Recently, Acklands-Grainger Inc., a wholly owned subsidiary of W.W. Grainger Inc. (GWW), acquired assets of the K&D Pratt Industrial Division. This division, which was earlier owned and operated by K&D Pratt Group Inc., distributes industrial and safety products.

K&D Pratt Industrial Division is a leading distributor in Atlantic Canada. The division’s strong customer relationships will further strengthen Grainger’s presence in this region.

This is the third acquisition announcement by Grainger since the beginning of fourth quarter 2009. In October, Grainger announced an all cash acquisition of Imperial Supplies, LLC from American Capital Ltd. (ACAS). The company said that the acquisition will be accretive to its 2010 earnings by 3?5 cents a share Incorporatedluding product and transportation cost savings.

Again in mid November, Grainger announced the acquisition of Alliance Energy Solutions. The company expects the acquisition to be accretive to earnings by approximately 1?2 cents per share in 2010.

The company expects higher sales and earnings for 2010, boosted by acquisitions made in 2009. Despite a weakening economy, Grainger continues to concentrate on increasing market share through its market expansion and product-line expansion programs.

At the end of the third quarter, Grainger had cash and cash equivalents of $672.0 million on its balance sheet. The company generated operating cash flow of $509.7 million in the first nine months of 2009. Given the company’s strong balance sheet and the ability to generate positive cash flow, we believe Grainger has adequate financial flexibility to pursue additional growth opportunities.

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