SEGMENT INFORMATION

Grainger’s two reportable segments are the U.S. and Canada. The U.S. operating segment reflects the results of Grainger's U.S. businesses. The Canada operating segment reflects the results for Acklands-Grainger, Inc. and its subsidiaries. Other businesses include Zoro Tools, Inc. (Zoro), the single channel online business in the U.S., MonotaRO Co. (MonotaRO) in Japan and operations in Europe, Asia and Latin America. These businesses individually do not meet the criteria of a reportable segment. Operating segments generate revenue almost exclusively through the distribution of MRO supplies, as service revenues account for approximately 1% of total revenues for each operating segment.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment transfer prices are established at external selling prices, less costs not incurred due to a related party sale. The segment results include certain centrally incurred costs for shared services that are charged to the segments based upon the relative level of service used by each operating segment.

Following is a summary of segment results (in thousands of dollars):



	2017
	United States			Canada			Other businesses			Total
Total net sales	$	7,960,075		$	752,900		$	2,120,303		$	10,833,278
Intersegment net sales	(403,824		)	(35		)	(4,561		)	(408,420		)
Net sales to external customers	7,556,251			752,865			2,115,742			10,424,858

Segment operating earnings	1,213,138			(76,538		)	55,633			1,192,233

Segment assets	2,309,734			278,633			605,452			3,193,819
Depreciation and amortization	168,862			18,965			31,016			218,843
Additions to long-lived assets	$	187,384		$	7,594		$	61,735		$	256,713



	2016
	United States			Canada			Other businesses			Total
Total net sales	$	7,870,105		$	733,829		$	1,884,963		$	10,488,897
Intersegment net sales	(347,468		)	(110		)	(4,115		)	(351,693		)
Net sales to external customers	7,522,637			733,719			1,880,848			10,137,204

Segment operating earnings	1,274,851			(65,362		)	40,684			1,250,173

Segment assets	2,275,009			286,035			494,067			3,055,111
Depreciation and amortization	159,334			18,050			23,792			201,176
Additions to long-lived assets	$	153,556		$	12,275		$	95,288		$	261,119



	2015
	United States			Canada			Other businesses			Total
Total net sales	$	7,963,416		$	890,530		$	1,405,750		$	10,259,696
Intersegment net sales	(282,305		)	(105		)	(3,902		)	(286,312		)
Net sales to external customers	7,681,111			890,425			1,401,848			9,973,384

Segment operating earnings	1,371,626			27,368			48,051			1,447,045

Segment assets	2,191,045			317,504			507,116			3,015,665
Depreciation and amortization	150,654			17,334			19,999			187,987
Additions to long-lived assets	$	302,316		$	20,464		$	21,135		$	343,915

Following are reconciliations of the segment information with the consolidated totals per the financial statements (in thousands of dollars):



	2017			2016			2015
Operating earnings:
Total operating earnings for reportable segments	$	1,192,233		$	1,250,173		$	1,447,045
Unallocated expenses	(143,571		)	(130,676		)	(146,725		)
Total consolidated operating earnings	$	1,048,662		$	1,119,497		$	1,300,320
Assets:
Assets for reportable segments	$	3,193,819		$	3,055,111		$	3,015,665
Other current and noncurrent assets	2,428,074			2,464,656			2,624,966
Unallocated assets	182,361			174,540			217,124
Total consolidated assets	$	5,804,254		$	5,694,307		$	5,857,755



	2017
	Segment Totals		Unallocated		Consolidated Total
Other significant items:
Depreciation and amortization	$	218,843	$	21,819	$	240,662
Additions to long-lived assets	$	256,713	$	5,283	$	261,996

			Revenues		Long-Lived Assets
Geographic information:
United States			$	7,948,291	$	1,097,543
Canada			761,065		199,660
Other foreign countries			1,715,502		246,700
			$	10,424,858	$	1,543,903



	2016
	Segment Totals		Unallocated		Consolidated Total
Other significant items:
Depreciation and amortization	$	201,176	$	21,469	$	222,645
Additions to long-lived assets	$	261,119	$	10,542	$	271,661

			Revenues		Long-Lived Assets
Geographic information:
United States			$	7,834,361	$	1,134,817
Canada			739,687		210,931
Other foreign countries			1,563,156		210,605
			$	10,137,204	$	1,556,353



	2015
	Segment Totals		Unallocated		Consolidated Total
Other significant items:
Depreciation and amortization	$	187,987	$	18,854	$	206,841
Additions to long-lived assets	$	343,915	$	16,912	$	360,827

			Revenues		Long-Lived Assets
Geographic information:
United States			$	7,866,300	$	1,231,083
Canada			897,431		215,202
Other foreign countries			1,209,653		153,508
			$	9,973,384	$	1,599,793

Revenues are attributed to countries based on the ship-to location of the customer.

Unallocated expenses and unallocated assets primarily relate to the Company headquarters' support services, which are not part of any business segment, as well as intercompany eliminations. Unallocated expenses include payroll and benefits, depreciation and other costs associated with headquarters-related support services. Unallocated assets include non-operating cash and cash equivalents, certain prepaid expenses and property, buildings and equipment-net.

Assets for reportable segments include net accounts receivable and first-in, first-out inventory, which are reported to the Company's Chief Operating Decision Maker. Long-lived assets consist of property, buildings, equipment and capitalized software.

Depreciation and amortization presented above includes depreciation of long-lived assets and amortization of capitalized software.