W.W. Grainger (GWW)

Net cash flows from operations of $468.9 million in 2007, $436.8 million in 2006 and $432.5 million in 2005 continued to improve Grainger’s financial position and serve as the primary source of funding. Net cash provided by operations increased $32.1 million in 2007 over 2006, driven primarily by increased net earnings. The Change in operating assets and liabilities – net of business acquisitions used cash of $106.4 million in 2007. This use of cash was primarily driven by increases in inventory and trade accounts receivable as well as a decrease in trade accounts payable due to the timing of payments at year-end. The increases in inventory and trade accounts receivable were due to product line expansion and increased sales. These changes were partially offset by an increase in other current liabilities due to higher compensation, benefit and profit sharing accruals, the result of increased headcount and improved Company performance. The increase in net cash flows from operations from 2005 to 2006 was primarily attributable to increased net earnings. The Change in operating assets and liabilities – net of business acquisitions used cash of $97.2 million in 2006. This use of cash was primarily driven by increases in inventory and trade accounts receivable, which were up due to increased sales and an increase in days sales outstanding. These changes were partially offset by an increase in trade accounts payable due to the higher inventory purchases.

Net cash flows used in investing activities were $197.0 million, $139.7 million and $163.0 million for 2007, 2006 and 2005, respectively. Capital expenditures for property, buildings, equipment and capitalized software were $197.4 million, $136.8 million and $157.2 million in 2007, 2006 and 2005, respectively. Additional information regarding capital spending is detailed in the

Net cash flows from operations of $468.9 million in 2007, $436.8 million in 2006 and $432.5 million in 2005 continued to improve Grainger’s financial position and serve as the primary source of funding. Net cash provided by operations increased $32.1 million in 2007 over 2006, driven primarily by increased net earnings. The Change in operating assets and liabilities – net of business acquisitions used cash of $106.4 million in 2007. This use of cash was primarily driven by increases in inventory and trade accounts receivable as well as a decrease in trade accounts payable due to the timing of payments at year-end. The increases in inventory and trade accounts receivable were due to product line expansion and increased sales. These changes were partially offset by an increase in other current liabilities due to higher compensation, benefit and profit sharing accruals, the result of increased headcount
and improved Company performance. The increase in net cash flows from operations from 2005 to 2006 was primarily attributable to increased net earnings. The Change in operating assets and liabilities – net of business acquisitions used cash of $97.2 million in 2006. This use of cash was primarily driven by increases in inventory and trade accounts receivable, which were up due to increased sales and an increase in days sales outstanding. These changes were partially offset by an increase in trade accounts payable due to the higher inventory purchases.

Net cash flows used in investing activities were $197.0 million, $139.7 million and $163.0 million for 2007, 2006 and 2005, respectively. Capital expenditures for property, buildings, equipment and capitalized software were $197.4 million, $136.8 million and $157.2 million in 2007, 2006 and 2005, respectively. Additional information regarding capital spending is detailed in the

Net cash flows from operations of $436.8 million in 2006, $432.5 million in 2005 and $406.5 million in 2004 continued to improve Grainger’s financial position and serve as the primary source of funding. Net cash provided by operations increased $4.3 million in 2006 over 2005, driven primarily by increased net earnings. The Change in operating assets and liabilities – net of business acquisitions and joint venture contributions used cash of $97.2 million in 2006. The use of cash was primarily driven by increases in inventory and trade accounts receivable, which were up due to increased sales throughout 2006 and an increase in days sales outstanding. These changes were partially offset by an increase in trade accounts payable due to the higher inventory purchases. The increase in net cash flows from operations from 2004 to 2005 was primarily attributable to increased net earnings. The Change in operating assets and liabilities – net of business acquisitions and joint venture contributions used cash of $57.1 million in 2005. The use of cash was primarily driven by increases in inventory and trade accounts receivable, which were up due to higher inventory purchases and sales in December. These changes were partially offset by an increase in trade accounts payable due to the higher inventory purchases and increases in profit sharing and compensation-related accruals, driven by an improved 2005 performance.

Net cash flows used in investing activities were $139.7 million, $163.0 million and $142.4 million for 2006, 2005 and 2004, respectively. Capital expenditures for property, buildings, equipment and capitalized software were $136.8 million, $157.2 million and $160.8 million in 2006, 2005 and 2004, respectively. Additional information regarding capital spending is detailed in the

Net cash flows from operations of $432.5 million in 2005, $406.5 million in 2004 and $394.1 million in 2003 continued to improve Grainger’s financial position and serve as the primary source of funding. Net cash provided by operations increased $26.0 million in 2005 over 2004 driven primarily by increased net earnings. The Change in operating assets and liabilities – net of business acquisition and joint venture contributions used cash of $57.1 million in 2005. The use of cash was primarily driven by increases in inventory and trade accounts receivable, which were up due to higher inventory purchases and sales in December. These changes were partially offset by an increase in trade accounts payable due to the higher inventory purchases and increases in profit sharing and compensation related accruals, driven by an improved 2005 performance. The increase in net cash flows from operations from 2003 to 2004 was primarily attributable to increased net earnings and an improvement in working capital management. Increases in current liabilities and trade accounts payable were partially offset by increases in inventory and accounts receivables.

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Net cash flows used in investing activities were $163.0 million, $142.4 million and $105.3 million for 2005, 2004 and 2003, respectively. Capital expenditures for property, buildings, equipment and capitalized software were $157.2 million, $160.8 million and $80.5 million in 2005, 2004 and 2003, respectively. Additional information regarding capital spending is detailed in the