Company to take an after-tax, non-recurring charge of $38 million including write-down of other digital investments
CHICAGO, (April 23, 2001) – Grainger today announced it will discontinue the operations of Material Logic, the digital unit formed to seek other equity participants. As a result of this action, Grainger will shut down all of Material Logic’s branded e-commerce sites except FindMRO, which will remain an integrated sourcing service for Grainger customers.
“The condition of the financial markets and the economy limited funding opportunities. Material Logic’s advanced e-procurement solution was sound, but customer adoption rates were slower than expected,” said Richard L. Keyser, Grainger chairman and chief executive officer. “The Internet continues to be an important part of our growth strategy led by Grainger.com, which provides our customers with speed, convenience, and cost savings.”
The company will help ensure a smooth transition for the 178 Material Logic employees whose jobs will be eliminated by providing a comprehensive separation package including outplacement services.
In connection with the closing of Material Logic, Grainger will take a non-recurring, after-tax charge of $24 million, or $0.25 per share, in the second quarter of 2001. In addition, the company will write down its investments in other digital enterprises and take an after-tax charge of $14 million or $0.15 per share. The total effect of both non-recurring charges will be $0.40 per share in the second quarter of 2001. The charge will be partially offset by elimination of the expected on-going losses of Material Logic and the equity losses of Works.com, equivalent to $0.29 per share for the remainder of the year. The company, therefore, reiterates its earnings per share guidance for the full year of $1.80 to $2.10, including the effect of the write-down and anticipated losses.
W.W. Grainger, Inc. (NYSE:GWW), with 2000 sales of $5 billion, is the leading North American provider of maintenance, repair, and operating (MRO) supplies and related information to businesses and institutions. Grainger shares are traded on the New York and Chicago stock exchanges. For more information, visit Grainger online at www.grainger.com.
This document may contain statements that are forward-looking, i.e. not historical facts. The forward-looking statements (generally identified by words or phrases indicating a projection or future expectation) 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.