment Letter for W.W. GRAINGER, INC. (GWW) (CIK 0000277135) (GWW) — Nov 22, 2005
W.W. GRAINGER, INC. (GWW) (CIK 0000277135)
Date: Nov. 22, 2005 · CIK: 0000277135 · Accession: 0000000000-05-059032
AI Filing Summary & Sentiment
File numbers found in text: 001-05684
Letter
November 22, 2005 By Facsimile and U.S. Mail Mr. Richard L. Keyser Chairman and CEO W.W. Grainger, Inc. 100 Grainger Parkway Lake Forest, Ill 60045-5201
Re: W.W. Grainger, Inc. Form 10-K for Fiscal Year Ended December 31, 2004 Filed February 28, 2005 File No. 001-05684
Dear Mr. Keyser:
We have reviewed the above referenced filing and have the following comments. Where indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this information, we may raise additional comments.
Please understand the purpose of our review is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Part IV, page 21 Item 15: Exhibits and Financial Statement Schedules, page 21
1. We do not see the Shareholder Rights Plan document included as an exhibit or incorporated by reference. Please refer us to the filed document that includes this Plan document. If a copy has not been included in a prior filing, please tell us
Mr. Richard L. Keyser W.W. Grainger, Inc. Novem ber 22, 2005 Page 2
why and provide a copy of the docum ent with your response. See Item 601(a) of Regulation S-K.
Notes to Consolidated Financial Statem ents, page 34 Note 20-Preferred Share Purchase Rights, page 51
2. Please tell us how you account for the shareholders’ rights to purchase fractional shares of junior participating preferred stock or, alternatively, tell us why you do not account for the purchase rights and include any applicable guidance that supports your accounting treatm ent. In your response please tell us your consideration of SFAS No. 150, SFAS No. 133 and EITF No. 00-19 in your determ ination and f urther tell us: • Whether the purchase rights are freestanding financial instrum ents or a feature em bedded in the com mon shares or other instrum ents; • If the purchase rights represent an obligation, either conditional or unconditional, requiring you to transfer shares; • Whether the purchase rights provide f or settlem ent in the f orm of cash, shares, a com bination of cash and shares or other instrum ents. If m ore than one form of consideration is available tell us if the issuer or holders possess the right to select the form of consideration; • What ‘certain’ circum stances perm it the exercise of the purchase rights other than the announcem ent of a tender offer for 15% or m ore of your common shares; • The possible adjustm ents that could occur to the purchase price of $250 per share; • Whether the issuer or holders possess the right to redeem the purchase rights at $0.001 per right and how this feature relates to the other exercise feature that perm its holders to purchase shares at $250 per share; and • What you intend to express in disclosing that purchase rights generally entitle the holder to ef fect a purchase of stock, other securities or assets having a m arket price equal to twice the exercise price.
Note 21 – Segm ent Inform ation, page 51
3. We note that you aggregate several different businesses in the Branch-based Distribution segm ent. Tell us in m ore detail how you determ ined that aggregation was appropriate in accordance with paragraph 17 of SFAS No. 131. Please focus your response on the sim ilarity of the econom ic characteristics of the aggregated businesses. In that regard, please provide us quantitative support for your
Mr. Richard L. Keyser W.W. Grainger, Inc. Novem ber 22, 2005 Page 3
assertions such as historical sales, m argin and operating prof it figures. W e will presum e that both the products sold as custom ers are sim ilar.
Note 24 – Unclassified – Net, page 55
4. We note that you have included gains and losses on the sale of fixed assets as part of non-operating item s. In future filings, we note that gains and losses on the sale of long-lived assets should be included as part of incom e from continuing operations. See paragraph 45 of SFAS No. 144.
As appropriate, please am end your filing and respond to these com ments within 10 business days, or tell us when you will provide us with a response. You m ay wish to provide us with m arked copies of the am endm ent to expedite our review. Please furnish a cover letter with your am endm ent that keys your responses to our com ments and provides any requested inform ation. Detailed letters greatly facilitate our review. File your response on EDGAR as a correspondence file. Please understand that we m ay have additional com ments after reviewing your responses to our com ments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing reviewed by the staff to be certain that they have provided all inform ation investors require for an inform ed decision. Since the com pany and its managem ent are in possession of all facts relating to a com pany’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have m ade.
In connection with responding to our com ments, please provide, in writing, a statem ent from the com pany acknowledging that:
the com pany is responsible for the adequacy and accuracy of the disclosure in the filing;
staff com ments or changes to disclosure in response to staff com ments do not foreclose the Com mission from taking any action with respect to the filing; and
the com pany m ay not assert staff com ments as a defense in any proceeding initiated by the Com mission or any person under the federal securities laws of the United States.
In addition, please be advised that the Division of Enforcem ent has access to all inform ation you provide to the staff of th e Division of Corporation Finance in our review of your filing or in response to our com ments on your filing.
Mr. Richard L. Keyser W.W. Grainger, Inc. Novem ber 22, 2005 Page 4
You m ay contact Brian McAllister, St aff Accountant at (202) 551-3341 or m e at (202) 551-3841 if you have any questions regarding com ments on the financial statem ents and related m atters.
S incerely,
M ichael Moran Accounting Branch Chief
Show Raw Text
Mail Stop 3561
November 22, 2005
By Facsimile and U.S. Mail
Mr. Richard L. Keyser
Chairman and CEO
W.W. Grainger, Inc.
100 Grainger Parkway
Lake Forest, Ill 60045-5201
Re: W.W. Grainger, Inc.
Form 10-K for Fiscal Year Ended December 31, 2004
Filed February 28, 2005
File No. 001-05684
Dear Mr. Keyser:
We have reviewed the above referenced filing and have the following comments.
Where indicated, we think you should revise your document in response to these
comments. If you disagree, we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure. After reviewing this information, we may
raise additional comments.
Please understand the purpose of our review is to assist you in your compliance
with the applicable disclosure requirements and to enhance the overall disclosure in your
filing. We look forward to working with you in these respects. We welcome any
questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Part IV, page 21
Item 15: Exhibits and Financial Statement Schedules, page 21
1. We do not see the Shareholder Rights Plan document included as an exhibit or incorporated by reference. Please refer us to the filed document that includes this
Plan document. If a copy has not been included in a prior filing, please tell us
Mr. Richard L. Keyser
W.W. Grainger, Inc.
Novem ber 22, 2005
Page 2
why and provide a copy of the docum ent with your response. See Item 601(a) of
Regulation S-K.
Notes to Consolidated Financial Statem ents, page 34
Note 20-Preferred Share Purchase Rights, page 51
2. Please tell us how you account for the shareholders’ rights to purchase fractional
shares of junior participating preferred stock or, alternatively, tell us why you do
not account for the purchase rights and include any applicable guidance that
supports your accounting treatm ent. In your response please tell us your
consideration of SFAS No. 150, SFAS No. 133 and EITF No. 00-19 in your
determ ination and f urther tell us:
• Whether the purchase rights are freestanding financial instrum ents or a
feature em bedded in the com mon shares or other instrum ents;
• If the purchase rights represent an obligation, either conditional or
unconditional, requiring you to transfer shares;
• Whether the purchase rights provide f or settlem ent in the f orm of cash,
shares, a com bination of cash and shares or other instrum ents. If m ore
than one form of consideration is available tell us if the issuer or holders
possess the right to select the form of consideration;
• What ‘certain’ circum stances perm it the exercise of the purchase rights
other than the announcem ent of a tender offer for 15% or m ore of your
common shares;
• The possible adjustm ents that could occur to the purchase price of $250
per share;
• Whether the issuer or holders possess the right to redeem the purchase
rights at $0.001 per right and how this feature relates to the other exercise
feature that perm its holders to purchase shares at $250 per share; and
• What you intend to express in disclosing that purchase rights generally
entitle the holder to ef fect a purchase of stock, other securities or assets
having a m arket price equal to twice the exercise price.
Note 21 – Segm ent Inform ation, page 51
3. We note that you aggregate several different businesses in the Branch-based
Distribution segm ent. Tell us in m ore detail how you determ ined that aggregation
was appropriate in accordance with paragraph 17 of SFAS No. 131. Please focus
your response on the sim ilarity of the econom ic characteristics of the aggregated
businesses. In that regard, please provide us quantitative support for your
Mr. Richard L. Keyser
W.W. Grainger, Inc.
Novem ber 22, 2005
Page 3
assertions such as historical sales, m argin and operating prof it figures. W e will
presum e that both the products sold as custom ers are sim ilar.
Note 24 – Unclassified – Net, page 55
4. We note that you have included gains and losses on the sale of fixed assets as part
of non-operating item s. In future filings, we note that gains and losses on the sale
of long-lived assets should be included as part of incom e from continuing
operations. See paragraph 45 of SFAS No. 144.
As appropriate, please am end your filing and respond to these com ments within
10 business days, or tell us when you will provide us with a response. You m ay wish to
provide us with m arked copies of the am endm ent to expedite our review. Please furnish
a cover letter with your am endm ent that keys your responses to our com ments and
provides any requested inform ation. Detailed letters greatly facilitate our review. File
your response on EDGAR as a correspondence file. Please understand that we m ay have
additional com ments after reviewing your responses to our com ments.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing reviewed by the staff to be certain that they have provided all
inform ation investors require for an inform ed decision. Since the com pany and its
managem ent are in possession of all facts relating to a com pany’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have m ade.
In connection with responding to our com ments, please provide, in writing, a
statem ent from the com pany acknowledging that:
the com pany is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff com ments or changes to disclosure in response to staff com ments do not
foreclose the Com mission from taking any action with respect to the filing; and
the com pany m ay not assert staff com ments as a defense in any proceeding
initiated by the Com mission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of Enforcem ent has access to all
inform ation you provide to the staff of th e Division of Corporation Finance in our
review of your filing or in response to our com ments on your filing.
Mr. Richard L. Keyser
W.W. Grainger, Inc.
Novem ber 22, 2005
Page 4
You m ay contact Brian McAllister, St aff Accountant at (202) 551-3341 or m e at
(202) 551-3841 if you have any questions regarding com ments on the financial
statem ents and related m atters.
S incerely,
M ichael Moran
Accounting Branch Chief