XML 40 R24.htm IDEA: XBRL DOCUMENT v3.6.0.2
EARNINGS PER SHARE
 12 Months Ended
Dec. 31, 2016
Earnings Per Share [Abstract]  
EARNINGS PER SHARE
EARNINGS PER SHARE
Certain of the Company’s stock incentive plans grant stock awards that contain nonforfeitable rights to dividends meet the criteria of a participating security. Under the two-class method, earnings are allocated between common stock and participating securities. The presentation of basic and diluted earnings per share is required only for each class of common stock and not for participating securities. As such, the Company presents basic and diluted earnings per share for its one class of common stock.
The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. The Company’s reported net earnings are reduced by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders for purposes of calculating earnings per share.
The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock or the two-class method. The Company has determined the two-class method to be the more dilutive. As such, the earnings allocated to common stock shareholders in the basic earnings per share calculation is adjusted for the reallocation of undistributed earnings to participating securities to arrive at the earnings allocated to common stock shareholders for calculating the diluted earnings per share.
The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in thousands of dollars, except for share and per share amounts):
 
For the Years Ended December 31,
 
2016
 
2015
 
2014
 
 
 
 
 
 
Net earnings attributable to W.W. Grainger, Inc. as reported
$
605,928

 
$
768,996

 
$
801,729

   Distributed earnings available to participating securities
(2,383
)
 
(2,823
)
 
(3,154
)
   Undistributed earnings available to participating securities
(3,044
)
 
(4,735
)
 
(6,370
)
Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders
600,501

 
761,438

 
792,205

   Undistributed earnings allocated to participating securities
3,044

 
4,735

 
6,370

   Undistributed earnings reallocated to participating securities
(3,023
)
 
(4,692
)
 
(6,290
)
Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders
$
600,522

 
$
761,481

 
$
792,285

 
 
 
 
 
 
Denominator for basic earnings per share – weighted average shares
60,430,892

 
65,156,864

 
68,334,322

Effect of dilutive securities
409,038

 
608,257

 
871,422

Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities
60,839,930

 
65,765,121

 
69,205,744

Earnings per share two-class method
 

 
 

 
 
Basic
$
9.94

 
$
11.69

 
$
11.59

Diluted
$
9.87

 
$
11.58

 
$
11.45