Lecture20 Spring 2009

Lecture20 Spring 2009 - Lecture 20 Shareholders Equity W W...

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Lecture 20 Shareholders Equity W. W. Grainger Financial Statement Analysis (FSA)
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W. W. Grainger Inc. Answer the following questions using the attached financial statement information for W. W. Grainger: 1. What is Grainger’s fiscal 2005 net income after taxes? 2. What was the amount of dividends that Grainger declared during fiscal 2005? 3. What was the amount of dividends that Grainger paid in cash to its shareholders during fiscal 2005? 4. During fiscal 2005, how were total assets, total liabilities, and total shareholders’ equity affected by the exercise of stock options? 5. If Grainger had always amortized the estimated fair value at grant date over the options’ vesting period, what would net income be for fiscal 2005?
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As of December 31, 2005 2004 2003 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 4,590 $ 9,485 $ 144,135 Trade accounts payable 319,254 289,388 257,806 Accrued compensation and benefits 164,574 138,143 121,550 Accrued contributions to employees’ profit sharing plans 106,825 89,878 58,100 Accrued expenses 107,167 100,287 81,359 Income taxes 24,554 35,253 43,690 Total current liabilities 726,964 662,434 706,640 LONG-TERM DEBT (less current maturities) 4,895 4,895 DEFERRED INCOME TAXES 7,019 4,482 ACCRUED EMPLOYMENT- RELATED BENEFITS COSTS 80,067 74,687 68,008 SHAREHOLDERS’ EQUITY Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding Common Stock – $0.50 par value – 300,000,000 shares authorized; issued, 109,667,938, 109,672,938 and 109,377,216 shares, respectively 54,834 54,836 54,689 Additional contributed capital 451,578 432,171 394,409 Retained earnings 2,722,103 2,458,442 2,242,762 Unearned restricted stock compensation (17,280) (14,463) (11,471) Accumulated other comprehensive earnings 27,082 18,052 2,594 Treasury stock, at cost – 19,952,297, 19,075,511 and 18,356,227 shares, respectively (949,341) (881,068) (837,848) Total shareholders’ equity 2,288,976 2,067,970 1,845,135 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,107,921 $ 2,809,573 $ 2,624,678
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Common Stock Additional Contributed Capital Retained Earnings Unearned Restricted Stock Compensation Accumulated Other Comprehensive Earnings (Losses) Treasury Stock Balance at January 1, 2003 $ 54,509 $ 379,942 $ 2,083,072 $ (17,144) $ (35,742) $ (796,939) Exercise of stock options 205 14,726 250 Tax benefits on stock options exercised 1,855 Issuance of other stock-based compensation awards (5) (448) (1,083) Tax benefits on other vested stock-based compensation awards 236 Remeasurement of other stock-based compensation awards 129 Cancellation of other stock-based compensation awards (20) (1,986) 2,005 Amortization of unearned compensation on other stock- based compensation awards 4,751 Purchase of 918,300 shares of treasury stock; 6,160 shares issued (45) (41,159) Other comprehensive earnings 38,336 Net earnings 226,971 Cash dividends paid ($0.735 per share) (67,281) Balance at December 31, 2003 $ 54,689 $ 394,409 $ 2,242,762 $ (11,471) $ 2,594 $ (837,848) Exercise of stock options 253 11,910 60,112 Tax benefits on stock options exercised 10,138 Issuance of other stock-based compensation awards 5 12,647 (12,652) Tax benefits on other vested stock-based compensation awards 1,930 Conversion of restricted stock to restricted stock units (108) 108
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