COVER
COVER - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 31, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 1-5684 | ||
Entity Registrant Name | W.W. Grainger, Inc. | ||
Entity Incorporation, State or Country Code | IL | ||
Entity Tax Identification Number | 36-1150280 | ||
Entity Address, Address Line One | 100 Grainger Parkway, | ||
Entity Address, City or Town | Lake Forest, | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60045-5201 | ||
City Area Code | 847 | ||
Local Phone Number | 535-1000 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | GWW | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 13,765,366,450 | ||
Entity Common Stock, Shares Outstanding | 53,656,306 | ||
Entity Central Index Key | 0000277135 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Documents Incorporated by Reference | Portions of the registrant's definitive proxy statement to be filed in connection with the annual meeting of shareholders to be held on April 29, 2020 , are incorporated by reference into Part III hereof of this Form 10-K where indicated. The registrant's definitive 2019 proxy statement will be filed on or about March 19, 2020. |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Net sales | $ 11,486 | $ 11,221 | $ 10,425 |
Cost of goods sold | 7,089 | 6,873 | 6,327 |
Gross profit | 4,397 | 4,348 | 4,098 |
Selling, general and administrative expenses | 3,135 | 3,190 | 3,063 |
Operating earnings | 1,262 | 1,158 | 1,035 |
Other (income) expense: | |||
Interest expense, net | 79 | 82 | 86 |
Other, net | (26) | (5) | 13 |
Total other expense, net | 53 | 77 | 99 |
Earnings before income taxes | 1,209 | 1,081 | 936 |
Income taxes | 314 | 258 | 313 |
Net earnings | 895 | 823 | 623 |
Less: Net earnings attributable to noncontrolling interest | 46 | 41 | 37 |
Net earnings attributable to W.W. Grainger, Inc. | $ 849 | $ 782 | $ 586 |
Earnings per share: | |||
Basic (in dollars per share) | $ 15.39 | $ 13.82 | $ 10.07 |
Diluted (in dollars per share) | $ 15.32 | $ 13.73 | $ 10.02 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 54.7 | 56.1 | 57.7 |
Diluted (in shares) | 54.9 | 56.5 | 58 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 895 | $ 823 | $ 623 |
Other comprehensive earnings (losses): | |||
Foreign currency translation adjustments, net of reclassification (see Note 5 and Note 12) | 26 | (41) | 93 |
Postretirement benefit plan re-measurement, net of tax expense $29 million (see Note 8 and Note 12) | 0 | 0 | 47 |
Postretirement benefit plan reclassification, net of tax benefit of $2 million, $3 million and $1 million, respectively | (6) | (7) | 2 |
Total other comprehensive (losses) earnings | 20 | (48) | 142 |
Comprehensive earnings, net of tax | 915 | 775 | 765 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | |||
Net earnings | 46 | 41 | 37 |
Foreign currency translation adjustments | 3 | 3 | 4 |
Total comprehensive earnings (losses) attributable to noncontrolling interest | 49 | 44 | 41 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 866 | $ 731 | $ 724 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Postretirement benefit plan remeasurement, net of tax expense | $ 29 | ||
Postretirement benefit plan reclassification, net of tax benefit | $ 2 | $ 3 | $ 1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 360 | $ 538 |
Accounts receivable (less allowance for doubtful accounts of $21 million and $25 million, respectively) | 1,425 | 1,385 |
Inventories – net | 1,655 | 1,541 |
Prepaid expenses and other assets | 104 | 83 |
Prepaid income taxes | 11 | 10 |
Total current assets | 3,555 | 3,557 |
PROPERTY, BUILDINGS AND EQUIPMENT – NET | 1,400 | 1,352 |
DEFERRED INCOME TAXES | 11 | 12 |
GOODWILL | 429 | 424 |
INTANGIBLES – NET | 304 | 460 |
OTHER ASSETS | 306 | 68 |
TOTAL ASSETS | 6,005 | 5,873 |
CURRENT LIABILITIES | ||
Short-term debt | 55 | 49 |
Current maturities of long-term debt | 246 | 81 |
Trade accounts payable | 719 | 678 |
Accrued compensation and benefits | 228 | 262 |
Accrued contributions to employees’ profit-sharing plans | 85 | 133 |
Accrued expenses | 318 | 269 |
Income taxes payable | 27 | 29 |
Total current liabilities | 1,678 | 1,501 |
LONG-TERM DEBT (less current maturities) | 1,914 | 2,090 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 106 | 103 |
OTHER NON-CURRENT LIABILITIES | 247 | 86 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; issued 109,659,219 shares | 55 | 55 |
Additional contributed capital | 1,182 | 1,134 |
Retained earnings | 8,405 | 7,869 |
Accumulated other comprehensive losses | (154) | (171) |
Treasury stock, at cost - 55,971,691 and 53,796,859 shares, respectively | (7,633) | (6,966) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,855 | 1,921 |
Noncontrolling interest | 205 | 172 |
Total shareholders' equity | 2,060 | 2,093 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 6,005 | $ 5,873 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 21 | $ 25 |
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized (in shares) | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued (in shares) | 0 | 0 |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost (in shares) | 55,971,691 | 53,796,859 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net earnings | $ 895 | $ 823 | $ 623 |
Provision for losses on accounts receivable | 12 | 7 | 16 |
Deferred income taxes and tax uncertainties | 4 | 7 | (5) |
Depreciation and amortization | 229 | 257 | 264 |
Impairment of goodwill, intangible and other assets | 123 | 156 | 28 |
Net (gains) losses from sales of assets and business divestitures | (6) | (6) | 28 |
Stock-based compensation | 40 | 47 | 33 |
Subtotal | 402 | 468 | 364 |
Change in operating assets and liabilities | |||
Accounts receivable | (42) | (79) | (103) |
Inventories | (106) | (129) | (5) |
Prepaid expenses and other assets | (33) | (2) | (5) |
Trade accounts payable | 32 | (51) | 72 |
Accrued liabilities | (84) | 18 | 113 |
Income taxes – net | (3) | 36 | 4 |
Other non-current liabilities | (19) | (27) | (6) |
Net cash provided by operating activities | 1,042 | 1,057 | 1,057 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Additions to property, buildings, equipment and intangibles | (221) | (239) | (237) |
Proceeds from sales of assets | 17 | 86 | 120 |
Equity method proceeds (investment) | 2 | ||
Equity method proceeds (investment) | (13) | (35) | |
Other – net | 0 | 0 | 6 |
Net cash used in investing activities | (202) | (166) | (146) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net decrease in commercial paper | 0 | 0 | (370) |
Borrowings under lines of credit | 20 | 26 | 74 |
Payments against lines of credit | (15) | (31) | (43) |
Proceeds from issuance of long-term debt | 0 | 0 | 401 |
Payments of long-term debt | (42) | (96) | (39) |
Proceeds from stock options exercised | 49 | 181 | 47 |
Payments for employee taxes withheld from stock awards | (11) | (12) | (28) |
Purchases of treasury stock | (700) | (425) | (605) |
Cash dividends paid | (328) | (316) | (304) |
Other – net | 4 | 3 | 0 |
Net cash used in financing activities | (1,023) | (670) | (867) |
Exchange rate effect on cash and cash equivalents | 5 | (10) | 9 |
NET CHANGE IN CASH AND CASH EQUIVALENTS: | (178) | 211 | 53 |
Cash and cash equivalents at beginning of year | 538 | 327 | 274 |
Cash and cash equivalents at end of year | 360 | 538 | 327 |
Supplemental cash flow information: | |||
Cash payments for interest (net of amounts capitalized) | 84 | 86 | 78 |
Cash payments for income taxes | $ 322 | $ 229 | $ 335 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] |
Beginning balance at Dec. 31, 2016 | $ 1,905 | $ 55 | $ 1,030 | $ 7,113 | $ (273) | $ (6,128) | $ 108 |
Stock based compensation | 70 | 10 | 60 | ||||
Purchases of treasury stock | (608) | (608) | |||||
Net earnings | 623 | 586 | 37 | ||||
Other comprehensive earnings (losses) | 142 | 138 | 4 | ||||
Cash dividends paid | (304) | 1 | (294) | (11) | |||
Ending balance at Dec. 31, 2017 | 1,828 | 55 | 1,041 | 7,405 | (135) | (6,676) | 138 |
Stock based compensation | 214 | 92 | 122 | ||||
Purchases of treasury stock | (412) | (412) | |||||
Net earnings | 823 | 782 | 41 | ||||
Other comprehensive earnings (losses) | (48) | (51) | 3 | ||||
Capital contribution | 4 | 4 | |||||
Reclassification due to the adoption of ASU 2018-02 | (15) | 15 | |||||
Cash dividends paid | (316) | 1 | (303) | (14) | |||
Ending balance at Dec. 31, 2018 | 2,093 | 55 | 1,134 | 7,869 | (171) | (6,966) | 172 |
Stock based compensation | 79 | 46 | 33 | ||||
Purchases of treasury stock | (700) | (700) | |||||
Net earnings | 895 | 849 | 46 | ||||
Other comprehensive earnings (losses) | 20 | 17 | 3 | ||||
Capital contribution | 2 | 2 | |||||
Cash dividends paid | (329) | (313) | (16) | ||||
Ending balance at Dec. 31, 2019 | $ 2,060 | $ 55 | $ 1,182 | $ 8,405 | $ (154) | $ (7,633) | $ 205 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share (in dollars per share) | $ 5.68 | $ 5.36 | $ 5.06 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPANY BACKGROUND W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America, Japan and Europe. In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries. PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements (Financial Statements) include the accounts of the Company and its subsidiaries over which the Company exercises control. All significant intercompany transactions are eliminated from the consolidated financial statements. The Company has a controlling ownership interest in MonotaRO Co., Ltd. (MonotaRO), the endless assortment business in Japan, with the residual representing the noncontrolling interest. USE OF ESTIMATES The preparation of the Company's consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. FOREIGN CURRENCY TRANSLATION The U.S. dollar is the Company's reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Translation gains or losses are recorded as a separate component of other comprehensive earnings (losses). REVENUE RECOGNITION The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), the transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations, and are satisfied when the services are rendered. Total service revenue is not material and accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2019 . The Company’s revenue is measured at the determinable transaction price, net of any variable considerations granted to customers and any taxes collected from customers and subsequently remitted to governmental authorities. Variable considerations include rights to return product and sales incentives, which primarily consist of volume rebates. These variable considerations are estimated throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $25 million and $29 million as of December 31, 2019 and 2018 , respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $57 million and $62 million as of December 31, 2019 and 2018 , respectively, and are reported as part of Accrued expenses. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2019 and 2018 . COST OF GOODS SOLD (COGS) COGS includes the purchase cost of goods sold, net of vendor considerations, in-bound shipping and handling costs and service costs. The Company receives vendor considerations, such as rebates to promote their products, which are generally recorded as a reduction to COGS. Rebates earned from vendors that are based on product purchases are capitalized into inventory and rebates earned based on products sold are credited directly to COGS. ADVERTISING Advertising costs, which includes online marketing, are generally expensed in the year the related advertisement is first presented or when incurred. Catalog expense is amortized over the life of the catalog, generally one year, beginning in the month of its distribution and is included in advertising expense. Total advertising expense was $ 316 million, $ 241 million and $ 187 million for 2019, 2018 and 2017 , respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) Company SG&A is primarily comprised of compensation and benefit costs, indirect purchasing, supply chain and branch operations, technology, leases, restructuring, impairments, advertising and selling expenses, as well as other types of general and administrative costs. STOCK INCENTIVE PLANS The Company measures all share-based payments using fair-value-based methods and records compensation expense on a straight line basis over the vesting periods, net of estimated forfeitures. INCOME TAXES The Company recognizes the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. Also, the Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters . The Company recognizes tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. The Company recognizes interest expense and penalties to its tax uncertainties in the provision for income taxes. OTHER COMPREHENSIVE EARNINGS (LOSSES) The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. CASH AND CASH EQUIVALENTS The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. CONCENTRATION OF CREDIT RISK The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. Also, the Company has a broad customer base representing many diverse industries across North America, Japan and Europe. Consequently, no significant concentration of credit risk is considered to exist. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are stated at their estimated net realizable value. The Company establishes allowances for customer accounts that are potentially uncollectible and these are determined based on several factors, including the age of the receivables, historical collection trends, and economic conditions that may have an impact on a specific industry, group of customers or a specific customer. INVENTORIES Company inventories primarily consist of merchandise purchased for resale, and they are valued at the lower of cost or net realizable value. The Company uses the last-in, first-out (LIFO) method to account for approximately 70% of total inventory and the first-in, first-out (FIFO) method for the remaining inventory. The Company regularly reviews inventory to evaluate continued demand and records provisions for the difference between excess and obsolete inventories and net realizable value. Estimated realizable value consider various variables, including product demand, aging and shelf life, market conditions, and liquidation or disposition history and values. If FIFO had been used for all of the Company’s inventories, they would have been $426 million and $ 394 million higher than reported at December 31, 2019 and December 31, 2018 , respectively. Concurrently, net earnings would have increased by $ 24 million and $ 8 million , and decreased by $ 1 million for the years ended December 31, 2019, 2018 and 2017, respectively. PROPERTY, BUILDINGS AND EQUIPMENT Company property, buildings and equipment are valued at cost. Depreciation is estimated using the declining-balance, sum-of-the-years-digits and straight-line depreciation methods over the assets' useful lives as follows: Buildings, structures and improvements 10 to 30 years Furniture, fixtures, machinery and equipment 3 to 10 years Depreciation expense was $150 million , $162 million and $170 million for the years ended December 31, 2019, 2018 and 2017 , respectively. The Company capitalized interest costs of $9 million , $10 million and $2 million for the years ended December 31, 2019, 2018 and 2017 , respectively. LEASES The Company leases certain properties and buildings (including branches, warehouses, distribution centers and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists mainly of operating leases which expire at various dates through 2036 . Many of the property and building lease agreements obligate the Company to pay real estate taxes, insurance and certain maintenance costs (hereinafter referred to as non-lease components). Certain of the Company’s lease arrangements contain renewal provisions from 1 to 30 years, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with right of use (ROU) assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in SG&A. GOODWILL AND OTHER INTANGIBLE ASSETS In a business acquisition, the Company recognizes goodwill as the excess purchase price of an acquired reporting unit over the net amount assigned to assets acquired including intangible assets, and liabilities assumed. Acquired intangibles include both: assets with indefinite lives and assets that are subject to amortization, which are amortized straight line over their estimated useful lives. The Company tests goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The Company performs qualitative assessments of significant events and circumstances, such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors to determine the existence of impairment indicators and assess if it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying value and if a quantitative impairment test is necessary. In the quantitative test, Grainger compares the carrying value of the reporting unit or an indefinite-lived intangible asset with its fair value. Any excess of the carrying value over fair value is recorded as an impairment charge, presented as part of SG&A. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values. Estimates of market- participant risk-adjusted weighted average cost of capital are used as a basis for determining the discount rates to apply to the reporting units’ future expected cash flows and terminal value. The Company’s indefinite-lived intangibles are primarily trade names. The fair value of trade names is calculated primarily using the relief-from-royalty method, which estimates the expected royalty savings attributable to the ownership of the trade name asset. The key assumptions when valuing a trade name are the revenue base, the royalty rate, and the discount rate. Additionally, the Company capitalizes certain costs related to the purchase and development of internal-use software, which are presented as intangible assets. Amortization of capitalized software is on a straight-line basis over three or five years. LONG-LIVED ASSETS The carrying value of long-lived assets, primarily property, buildings and equipment and amortizable intangibles, is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset group may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows resulting from use of the asset group, including disposition, are less than their carrying value. Impairment is measured as the amount by which the asset group's carrying amount exceeds the fair value. CONTINGENCIES The Company accrues for costs relating to litigation claims and other contingent matters, when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. NEW ACCOUNTING STANDARDS In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update). This ASU clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning with the SEC's regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU was effective immediately upon issuance and did not have a material impact on the Company's Financial Statements and related disclosures. On January 1, 2019, the Company adopted ASU 2016-02, Leases as modified subsequently by ASUs 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01(Topic 842). The Company utilized the simplified modified retrospective transition method that allowed for a cumulative-effect adjustment in the period of adoption, and did not restate prior periods. Additionally, the Company elected the practical expedients package permitted under the transition guidance. Adoption of the new standard resulted in the recording of ROU assets and lease liabilities of approximately $208 million and $205 million , respectively, as of January 1, 2019 related to operating and finance leases. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as modified by subsequently issued ASUs 2018-19, 2019-04, 2019-05 and 2019-11. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Per the permitted effective dates, the Company will adopt this ASU effective January 1, 2020. The Company does not expect the adoption of this ASU to have a material impact on the Company's Financial Statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. Per the permitted effective dates, the Company will adopt this ASU effective January 1, 2021. The Company is evaluating the impact of this ASU. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE [Abstract] | |
REVENUE | REVENUE Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Grainger serves a large number of customers in diverse industries, which are subject to different economic and market specific factors. The Company's presentation of revenue by industry most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue and cash flows are affected by economic and market specific factors. The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Twelve Months Ended December 31, 2019 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 17 % Light Manufacturing 12 % 6 % 10 % Transportation 6 % 8 % 5 % Healthcare 7 % — % 6 % Commercial 10 % 9 % 8 % Retail/Wholesale 9 % 4 % 7 % Contractors 10 % 10 % 8 % Natural Resources 3 % 33 % 4 % Other (1) 6 % 4 % 21 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 5 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers, and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe and Mexico and account for approximately 23% of revenue for the twelve months ended December 31, 2019. Twelve Months Ended December 31, 2018 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 18 % Light Manufacturing 13 % 6 % 11 % Transportation 6 % 7 % 5 % Healthcare 7 % — % 5 % Commercial 9 % 10 % 8 % Retail/Wholesale 8 % 4 % 7 % Contractors 10 % 11 % 8 % Natural Resources 3 % 32 % 4 % Other (1) 7 % 4 % 20 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 6 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers, and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe and Mexico and account for approximately 22% of revenue for the twelve months ended December 31, 2018. |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, BUILDINGS AND EQUIPMENT | PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment consisted of the following (in millions of dollars): As of December 31, 2019 December 31, 2018 Land $ 332 $ 318 Building, structures and improvements 1,329 1,338 Furniture, fixtures, machinery and equipment 1,832 1,785 Property, buildings and equipment $ 3,493 $ 3,441 Less: Accumulated depreciation and amortization 2,093 2,089 Property, buildings and equipment, net $ 1,400 $ 1,352 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The balances and changes in the carrying amount of Goodwill by segment are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2018 $ 192 $ 130 $ 222 $ 544 Impairment — — (105 ) (105 ) Translation — (10 ) (5 ) (15 ) Balance at December 31, 2018 192 120 112 424 Translation — 6 (1 ) 5 Balance at December 31, 2019 $ 192 $ 126 $ 111 $ 429 United States Canada Other businesses Total Cumulative goodwill impairment charges, December 31, 2019 (1) $ — $ 32 $ 152 $ 184 (1) Restated to include only impairments related to current businesses in Grainger's portfolio. There were no impairments to goodwill for the years ended December 31, 2019 and 2017. In 2018, there was a $ 105 million goodwill impairment recorded in SG&A at the Cromwell business in the U.K. The balances and changes in Intangible assets - net are as follows (in millions of dollars): As of December 31, 2019 2018 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/impairment Net carrying amount Customer lists and relationships 13.2 years $ 401 $ 301 $ 100 $ 410 $ 204 $ 206 Trademarks, trade names and other 14.1 years 36 20 16 24 15 9 Non-amortized trade names and other — 100 38 62 133 34 99 Capitalized software 4.2 years 626 500 126 657 511 146 Total intangible assets 8.2 years $ 1,163 $ 859 $ 304 $ 1,224 $ 764 $ 460 Amortization expense of intangible assets presented within SG&A, excluding impairment charges was $ 78 million , $ 92 million , and $ 89 million for the years ended December 31, 2019 , 2018 and 2017 , respectively. Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2020 $ 72 2021 55 2022 38 2023 13 2024 12 Thereafter 52 Total $ 242 Grainger completed its annual impairment testing during the fourth quarter of 2019. Qualitative tests for the quarter indicated the existence of impairment indicators for the Canada business and Cromwell (included in other businesses). As such, quantitative tests were performed. Based on the result of the quantitative tests performed for the Canada business, the Company concluded that there was no impairment of goodwill. The risk of impairment for the Canada business is dependent upon key assumptions included in the determination of the reporting unit's fair value, particularly revenue growth expectations, future expected cash flows and operating earnings performance. Changes in assumptions regarding future performance and unfavorable economic environment in Canada may have a significant impact on future cash flows expectations and require the recording of future impairment charges. The carrying value of the Canada businesses goodwill was $ 126 million as of December 31, 2019. The quantitative test for Cromwell indicated the existence of impairment of the reporting unit’s intangible assets. Cromwell’s declining operating performance and accelerated customer attrition resulted in lowered outlook projections. As a result, the Company concluded that Cromwell’s trade name was fully impaired. Concurrently, as a result of the circumstances leading to trade name impairment, the Company performed a recoverability and fair value test of Cromwell’s customer relationships intangible asset and concluded to impair the asset. The aggregate impairment charge for Cromwell’s intangibles in 2019 amounted to approximately $ 120 million. Previously, during the third quarter of 2018 the Company recorded impairment charges totaling $ 139 million attributable to all of Cromwell’s goodwill and a portion of its trade name assets. This impairment was driven by the deterioration |
RESTRUCTURING RESERVES
RESTRUCTURING RESERVES | 12 Months Ended |
Dec. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING RESERVES | RESTRUCTURING Restructuring activity for the twelve months ended December 31, 2019 was not material. In the twelve months ended December 31, 2018 and 2017, the Company recorded restructuring charges of approximately $ 47 million and $ 116 million, respectively. These charges primarily consisted of involuntary employee termination costs across the business, asset impairments, write-down losses and other exit-related costs and are included in SG&A. The charges in the U.S. and Canada businesses were partially offset by gains from the sales of real estate. The reserve balance as of December 31, 2019 and December 31, 2018 was approximately $ 10 million and $ 47 million, respectively, and is primarily included in Accrued compensation and benefits. The remaining reserves are expected to be paid through 2020. |
SHORT-TERM DEBT
SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2019 | |
Short-term Debt [Abstract] | |
SHORT-TERM DEBT | SHORT-TERM DEBT Short-term debt consisted of the following (in millions of dollars): As of December 31, 2019 2018 Lines of Credit Outstanding at December 31 $ 55 $ 49 Maximum month-end balance during the year $ 56 $ 138 Weighted average interest rate during the year 2.32 % 2.29 % Weighted average interest rate at December 31 2.44 % 2.35 % Commercial Paper Outstanding at December 31 $ — $ — Maximum month-end balance during the year $ — $ 90 Weighted average interest rate during the year — % 1.80 % Lines of Credit The Company's U.S. business has a five -year $750 million unsecured revolving line of credit, maturing in 2022. There were no borrowings outstanding under the line of credit as of December 31, 2019 and 2018 . The primary purpose of this credit facility is to support the Company's commercial paper program and for general corporate purposes. Foreign subsidiaries utilize lines of credit for working capital purposes and other operating needs. These foreign lines of credit in aggregate were $55 million and $49 million as of December 31, 2019 and 2018 , respectively. Commercial Paper The Company issues commercial paper from time to time for general working capital needs. At December 31, 2019 , there was no ne outstanding. The Company's short-term debt instruments include affirmative and negative covenants that are usual and customary for companies with similar credit ratings and do not contain any financial performance covenants. The Company was in compliance with all debt covenants as of December 31, 2019 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following (in millions of dollars): As of December 31, 2019 2018 Carrying Value Fair Value (1) Carrying Value Fair Value (1) 4.60% senior notes due 2045 $ 1,000 $ 1,194 $ 1,000 $ 1,026 3.75% senior notes due 2046 400 416 400 357 4.20% senior notes due 2047 400 449 400 383 British pound term loan 170 170 174 174 Euro term loan 123 123 126 126 Canadian dollar revolving credit facility 46 46 44 44 Other 42 42 49 49 Subtotal 2,181 2,440 2,193 2,159 Less current maturities (246 ) (246 ) (81 ) (81 ) Debt issuance costs and discounts, net of amortization (21 ) (21 ) (22 ) (22 ) Long-term debt (less current maturities) $ 1,914 $ 2,173 $ 2,090 $ 2,056 (1) The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. Senior Notes In the years 2015-2017, Grainger issued $1.8 billion in long-term debt (Senior Notes) to partially fund the repurchase of $2.8 billion in shares of the total $3 billion previously announced. The remaining share repurchases were funded from internally generated cash. Debt was issued as follows: • In May 2017 , $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually. • In May 2016 , $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually. • In June 2015 , $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually. The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20 - 25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $24 million associated with the issuance of the Senior Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Senior Notes. British Pound Term Loan In August 2015 , the Company entered into an unsecured credit facilities agreement providing for a five -year term loan of £160 million and revolving credit facility of up to £20 million (see Note 6 to the Financial Statements). Under the agreement, the principal amount of the term loan will be repaid semiannually in installments of £4 million beginning February 2016 through February 2020 with the remaining outstanding amount due August 2020 and accordingly, the amount outstanding is included in Current maturities of long-term debt as of December 31, 2019. At the election of the Company, the term loan bears interest at the LIBOR Rate plus a margin of 75 basis points , as defined within the term loan agreement. At December 31, 2019 , the Company had elected a one-month LIBOR interest period. The weighted average interest rate was 1.47% and 1.34% for the years ended December 31, 2019 and 2018 , respectively. Euro Term Loan In August 2016, the Company entered into an agreement for a five -year term loan of €110 million and a revolving credit facility of up to €20 million (see Note 6 to the Financial Statements). Under the agreement, no principal amount of the loan will be required to be paid until the loan becomes due on August 31, 2021 , at which time the loan will be required to be paid in full. The Company, at its option, may prepay this term loan in whole or in part at the end of any interest period without penalty. The loan bears interest at the EURIBOR plus a margin of 45 basis points , as defined within the term loan agreement. If EURIBOR is less than zero, then EURIBOR will be deemed to be zero. The interest rate at both December 31, 2019 and 2018 was 0.45% . Canadian Dollar Revolving Credit Facility In September 2014 , the Company entered into an unsecured revolving credit facility with a maximum availability of C$175 million . The loan bears interest at the Canadian Dollar Offered Rate (CDOR) plus a margin of 80 basis points , as defined within the loan agreement. The weighted average interest rate during the year on this outstanding amount was 2.82% . No principal payments are required on the credit facility until the maturity date. In July 2019, the facility was amended to mature in 2020 and accordingly, the amount outstanding is included in Current maturities of long-term debt as of December 31, 2019 . The scheduled aggregate principal payments related to long-term debt, excluding debt issuance costs, are due as follows (in millions of dollars): Year Payment Amount 2020 $ 246 2021 129 2022 — 2023 — 2024 6 Thereafter 1,800 Total $ 2,181 The Company's long-term debt instruments include affirmative and negative covenants that are usual and customary for companies with similar credit ratings and do not contain any financial performance covenants. The Company was in compliance with all debt covenants as of December 31, 2019 . |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2019 | |
EMPLOYEE BENEFITS [Abstract] | |
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS The Company provides various retirement benefits to eligible employees, including contributions to defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and other benefits. Eligibility requirements and benefit levels vary depending on employee location. Various foreign benefit plans cover employees in accordance with local legal requirements. Defined Contribution Plans A majority of the Company's U.S. employees are covered by a noncontributory profit-sharing plan. The plan aligns Company contributions to Company performance and includes two components, a variable annual contribution based on the Company's rate of return on invested capital and an automatic contribution equal to 3% of the eligible employee's total eligible compensation. In addition, employees covered by the plan are also able to make personal contributions. The total Company contribution will be maintained at a minimum of 8% and a maximum of 18% of total eligible compensation paid to eligible employees. The total profit-sharing plan expense was $113 million , $ 164 million , and $ 120 million for 2019, 2018 and 2017 , respectively. The Company sponsors additional defined contribution plans available to certain U.S. and foreign employees for which contributions are made by the Company and participating employees. The expense associated with these defined contribution plans totaled $19 million , $ 13 million , and $ 18 million for 2019, 2018 and 2017 , respectively. Postretirement Healthcare Benefits Plans The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its U.S. employees hired prior to January 1, 2013, and their dependents should they elect to maintain such coverage upon retirement. Covered employees become eligible for participation when they qualify for retirement while working for the Company. Participation in the plan is voluntary and requires participants to make contributions toward the cost of the plan, as determined by the Company. During the third quarter of 2017, the Company implemented plan design changes effective January 1, 2018, for the post-65 age group. This plan change moved all post-65 Medicare eligible retirees to healthcare exchanges and provided them a subsidy to purchase insurance. The amount of the subsidy is based on years of service. As a result of the plan change, the plan obligation was remeasured as of August 31, 2017. The remeasurement resulted in a decrease in the postretirement benefit obligation of $76 million and a corresponding unrecognized gain recorded in Other comprehensive earnings net of tax of $29 million . Certain amounts in the 2017 financial statements, as previously reported, have been reclassified to conform to the 2018 presentation. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which became effective January 1, 2018. The net periodic benefits costs were valued with a measurement date of January 1 for each year and August 31, 2017 remeasurement date and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 SG&A Service cost $ 4 $ 6 $ 7 Other income (expense) Interest cost 7 7 8 Expected return on assets (12) (13 ) (12 ) Amortization of prior service credit (10) (10 ) (7 ) Amortization of unrecognized gains (4) (3 ) (2 ) Net periodic (benefits) costs $ (15 ) $ (13 ) $ (6 ) Reconciliations of the beginning and ending balances of the postretirement benefit obligation, which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit obligation follow (in millions of dollars): 2019 2018 Benefit obligation at beginning of year $ 190 $ 208 Service cost 4 6 Interest cost 7 7 Plan participants' contributions 3 3 Actuarial (gains) 5 (26 ) Benefits paid (9 ) (9 ) Prescription drug rebates — 1 Benefit obligation at end of year $ 200 $ 190 Plan assets available for benefits at beginning of year $ 176 $ 189 Actual (losses) returns on plan assets 28 (8 ) Plan participants' contributions 3 3 Prescription drug rebates — 1 Benefits paid (9 ) (9 ) Plan assets available for benefits at end of year 198 176 Noncurrent postretirement benefit obligation $ 2 $ 14 The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2019 2018 Prior service credit $ 61 $ 71 Unrecognized gains 44 37 Deferred tax (liability) (26 ) (26 ) Net accumulated gains $ 79 $ 82 The Company has elected to amortize the amount of net unrecognized gains over a period equal to the average remaining service period for active plan participants expected to retire and receive benefits of approximately 11.1 years for 2019 . The postretirement benefit obligation was determined by applying the terms of the plan and actuarial models. These models include various actuarial assumptions, including discount rates, long-term rates of return on plan assets, healthcare cost trend rate and cost-sharing between the Company and the retirees. The Company evaluates its actuarial assumptions on an annual basis and considers changes in these long-term factors based upon market conditions and historical experience. The following assumptions were used to determine net periodic benefit costs at January 1 of each year (excluding the August 31, 2017 remeasurement date): For the Years Ended December 31, 2019 2018 2017 Discount rate 4.08 % 3.44 % 4.00 % Long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.31 % 6.56 % 6.81 % Post age 65 NA NA 9.36 % Catastrophic drug benefit NA 12.50 % NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % NA The following assumptions were used to determine benefit obligations at December 31: 2019 2018 2017 Discount rate 3.01 % 4.08 % 3.44 % Expected long-term rate of return on plan assets, net of tax 4.00 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.06 % 6.31 % 6.56 % Post age 65 NA NA NA Catastrophic drug benefit NA 11.50 % 12.50 % Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % 2.50 % The discount rate assumptions reflect the rates available on high-quality fixed income debt instruments as of December 31, the measurement date of each year. These rates have been selected due to their similarity to the duration of the projected cash flows of the postretirement healthcare benefit plan. As of December 31, 2019 , the Company decreased the discount rate from 4.08% to 3.01% to reflect the decrease in the market interest rates at December 31, 2019 . The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. As of December 31, 2019 , the initial healthcare cost trend rate was 6.06% for pre age 65. The healthcare costs trend rates decline each year until reaching the ultimate trend rate of 2.50% . The plan amendment adopted in 2017 moves all post age 65 Medicare eligible retirees to an exchange and provides a subsidy to those retirees to purchase insurance. The amount of the subsidy is based on years of service and is indexed at 2.50% for grandfathered employees. The Company has established a Group Benefit Trust (Trust) to fund the plan obligations and process benefit payments. In 2019, the Company liquidated previously held index funds and has temporarily invested all assets of the Trust in money market funds. The Company is in the process of transitioning the Trust assets from money market funds into a liability driven investment solution composed of growth assets and fixed income. The plan's assets are stated at fair value, which represents the net asset value of shares held by the plan in the registered investment companies at the quoted market prices (Level 1 input). The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2019 2018 Registered investment companies: Vanguard Federal Money Market Fund $ 109 $ — Fidelity Government Money Market Fund 95 — Fidelity Spartan U.S. Equity Index Fund — 80 Vanguard 500 Index Fund — 93 Vanguard Total International Stock — 26 Plan Assets 204 199 Less: trust liabilities (6 ) (23 ) Plan assets available for benefits $ 198 $ 176 Consistent with the new investment strategy, the after-tax expected long-term rates of return on plan assets of 4.00% at December 31, 2019 is based on the historical average of long-term rates of return and an estimated tax rate. The required use of an expected long-term rate of return on plan assets may result in recognition of income that is greater or lower than the actual return on plan assets in any given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns and, therefore, result in a pattern of income recognition that more closely matches the pattern of the services provided by the employees. The Company's investment policies include periodic reviews by management and trustees at least annually concerning: (1) the allocation of assets among various asset classes (e.g., domestic stocks, international stocks, short-term bonds, long-term bonds, etc.); (2) the investment performance of the assets, including performance comparisons with appropriate benchmarks; (3) investment guidelines and other matters of investment policy and (4) the hiring, dismissal or retention of investment managers. The funding of the Trust is an estimated amount that is intended to allow the maximum deductible contribution under the Internal Revenue Code of 1986 (IRC), as amended. There are no minimum funding requirements and the Company intends to follow its practice of funding the maximum deductible contribution under the IRC. The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future employee service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2020 $ 9 2021 10 2022 11 2023 12 2024 12 2025-2029 62 Total $ 116 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases certain properties and buildings (including branches, warehouses, distribution centers and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists mainly of operating leases which expire at various dates through 2036 . Finance leases and service contracts with lease arrangements are not material and the following disclosures pertain to the Company’s operating leases. Information related to operating leases is as follows (in millions of dollars): As of December 31, 2019 ROU Assets Other assets $ 223 Operating lease liabilities Accrued expenses 58 Other non-current liabilities 171 Total operating lease liabilities $ 229 Twelve Months Ended December 31, 2019 Weighted average remaining lease term 5 years Weighted average incremental borrowing rate 2.3 % Cash paid for operating leases $ 67 ROU assets obtained in exchange for operating lease obligations $ 88 Rent expense was $76 million for 2019 , 2018 and 2017 . These amounts are net of sublease income of $3 million , $3 million and $2 million for 2019 , 2018 and 2017 . Maturities of operating lease liabilities as of December 31, 2019 (in millions of dollars) are as follows: Maturity of operating lease liabilities 2020 $ 63 2021 55 2022 45 2023 30 2024 16 Thereafter 30 Total lease payments 239 Less interest (10 ) Present value of lease liabilities $ 229 Capital leases as of December 31, 2019 and 2018 were not considered material. Capital lease obligations are reported in Long-term debt. As of December 31, 2019 |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2019 | |
STOCK INCENTIVE PLANS [Abstract] | |
STOCK INCENTIVE PLANS | STOCK INCENTIVE PLANS The Company maintains stock incentive plans under which the Company may grant a variety of incentive awards to employees and executives, which include restricted stock units (RSUs), non-qualified stock options, performance shares and deferred stock units. As of December 31, 2019 , there were 2.3 million shares available for grant under the plans. When awards are exercised or settled, shares of the Company’s treasury stock are issued. Pretax stock-based compensation expense included in SG&A was $ 40 million , $ 47 million , and $ 33 million in 2019, 2018 and 2017 , respectively, and was primarily comprised of RSUs. Related income tax benefits recognized in earnings were $ 15 million , $26 million , and $ 26 million in 2019, 2018 and 2017 , respectively. Restricted Stock Units The Company awards RSUs to certain employees and executives. RSUs vest generally over periods from one to seven years from issuance. RSU expense for the years ended December 31, 2019, 2018 and 2017 was approximately $ 27 million, $ 23 million and $ 17 million, respectively. The following table summarizes RSU activity (in millions, except for share and per share amounts): 2019 2018 2017 Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Beginning nonvested units 343,814 $ 245.38 352,919 $ 226.31 373,403 $ 221.77 Issued 96,823 $ 299.25 141,775 $ 284.98 129,378 $ 222.53 Canceled (36,224 ) $ 253.22 (56,393 ) $ 245.08 (47,488 ) $ 229.36 Vested (78,289 ) $ 247.96 (94,487 ) $ 233.75 (102,374 ) $ 203.51 Ending nonvested units 326,124 $ 259.88 343,814 $ 245.38 352,919 $ 226.31 Fair value of shares vested $ 19 $ 22 $ 21 At December 31, 2019 there was $ 45 million of total unrecognized compensation expense related to nonvested RSUs that the Company expects to recognize over a weighted average period of 2.1 years. Stock Options The Company issues stock options to certain employees and executives. Stock options are granted with an exercise price equal to the closing market price of the Company's stock on the day of the grant. The options generally expire 10 years from the grant date. Stock option expense for the years ended December 31, 2019, 2018 and 2017 was approximately $ 8 million, $ 9 million and $ 13 million, respectively. At December 31, 2019 there was $ 10.5 million of total unrecognized compensation expense related to nonvested option awards, which the Company expects to recognize over a weighted average period of 1.8 |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2019 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK The Company had no shares of preferred stock outstanding as of December 31, 2019 and 2018 . The activity related to outstanding common stock and common stock held in treasury was as follows: 2019 2018 2017 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 55,862,360 53,796,859 56,328,863 53,330,356 58,804,314 50,854,905 Exercise of stock options 232,052 (232,052 ) 930,258 (930,258 ) 407,542 (407,542 ) Settlement of restricted stock units, net of 26,107, 39,075 and 36,585 shares retained, respectively 52,182 (52,182 ) 80,988 (80,988 ) 103,331 (103,331 ) Settlement of performance share units, net of 6,737, 1,027 and 9,334 shares retained, respectively 14,027 (14,027 ) 1,911 (1,911 ) 13,978 (13,978 ) Purchase of treasury shares (2,473,093 ) 2,473,093 (1,479,660 ) 1,479,660 (3,000,302 ) 3,000,302 Balance at end of period 53,687,528 55,971,691 55,862,360 53,796,859 56,328,863 53,330,356 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) The components of AOCE consisted of the following (in millions of dollars): Foreign Currency Translation and Other Defined Postretirement Benefit Plan Other Employment-related Benefit Plans Total Foreign Currency Translation Attributable to Noncontrolling Interests AOCE Attributable to W.W. Grainger, Inc. Balance at January 1, 2017, net of tax $ (316 ) $ 25 $ (5 ) $ (296 ) $ (23 ) $ (273 ) Other comprehensive earnings (loss) before reclassifications, net of tax 75 86 1 162 4 158 Amounts reclassified to Net earnings 18 (38 ) — (20 ) — (20 ) Net current period activity $ 93 $ 48 $ 1 $ 142 $ 4 $ 138 Balance at December 31, 2017, net of tax $ (223 ) $ 73 $ (4 ) $ (154 ) $ (19 ) $ (135 ) Other comprehensive earnings (loss) before reclassifications, net of tax (43 ) 4 (1 ) (40 ) 3 (43 ) Amounts reclassified to Net earnings 2 (10 ) — (8 ) — (8 ) Amounts reclassified to Retained earnings — 15 — 15 — 15 Net current period activity $ (41 ) $ 9 $ (1 ) $ (33 ) $ 3 $ (36 ) Balance at December 31, 2018, net of tax $ (264 ) $ 82 $ (5 ) $ (187 ) $ (16 ) $ (171 ) Other comprehensive earnings (loss) before reclassifications, net of tax 25 8 (3 ) 30 3 27 Amounts reclassified to Net earnings 1 (11 ) — (10 ) — (10 ) Net current period activity 26 (3 ) (3 ) 20 3 17 Balance at December 31, 2019, net of tax $ (238 ) $ 79 $ (8 ) $ (167 ) $ (13 ) $ (154 ) |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 U.S. $ 1,226 $ 1,163 $ 971 Foreign (17 ) (82 ) (35 ) Total $ 1,209 $ 1,081 $ 936 Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Current income tax expense: U.S. Federal $ 199 $ 166 $ 248 U.S. State 44 32 29 Foreign 58 47 22 Total current 301 245 299 Deferred income tax expense 13 13 14 Total income tax expense $ 314 $ 258 $ 313 The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2019 and 2018 were as follows (in millions of dollars): As of December 31, 2019 2018 Deferred tax assets: Accrued expenses $ 86 $ 35 Foreign operating loss carryforwards 67 64 Accrued employment-related benefits 49 49 Tax credit carryforward 22 22 Other 12 11 Deferred tax assets 236 181 Less valuation allowance (72 ) (72 ) Deferred tax assets, net of valuation allowance $ 164 $ 109 Deferred tax liabilities: Property, buildings and equipment (134 ) (44 ) Intangibles (83 ) (105 ) Prepaids (6 ) (6 ) Other (6 ) (8 ) Deferred tax liabilities (229 ) (163 ) Net deferred tax liability $ (65 ) $ (54 ) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 11 $ 12 Noncurrent liabilities (76 ) (66 ) Net deferred tax liability $ (65 ) $ (54 ) At December 31, 2019 the Company had $ 286 million of net operating loss (NOLs) carryforwards related primarily to foreign operations. Some of the operating loss carryforwards may expire at various dates through 2039. The Company has recorded a valuation allowance, which represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and deferred tax assets that may not be realized. The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2019 2018 Balance at beginning of period $ (72 ) $ (84 ) Increases primarily related to foreign NOLs (9 ) (3 ) Releases related to foreign NOLs 10 16 Increase related to U.S. foreign tax credits (1 ) (1 ) Balance at end of period $ (72 ) $ (72 ) A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Federal income tax $ 254 $ 227 $ 327 State income taxes, net of federal income tax benefit 36 32 20 Clean energy credit — (20 ) (38 ) Foreign rate difference 25 20 10 Goodwill impairment — 20 — U.S. tax legislation impact — — (3 ) Excess tax benefits from stock-based compensation (2 ) (15 ) (14 ) Other - net 1 (6 ) 11 Income tax expense $ 314 $ 258 $ 313 Effective tax rate 26.0 % 23.9 % 33.5 % Foreign Undistributed Earnings Estimated gross undistributed earnings of foreign subsidiaries at December 31, 2019 , amounted to $402 million . The Company considers these undistributed earnings permanently reinvested in its foreign operations and is not recording a deferred tax liability for any foreign withholding taxes on such amounts. The Company's permanent reinvestment assertion has not changed following the enactment of the 2017 Tax Cuts and Jobs Act. If at some future date the Company ceases to be permanently reinvested in its foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference in its investments in its foreign subsidiaries. Tax Uncertainties The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Balance at beginning of year $ 37 $ 45 $ 59 Additions for tax positions related to the current year 3 4 4 Additions for tax positions of prior years 1 3 5 Reductions for tax positions of prior years (1 ) (5 ) (13 ) Reductions due to statute lapse (10 ) (9 ) (5 ) Settlements, audit payments, refunds - net (2 ) (1 ) (5 ) Balance at end of year $ 28 $ 37 $ 45 The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in this amount are $ 8 million and $ 13 million at December 31, 2019 and 2018, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Any changes in the timing of deductibility of these items would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authorities to an earlier period. Excluding the timing items, the remaining amounts would affect the annual tax rate. In 2019, the changes to tax positions related generally to the impact of expiring statutes, conclusion of audits and audit settlements. Estimated interest and penalties were not material. The Company regularly undergoes examination of its federal income tax returns by the Internal Revenue Service. The statute of limitations expired for the Company's 2015 federal tax return while tax years 2016 through 2019 are open. The Company is also subject to audit by state, local and foreign taxing authorities. Tax years 2012-2019 remain subject to state and local audits and 2007-2019 remain subject to foreign audits. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Grainger’s two reportable segments are the U.S. and Canada. These reportable segments reflect the results of the Company's high-touch solutions businesses in those geographies. Other businesses include the endless assortment businesses, Zoro Tools, Inc. (Zoro) and MonotaRO Co. (MonotaRO), and smaller high-tough solutions businesses in Europe and Mexico. 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 millions of dollars): 2019 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,815 $ 529 $ 9,344 $ 2,651 $ 11,995 Intersegment net sales (505 ) — (505 ) (4 ) (509 ) Net sales to external customers $ 8,310 $ 529 $ 8,839 $ 2,647 11,486 Segment operating earnings $ 1,391 $ 3 $ 1,394 $ (9 ) $ 1,385 2018 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,588 $ 653 $ 9,241 $ 2,441 $ 11,682 Intersegment net sales (457 ) — (457 ) (4 ) (461 ) Net sales to external customers $ 8,131 $ 653 $ 8,784 $ 2,437 $ 11,221 Segment operating earnings $ 1,338 $ (49 ) $ 1,289 $ 8 $ 1,297 2017 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,960 $ 753 $ 8,713 $ 2,120 $ 10,833 Intersegment net sales (404 ) — (404 ) (4 ) (408 ) Net sales to external customers $ 7,556 $ 753 $ 8,309 $ 2,116 $ 10,425 Segment operating earnings $ 1,200 $ (77 ) $ 1,123 $ 56 $ 1,179 Following are reconciliations of the segment information with the consolidated totals per the Financial Statements (in millions of dollars): 2019 2018 2017 Operating earnings: Total operating earnings for reportable segments $ 1,394 $ 1,289 $ 1,123 Other businesses (9 ) 8 56 Unallocated expenses (123 ) (139 ) (144 ) Total consolidated operating earnings $ 1,262 $ 1,158 $ 1,035 Assets: United States $ 2,668 $ 2,496 $ 2,310 Canada 173 188 279 Assets for reportable segments $ 2,841 $ 2,684 $ 2,589 Other current and noncurrent assets 3,003 2,879 3,033 Unallocated assets 161 310 182 Total consolidated assets $ 6,005 $ 5,873 $ 5,804 Depreciation and amortization: United States $ 148 $ 166 $ 169 Canada 17 19 19 Depreciation and amortization for reportable segments $ 165 $ 185 $ 188 Other businesses and unallocated 45 49 53 Total consolidated depreciation and amortization $ 210 $ 234 $ 241 Additions to long-lived assets United States $ 168 $ 200 $ 187 Canada 9 7 8 Additions to long-lived assets for reportable segments $ 177 $ 207 $ 195 Other businesses and unallocated 72 39 67 Total consolidated additions to long-lived assets $ 249 $ 246 $ 262 Following are revenue and long-lived assets by geographic location (in millions of dollars): 2019 2018 2017 Revenue by geographic location: United States $ 8,865 $ 8,613 $ 7,948 Canada 539 658 761 Other foreign countries 2,082 1,950 1,716 $ 11,486 $ 11,221 $ 10,425 Long-lived segment assets by geographic location: United States $ 1,268 $ 1,140 $ 1,098 Canada 152 136 199 Other foreign countries 327 202 247 $ 1,747 $ 1,478 $ 1,544 The Company is a broad-line distributor of MRO products and services. Products are regularly added and deleted from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed. Unallocated amounts include corporate-level support and administrative expenses, corporate-level assets consisting primarily of cash, property, buildings and equipment and intersegment eliminations and other adjustments. Unallocated expenses and assets are not included in any reportable segment. 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, capitalized software and ROU assets of $ 223 million as of December 31, 2019. Depreciation and amortization presented above includes depreciation of long-lived assets and amortization of capitalized software. |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 12 Months Ended |
Dec. 31, 2019 | |
CONTINGENCIES AND LEGAL MATTERS [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS From time to time the Company is involved in various legal and administrative proceedings that are incidental to its business, including claims related to product liability, general negligence, contract disputes, environmental issues, unclaimed property, wage and hour laws, intellectual property, employment practices, regulatory compliance or other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties. For example, beginning in the fourth quarter of 2019, Grainger has been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO, LLC chemical refinery located in Harris County. The complaints seek recovery of compensatory and other damages and relief. Grainger is investigating the claims, which are at an early stage, and intends to contest these matters vigorously. Also, as a government contractor selling to federal, state and local governmental entities, the Company may be subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration or to pricing compliance. While the Company is unable to predict the outcome of any of these matters, it is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position or results of operations. From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as a defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products manufactured by third parties purportedly distributed by the Company. While several lawsuits have been dismissed in the past based on the lack of product identification, if a specific product distributed by the Company is identified in any pending or future lawsuits, the Company will seek to exercise indemnification remedies against the product manufacturer to the extent available. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope and coverage and the costs of defense, of lawsuits involving claims of exposure to asbestos. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in these lawsuits. While the Company is unable to predict the outcome of these proceedings, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position or results of operations. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2019 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) A summary of selected quarterly information for 2019 and 2018 is as follows (in millions of dollars, except for per share amounts): 2019 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,799 $ 2,893 $ 2,947 $ 2,847 $ 11,486 COGS 1,704 1,772 1,848 1,765 7,089 Gross profit 1,095 1,121 1,099 1,082 4,397 SG&A 732 741 761 901 3,135 Operating earnings 363 380 338 181 1,262 Net earnings attributable to W.W. Grainger, Inc. $ 253 $ 260 $ 233 $ 103 $ 849 Earnings per share - basic $ 4.50 $ 4.69 $ 4.27 $ 1.89 $ 15.39 Earnings per share - diluted $ 4.48 $ 4.67 $ 4.25 $ 1.88 $ 15.32 2018 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,766 $ 2,861 $ 2,831 $ 2,763 $ 11,221 COGS 1,674 1,750 1,752 1,697 6,873 Gross profit 1,092 1,111 1,079 1,066 4,348 SG&A 757 767 890 776 3,190 Operating earnings 335 344 189 290 1,158 Net earnings attributable to W.W. Grainger, Inc. $ 232 $ 237 $ 104 $ 209 $ 782 Earnings per share - basic $ 4.09 $ 4.19 $ 1.84 $ 3.71 $ 13.82 Earnings per share - diluted $ 4.07 $ 4.16 $ 1.82 $ 3.68 $ 13.73 |
SUBSEQUENT EVENT (Notes)
SUBSEQUENT EVENT (Notes) | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENT In February 2020, the Company entered into a five-year syndicated $1.25 billion revolving credit facility (2020 Credit Facility). The 2020 Credit Facility is unsecured and repayable at maturity in February 2025, subject to two one-year extensions if sufficient lenders agree. This revolving credit facility replaced the Company's 2017 Credit Facility. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of the Company's consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. |
FOREIGN CURRENCY TRANSLATION | FOREIGN CURRENCY TRANSLATION The U.S. dollar is the Company's reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Translation gains or losses are recorded as a separate component of other comprehensive earnings (losses). |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), the transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations, and are satisfied when the services are rendered. Total service revenue is not material and accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2019 . The Company’s revenue is measured at the determinable transaction price, net of any variable considerations granted to customers and any taxes collected from customers and subsequently remitted to governmental authorities. Variable considerations include rights to return product and sales incentives, which primarily consist of volume rebates. These variable considerations are estimated throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $25 million and $29 million as of December 31, 2019 and 2018 , respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $57 million and $62 million as of December 31, 2019 and 2018 , respectively, and are reported as part of Accrued expenses. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2019 and 2018 . |
COST OF GOODS SOLD | COST OF GOODS SOLD (COGS) COGS includes the purchase cost of goods sold, net of vendor considerations, in-bound shipping and handling costs and service costs. The Company receives vendor considerations, such as rebates to promote their products, which are generally recorded as a reduction to COGS. Rebates earned from vendors that are based on product purchases are capitalized into inventory and rebates earned based on products sold are credited directly to COGS. |
ADVERTISING | ADVERTISING |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) Company SG&A is primarily comprised of compensation and benefit costs, indirect purchasing, supply chain and branch operations, technology, leases, restructuring, impairments, advertising and selling expenses, as well as other types of general and administrative costs. |
STOCK INCENTIVE PLANS | STOCK INCENTIVE PLANS The Company measures all share-based payments using fair-value-based methods and records compensation expense on a straight line basis over the vesting periods, net of estimated forfeitures. |
INCOME TAXES | INCOME TAXES The Company recognizes the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. Also, the Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters . The Company recognizes tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. The Company recognizes interest expense and penalties to its tax uncertainties in the provision for income taxes. |
OTHER COMPREHENSIVE EARNINGS (LOSSES) | OTHER COMPREHENSIVE EARNINGS (LOSSES) The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. |
CONCENTRATION OF CREDIT RISK | CONCENTRATION OF CREDIT RISK The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. Also, the Company has a broad customer base representing many diverse industries across North America, Japan and Europe. Consequently, no significant concentration of credit risk is considered to exist. |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are stated at their estimated net realizable value. The Company establishes allowances for customer accounts that are potentially uncollectible and these are determined based on several factors, including the age of the receivables, historical collection trends, and economic conditions that may have an impact on a specific industry, group of customers or a specific customer. |
INVENTORIES | INVENTORIES Company inventories primarily consist of merchandise purchased for resale, and they are valued at the lower of cost or net realizable value. The Company uses the last-in, first-out (LIFO) method to account for approximately 70% of total inventory and the first-in, first-out (FIFO) method for the remaining inventory. The Company regularly reviews inventory to evaluate continued demand and records provisions for the difference between excess and obsolete inventories and net realizable value. Estimated realizable value consider various variables, including product demand, aging and shelf life, market conditions, and liquidation or disposition history and values. |
PROPERTY, BUILDINGS AND EQUIPMENT | PROPERTY, BUILDINGS AND EQUIPMENT Company property, buildings and equipment are valued at cost. Depreciation is estimated using the declining-balance, sum-of-the-years-digits and straight-line depreciation methods over the assets' useful lives as follows: Buildings, structures and improvements 10 to 30 years Furniture, fixtures, machinery and equipment 3 to 10 years |
LEASES | LEASES The Company leases certain properties and buildings (including branches, warehouses, distribution centers and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists mainly of operating leases which expire at various dates through 2036 . Many of the property and building lease agreements obligate the Company to pay real estate taxes, insurance and certain maintenance costs (hereinafter referred to as non-lease components). Certain of the Company’s lease arrangements contain renewal provisions from 1 to 30 years, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with right of use (ROU) assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in SG&A. |
GOODWILL AND OTHER INTANGIBLES ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS In a business acquisition, the Company recognizes goodwill as the excess purchase price of an acquired reporting unit over the net amount assigned to assets acquired including intangible assets, and liabilities assumed. Acquired intangibles include both: assets with indefinite lives and assets that are subject to amortization, which are amortized straight line over their estimated useful lives. The Company tests goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The Company performs qualitative assessments of significant events and circumstances, such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors to determine the existence of impairment indicators and assess if it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying value and if a quantitative impairment test is necessary. In the quantitative test, Grainger compares the carrying value of the reporting unit or an indefinite-lived intangible asset with its fair value. Any excess of the carrying value over fair value is recorded as an impairment charge, presented as part of SG&A. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values. Estimates of market- participant risk-adjusted weighted average cost of capital are used as a basis for determining the discount rates to apply to the reporting units’ future expected cash flows and terminal value. The Company’s indefinite-lived intangibles are primarily trade names. The fair value of trade names is calculated primarily using the relief-from-royalty method, which estimates the expected royalty savings attributable to the ownership of the trade name asset. The key assumptions when valuing a trade name are the revenue base, the royalty rate, and the discount rate. |
CAPITALIZED SOFTWARE | Additionally, the Company capitalizes certain costs related to the purchase and development of internal-use software, which are presented as intangible assets. Amortization of capitalized software is on a straight-line basis over three or five years. |
LONG-LIVED ASSETS | LONG-LIVED ASSETS The carrying value of long-lived assets, primarily property, buildings and equipment and amortizable intangibles, is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset group may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows resulting from use of the asset group, including disposition, are less than their carrying value. Impairment is measured as the amount by which the asset group's carrying amount exceeds the fair value. |
CONTINGENCIES | CONTINGENCIES The Company accrues for costs relating to litigation claims and other contingent matters, when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update). This ASU clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning with the SEC's regulations, thereby eliminating redundancies and making the codification easier to apply. This ASU was effective immediately upon issuance and did not have a material impact on the Company's Financial Statements and related disclosures. On January 1, 2019, the Company adopted ASU 2016-02, Leases as modified subsequently by ASUs 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01(Topic 842). The Company utilized the simplified modified retrospective transition method that allowed for a cumulative-effect adjustment in the period of adoption, and did not restate prior periods. Additionally, the Company elected the practical expedients package permitted under the transition guidance. Adoption of the new standard resulted in the recording of ROU assets and lease liabilities of approximately $208 million and $205 million , respectively, as of January 1, 2019 related to operating and finance leases. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as modified by subsequently issued ASUs 2018-19, 2019-04, 2019-05 and 2019-11. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Per the permitted effective dates, the Company will adopt this ASU effective January 1, 2020. The Company does not expect the adoption of this ASU to have a material impact on the Company's Financial Statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. Per the permitted effective dates, the Company will adopt this ASU effective January 1, 2021. The Company is evaluating the impact of this ASU. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |
Disaggregation of Revenue | The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Twelve Months Ended December 31, 2019 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 17 % Light Manufacturing 12 % 6 % 10 % Transportation 6 % 8 % 5 % Healthcare 7 % — % 6 % Commercial 10 % 9 % 8 % Retail/Wholesale 9 % 4 % 7 % Contractors 10 % 10 % 8 % Natural Resources 3 % 33 % 4 % Other (1) 6 % 4 % 21 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 5 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers, and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe and Mexico and account for approximately 23% of revenue for the twelve months ended December 31, 2019. Twelve Months Ended December 31, 2018 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 18 % Light Manufacturing 13 % 6 % 11 % Transportation 6 % 7 % 5 % Healthcare 7 % — % 5 % Commercial 9 % 10 % 8 % Retail/Wholesale 8 % 4 % 7 % Contractors 10 % 11 % 8 % Natural Resources 3 % 32 % 4 % Other (1) 7 % 4 % 20 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 6 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers, and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe and Mexico and account for approximately 22% of revenue for the twelve months ended December 31, 2018. |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Buildings and Equipment | Property, buildings and equipment consisted of the following (in millions of dollars): As of December 31, 2019 December 31, 2018 Land $ 332 $ 318 Building, structures and improvements 1,329 1,338 Furniture, fixtures, machinery and equipment 1,832 1,785 Property, buildings and equipment $ 3,493 $ 3,441 Less: Accumulated depreciation and amortization 2,093 2,089 Property, buildings and equipment, net $ 1,400 $ 1,352 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
Schedule of Goodwill | The balances and changes in the carrying amount of Goodwill by segment are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2018 $ 192 $ 130 $ 222 $ 544 Impairment — — (105 ) (105 ) Translation — (10 ) (5 ) (15 ) Balance at December 31, 2018 192 120 112 424 Translation — 6 (1 ) 5 Balance at December 31, 2019 $ 192 $ 126 $ 111 $ 429 United States Canada Other businesses Total Cumulative goodwill impairment charges, December 31, 2019 (1) $ — $ 32 $ 152 $ 184 (1) Restated to include only impairments related to current businesses in Grainger's portfolio. |
Schedule of Finite-Lived Intangible Assets by Major Class | The balances and changes in Intangible assets - net are as follows (in millions of dollars): As of December 31, 2019 2018 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/impairment Net carrying amount Customer lists and relationships 13.2 years $ 401 $ 301 $ 100 $ 410 $ 204 $ 206 Trademarks, trade names and other 14.1 years 36 20 16 24 15 9 Non-amortized trade names and other — 100 38 62 133 34 99 Capitalized software 4.2 years 626 500 126 657 511 146 Total intangible assets 8.2 years $ 1,163 $ 859 $ 304 $ 1,224 $ 764 $ 460 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2020 $ 72 2021 55 2022 38 2023 13 2024 12 Thereafter 52 Total $ 242 |
SHORT-TERM DEBT (Tables)
SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Short-term Debt [Abstract] | |
Schedule of Short-term Debt | Short-term debt consisted of the following (in millions of dollars): As of December 31, 2019 2018 Lines of Credit Outstanding at December 31 $ 55 $ 49 Maximum month-end balance during the year $ 56 $ 138 Weighted average interest rate during the year 2.32 % 2.29 % Weighted average interest rate at December 31 2.44 % 2.35 % Commercial Paper Outstanding at December 31 $ — $ — Maximum month-end balance during the year $ — $ 90 Weighted average interest rate during the year — % 1.80 % |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following (in millions of dollars): As of December 31, 2019 2018 Carrying Value Fair Value (1) Carrying Value Fair Value (1) 4.60% senior notes due 2045 $ 1,000 $ 1,194 $ 1,000 $ 1,026 3.75% senior notes due 2046 400 416 400 357 4.20% senior notes due 2047 400 449 400 383 British pound term loan 170 170 174 174 Euro term loan 123 123 126 126 Canadian dollar revolving credit facility 46 46 44 44 Other 42 42 49 49 Subtotal 2,181 2,440 2,193 2,159 Less current maturities (246 ) (246 ) (81 ) (81 ) Debt issuance costs and discounts, net of amortization (21 ) (21 ) (22 ) (22 ) Long-term debt (less current maturities) $ 1,914 $ 2,173 $ 2,090 $ 2,056 (1) The estimated fair value of the Company’s Senior Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
Schedule of Maturities of Long-term Debt | The scheduled aggregate principal payments related to long-term debt, excluding debt issuance costs, are due as follows (in millions of dollars): Year Payment Amount 2020 $ 246 2021 129 2022 — 2023 — 2024 6 Thereafter 1,800 Total $ 2,181 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EMPLOYEE BENEFITS [Abstract] | |
Schedule of Net Benefit Costs | The net periodic benefits costs were valued with a measurement date of January 1 for each year and August 31, 2017 remeasurement date and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 SG&A Service cost $ 4 $ 6 $ 7 Other income (expense) Interest cost 7 7 8 Expected return on assets (12) (13 ) (12 ) Amortization of prior service credit (10) (10 ) (7 ) Amortization of unrecognized gains (4) (3 ) (2 ) Net periodic (benefits) costs $ (15 ) $ (13 ) $ (6 ) |
Schedule of Accumulated and Projected Benefit Obligations | Reconciliations of the beginning and ending balances of the postretirement benefit obligation, which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit obligation follow (in millions of dollars): 2019 2018 Benefit obligation at beginning of year $ 190 $ 208 Service cost 4 6 Interest cost 7 7 Plan participants' contributions 3 3 Actuarial (gains) 5 (26 ) Benefits paid (9 ) (9 ) Prescription drug rebates — 1 Benefit obligation at end of year $ 200 $ 190 Plan assets available for benefits at beginning of year $ 176 $ 189 Actual (losses) returns on plan assets 28 (8 ) Plan participants' contributions 3 3 Prescription drug rebates — 1 Benefits paid (9 ) (9 ) Plan assets available for benefits at end of year 198 176 Noncurrent postretirement benefit obligation $ 2 $ 14 |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2019 2018 Prior service credit $ 61 $ 71 Unrecognized gains 44 37 Deferred tax (liability) (26 ) (26 ) Net accumulated gains $ 79 $ 82 |
Schedule of Assumptions Used | The following assumptions were used to determine net periodic benefit costs at January 1 of each year (excluding the August 31, 2017 remeasurement date): For the Years Ended December 31, 2019 2018 2017 Discount rate 4.08 % 3.44 % 4.00 % Long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.31 % 6.56 % 6.81 % Post age 65 NA NA 9.36 % Catastrophic drug benefit NA 12.50 % NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % NA The following assumptions were used to determine benefit obligations at December 31: 2019 2018 2017 Discount rate 3.01 % 4.08 % 3.44 % Expected long-term rate of return on plan assets, net of tax 4.00 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.06 % 6.31 % 6.56 % Post age 65 NA NA NA Catastrophic drug benefit NA 11.50 % 12.50 % Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % 2.50 % |
Schedule of Allocation of Plan Assets | The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2019 2018 Registered investment companies: Vanguard Federal Money Market Fund $ 109 $ — Fidelity Government Money Market Fund 95 — Fidelity Spartan U.S. Equity Index Fund — 80 Vanguard 500 Index Fund — 93 Vanguard Total International Stock — 26 Plan Assets 204 199 Less: trust liabilities (6 ) (23 ) Plan assets available for benefits $ 198 $ 176 |
Schedule of Expected Benefit Payments | The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future employee service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2020 $ 9 2021 10 2022 11 2023 12 2024 12 2025-2029 62 Total $ 116 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Assets and Liabilities | Information related to operating leases is as follows (in millions of dollars): As of December 31, 2019 ROU Assets Other assets $ 223 Operating lease liabilities Accrued expenses 58 Other non-current liabilities 171 Total operating lease liabilities $ 229 |
Schedule of Operating Lease Information | Twelve Months Ended December 31, 2019 Weighted average remaining lease term 5 years Weighted average incremental borrowing rate 2.3 % Cash paid for operating leases $ 67 ROU assets obtained in exchange for operating lease obligations $ 88 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities as of December 31, 2019 (in millions of dollars) are as follows: Maturity of operating lease liabilities 2020 $ 63 2021 55 2022 45 2023 30 2024 16 Thereafter 30 Total lease payments 239 Less interest (10 ) Present value of lease liabilities $ 229 |
STOCK INCENTIVE PLANS (Tables)
STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK INCENTIVE PLANS [Abstract] | |
Activity for restricted stock units | The following table summarizes RSU activity (in millions, except for share and per share amounts): 2019 2018 2017 Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Beginning nonvested units 343,814 $ 245.38 352,919 $ 226.31 373,403 $ 221.77 Issued 96,823 $ 299.25 141,775 $ 284.98 129,378 $ 222.53 Canceled (36,224 ) $ 253.22 (56,393 ) $ 245.08 (47,488 ) $ 229.36 Vested (78,289 ) $ 247.96 (94,487 ) $ 233.75 (102,374 ) $ 203.51 Ending nonvested units 326,124 $ 259.88 343,814 $ 245.38 352,919 $ 226.31 Fair value of shares vested $ 19 $ 22 $ 21 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
CAPITAL STOCK [Abstract] | |
Schedule of Capital Stock | The activity related to outstanding common stock and common stock held in treasury was as follows: 2019 2018 2017 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 55,862,360 53,796,859 56,328,863 53,330,356 58,804,314 50,854,905 Exercise of stock options 232,052 (232,052 ) 930,258 (930,258 ) 407,542 (407,542 ) Settlement of restricted stock units, net of 26,107, 39,075 and 36,585 shares retained, respectively 52,182 (52,182 ) 80,988 (80,988 ) 103,331 (103,331 ) Settlement of performance share units, net of 6,737, 1,027 and 9,334 shares retained, respectively 14,027 (14,027 ) 1,911 (1,911 ) 13,978 (13,978 ) Purchase of treasury shares (2,473,093 ) 2,473,093 (1,479,660 ) 1,479,660 (3,000,302 ) 3,000,302 Balance at end of period 53,687,528 55,971,691 55,862,360 53,796,859 56,328,863 53,330,356 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Schedule of AOCE | The components of AOCE consisted of the following (in millions of dollars): Foreign Currency Translation and Other Defined Postretirement Benefit Plan Other Employment-related Benefit Plans Total Foreign Currency Translation Attributable to Noncontrolling Interests AOCE Attributable to W.W. Grainger, Inc. Balance at January 1, 2017, net of tax $ (316 ) $ 25 $ (5 ) $ (296 ) $ (23 ) $ (273 ) Other comprehensive earnings (loss) before reclassifications, net of tax 75 86 1 162 4 158 Amounts reclassified to Net earnings 18 (38 ) — (20 ) — (20 ) Net current period activity $ 93 $ 48 $ 1 $ 142 $ 4 $ 138 Balance at December 31, 2017, net of tax $ (223 ) $ 73 $ (4 ) $ (154 ) $ (19 ) $ (135 ) Other comprehensive earnings (loss) before reclassifications, net of tax (43 ) 4 (1 ) (40 ) 3 (43 ) Amounts reclassified to Net earnings 2 (10 ) — (8 ) — (8 ) Amounts reclassified to Retained earnings — 15 — 15 — 15 Net current period activity $ (41 ) $ 9 $ (1 ) $ (33 ) $ 3 $ (36 ) Balance at December 31, 2018, net of tax $ (264 ) $ 82 $ (5 ) $ (187 ) $ (16 ) $ (171 ) Other comprehensive earnings (loss) before reclassifications, net of tax 25 8 (3 ) 30 3 27 Amounts reclassified to Net earnings 1 (11 ) — (10 ) — (10 ) Net current period activity 26 (3 ) (3 ) 20 3 17 Balance at December 31, 2019, net of tax $ (238 ) $ 79 $ (8 ) $ (167 ) $ (13 ) $ (154 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 U.S. $ 1,226 $ 1,163 $ 971 Foreign (17 ) (82 ) (35 ) Total $ 1,209 $ 1,081 $ 936 |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Current income tax expense: U.S. Federal $ 199 $ 166 $ 248 U.S. State 44 32 29 Foreign 58 47 22 Total current 301 245 299 Deferred income tax expense 13 13 14 Total income tax expense $ 314 $ 258 $ 313 |
Schedule of Deferred Tax Assets and Liabilities | The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2019 and 2018 were as follows (in millions of dollars): As of December 31, 2019 2018 Deferred tax assets: Accrued expenses $ 86 $ 35 Foreign operating loss carryforwards 67 64 Accrued employment-related benefits 49 49 Tax credit carryforward 22 22 Other 12 11 Deferred tax assets 236 181 Less valuation allowance (72 ) (72 ) Deferred tax assets, net of valuation allowance $ 164 $ 109 Deferred tax liabilities: Property, buildings and equipment (134 ) (44 ) Intangibles (83 ) (105 ) Prepaids (6 ) (6 ) Other (6 ) (8 ) Deferred tax liabilities (229 ) (163 ) Net deferred tax liability $ (65 ) $ (54 ) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 11 $ 12 Noncurrent liabilities (76 ) (66 ) Net deferred tax liability $ (65 ) $ (54 ) |
Summary of Valuation Allowance Changes | The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2019 2018 Balance at beginning of period $ (72 ) $ (84 ) Increases primarily related to foreign NOLs (9 ) (3 ) Releases related to foreign NOLs 10 16 Increase related to U.S. foreign tax credits (1 ) (1 ) Balance at end of period $ (72 ) $ (72 ) |
Reconciliation of Income Tax Statutory Rate | A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Federal income tax $ 254 $ 227 $ 327 State income taxes, net of federal income tax benefit 36 32 20 Clean energy credit — (20 ) (38 ) Foreign rate difference 25 20 10 Goodwill impairment — 20 — U.S. tax legislation impact — — (3 ) Excess tax benefits from stock-based compensation (2 ) (15 ) (14 ) Other - net 1 (6 ) 11 Income tax expense $ 314 $ 258 $ 313 Effective tax rate 26.0 % 23.9 % 33.5 % |
Reconciliation of Income Tax Contingencies | The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2019 2018 2017 Balance at beginning of year $ 37 $ 45 $ 59 Additions for tax positions related to the current year 3 4 4 Additions for tax positions of prior years 1 3 5 Reductions for tax positions of prior years (1 ) (5 ) (13 ) Reductions due to statute lapse (10 ) (9 ) (5 ) Settlements, audit payments, refunds - net (2 ) (1 ) (5 ) Balance at end of year $ 28 $ 37 $ 45 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): 2019 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,815 $ 529 $ 9,344 $ 2,651 $ 11,995 Intersegment net sales (505 ) — (505 ) (4 ) (509 ) Net sales to external customers $ 8,310 $ 529 $ 8,839 $ 2,647 11,486 Segment operating earnings $ 1,391 $ 3 $ 1,394 $ (9 ) $ 1,385 2018 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,588 $ 653 $ 9,241 $ 2,441 $ 11,682 Intersegment net sales (457 ) — (457 ) (4 ) (461 ) Net sales to external customers $ 8,131 $ 653 $ 8,784 $ 2,437 $ 11,221 Segment operating earnings $ 1,338 $ (49 ) $ 1,289 $ 8 $ 1,297 2017 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,960 $ 753 $ 8,713 $ 2,120 $ 10,833 Intersegment net sales (404 ) — (404 ) (4 ) (408 ) Net sales to external customers $ 7,556 $ 753 $ 8,309 $ 2,116 $ 10,425 Segment operating earnings $ 1,200 $ (77 ) $ 1,123 $ 56 $ 1,179 |
Significant Reconciling Items from Segments to Consolidated | Following are reconciliations of the segment information with the consolidated totals per the Financial Statements (in millions of dollars): 2019 2018 2017 Operating earnings: Total operating earnings for reportable segments $ 1,394 $ 1,289 $ 1,123 Other businesses (9 ) 8 56 Unallocated expenses (123 ) (139 ) (144 ) Total consolidated operating earnings $ 1,262 $ 1,158 $ 1,035 Assets: United States $ 2,668 $ 2,496 $ 2,310 Canada 173 188 279 Assets for reportable segments $ 2,841 $ 2,684 $ 2,589 Other current and noncurrent assets 3,003 2,879 3,033 Unallocated assets 161 310 182 Total consolidated assets $ 6,005 $ 5,873 $ 5,804 Depreciation and amortization: United States $ 148 $ 166 $ 169 Canada 17 19 19 Depreciation and amortization for reportable segments $ 165 $ 185 $ 188 Other businesses and unallocated 45 49 53 Total consolidated depreciation and amortization $ 210 $ 234 $ 241 Additions to long-lived assets United States $ 168 $ 200 $ 187 Canada 9 7 8 Additions to long-lived assets for reportable segments $ 177 $ 207 $ 195 Other businesses and unallocated 72 39 67 Total consolidated additions to long-lived assets $ 249 $ 246 $ 262 Following are revenue and long-lived assets by geographic location (in millions of dollars): 2019 2018 2017 Revenue by geographic location: United States $ 8,865 $ 8,613 $ 7,948 Canada 539 658 761 Other foreign countries 2,082 1,950 1,716 $ 11,486 $ 11,221 $ 10,425 Long-lived segment assets by geographic location: United States $ 1,268 $ 1,140 $ 1,098 Canada 152 136 199 Other foreign countries 327 202 247 $ 1,747 $ 1,478 $ 1,544 |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
Schedule of Quarterly Financial Information | A summary of selected quarterly information for 2019 and 2018 is as follows (in millions of dollars, except for per share amounts): 2019 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,799 $ 2,893 $ 2,947 $ 2,847 $ 11,486 COGS 1,704 1,772 1,848 1,765 7,089 Gross profit 1,095 1,121 1,099 1,082 4,397 SG&A 732 741 761 901 3,135 Operating earnings 363 380 338 181 1,262 Net earnings attributable to W.W. Grainger, Inc. $ 253 $ 260 $ 233 $ 103 $ 849 Earnings per share - basic $ 4.50 $ 4.69 $ 4.27 $ 1.89 $ 15.39 Earnings per share - diluted $ 4.48 $ 4.67 $ 4.25 $ 1.88 $ 15.32 2018 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,766 $ 2,861 $ 2,831 $ 2,763 $ 11,221 COGS 1,674 1,750 1,752 1,697 6,873 Gross profit 1,092 1,111 1,079 1,066 4,348 SG&A 757 767 890 776 3,190 Operating earnings 335 344 189 290 1,158 Net earnings attributable to W.W. Grainger, Inc. $ 232 $ 237 $ 104 $ 209 $ 782 Earnings per share - basic $ 4.09 $ 4.19 $ 1.84 $ 3.71 $ 13.82 Earnings per share - diluted $ 4.07 $ 4.16 $ 1.82 $ 3.68 $ 13.73 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 | |
Service fee revenue (approximately) | 1.00% | |||
Accrued sales returns | $ 25 | $ 29 | ||
Accrued sales incentives | 57 | 62 | ||
Advertising expense | $ 316 | 241 | $ 187 | |
Original maturity of cash (days) | 90 days | |||
Percentage of LIFO Inventory | 70.00% | |||
Inventory, LIFO Reserve | $ 426 | 394 | ||
Depreciation | 150 | 162 | 170 | |
Capitalized interest costs | 9 | 10 | 2 | |
Operating Lease, Right-of-Use Asset | 223 | $ 208 | ||
Total operating lease liabilities | 229 | $ 205 | ||
Inventory, LIFO Reserve, Effect on Income, Net | $ 24 | $ 8 | $ (1) | |
Operating Lease Expiration Date | 2036 | |||
Minimum [Member] | ||||
Buildings, structures and improvements, estimated useful life | 10 years | |||
Furniture, fixtures, machinery and equipment, estimated useful life | 3 years | |||
Capitalized software amortization period | 3 years | |||
Operating lease renewal term | 1 year | |||
Maximum [Member] | ||||
Buildings, structures and improvements, estimated useful life | 30 years | |||
Furniture, fixtures, machinery and equipment, estimated useful life | 10 years | |||
Capitalized software amortization period | 5 years | |||
Operating lease renewal term | 30 years |
REVENUE (Details)
REVENUE (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 100.00% | 100.00% |
Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 14.00% | 14.00% |
Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 17.00% | 18.00% |
Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 11.00% |
Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 5.00% |
Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 5.00% |
Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% | 8.00% |
Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 7.00% |
Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% | 8.00% |
Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% | 4.00% |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 21.00% | 20.00% |
Other businesses | ||
Disaggregation of Revenue [Line Items] | ||
Percentage Of Company-Wide Revenue | 23.00% | 22.00% |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 72.00% | 72.00% |
United States | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% | 18.00% |
United States | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 19.00% | 19.00% |
United States | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 12.00% | 13.00% |
United States | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 6.00% |
United States | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 7.00% |
United States | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 9.00% |
United States | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 8.00% |
United States | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
United States | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% | 3.00% |
United States | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 7.00% |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 5.00% | 6.00% |
Canada | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 6.00% |
Canada | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 20.00% | 20.00% |
Canada | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 6.00% |
Canada | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% | 7.00% |
Canada | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 0.00% | 0.00% |
Canada | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 10.00% |
Canada | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% | 4.00% |
Canada | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 11.00% |
Canada | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 33.00% | 32.00% |
Canada | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% | 4.00% |
PROPERTY, BUILDINGS AND EQUIP_3
PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | $ 3,493 | $ 3,441 |
Less: Accumulated depreciation and amortization | 2,093 | 2,089 |
PROPERTY, BUILDINGS AND EQUIPMENT – NET | 1,400 | 1,352 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 332 | 318 |
Building, structures and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 1,329 | 1,338 |
Furniture, fixtures, machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | $ 1,832 | $ 1,785 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Amortization expense, intangible assets | $ 78 | $ 92 | $ 89 | |
GOODWILL | 429 | 424 | 544 | |
Impairment of goodwill, intangible and other assets | 123 | 156 | 28 | |
Other businesses | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill, Impairment Loss, Rounded | 105 | |||
Impairment of Intangible Assets (Excluding Goodwill) | 120 | |||
Impairment of goodwill, intangible and other assets | $ 139 | |||
Canada | ||||
Segment Reporting Information [Line Items] | ||||
GOODWILL | $ 126 | $ 120 | $ 130 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 424 | $ 544 |
Impairment | (105) | |
Translation | 5 | (15) |
Goodwill, ending balance | 429 | 424 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, December 31, 2019 (1) | 184 | |
United States | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 192 | 192 |
Impairment | 0 | |
Translation | 0 | 0 |
Goodwill, ending balance | 192 | 192 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, December 31, 2019 (1) | 0 | |
Canada | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 120 | 130 |
Impairment | 0 | |
Translation | 6 | (10) |
Goodwill, ending balance | 126 | 120 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, December 31, 2019 (1) | 32 | |
Other businesses | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 112 | 222 |
Impairment | (105) | |
Translation | (1) | (5) |
Goodwill, ending balance | 111 | $ 112 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, December 31, 2019 (1) | $ 152 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets included in Other assets and intangibles (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total intangible assets, gross | $ 1,163 | $ 1,224 |
Total intangible assets, net | 304 | 460 |
Finite-lived intangible assets, accumulated amortization | 859 | 764 |
Total | 242 | |
Customer lists and relationships [Member] | ||
Finite-lived intangible assets, gross | 401 | 410 |
Finite-lived intangible assets, accumulated amortization | 301 | 204 |
Total | 100 | 206 |
Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, gross | 36 | 24 |
Finite-lived intangible assets, accumulated amortization | 20 | 15 |
Total | 16 | 9 |
Non-amortized trade names and other [Member] | ||
Finite-lived intangible assets, gross | 100 | 133 |
Finite-lived intangible assets, accumulated amortization | 38 | 34 |
Indefinite-lived intangible assets, carrying amount | 62 | 99 |
Capitalized software [Member] | ||
Finite-lived intangible assets, gross | 626 | 657 |
Finite-lived intangible assets, accumulated amortization | 500 | 511 |
Total | $ 126 | $ 146 |
Weighted average [Member] | ||
Finite-lived intangible assets, useful life | 8 years 2 months 12 days | |
Weighted average [Member] | Customer lists and relationships [Member] | ||
Finite-lived intangible assets, useful life | 13 years 2 months 12 days | |
Weighted average [Member] | Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, useful life | 14 years 1 month 6 days | |
Weighted average [Member] | Capitalized software [Member] | ||
Finite-lived intangible assets, useful life | 4 years 2 months 12 days |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS Estimated amortization expense (Details) $ in Millions | Dec. 31, 2019USD ($) |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
2020 | $ 72 |
2021 | 55 |
2022 | 38 |
2023 | 13 |
2024 | 12 |
Thereafter | 52 |
Total | $ 242 |
RESTRUCTURING RESERVES RESTRUCT
RESTRUCTURING RESERVES RESTRUCTURING (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | |
Selling, General and Administrative Expenses [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Costs | $ 47 | $ 116 | |
Employee Related Liabilities, Current [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | $ 47 | $ 10 |
SHORT-TERM DEBT (Details)
SHORT-TERM DEBT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Short-term Debt [Line Items] | ||
Short-term debt, outstanding | $ 55,000,000 | $ 49,000,000 |
Line of credit [Member] | ||
Short-term Debt [Line Items] | ||
Lines of credit | 55,000,000 | 49,000,000 |
Maximum month-end balance during the year | $ 56,000,000 | $ 138,000,000 |
Weighted average interest rate during the year | 2.32% | 2.29% |
Weighted average interest rate at December 31 | 2.44% | 2.35% |
Commercial Paper [Member] | ||
Short-term Debt [Line Items] | ||
Maximum month-end balance during the year | $ 0 | $ 90,000,000 |
Weighted average interest rate during the year | 0.00% | 1.80% |
Commercial paper | $ 0 | $ 0 |
Short-term debt, outstanding | 0 | |
5-Year Unsecured Revolving Line Of Credit [Member] | Domestic Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 750,000,000 | |
Debt, term | 5 years | |
Line of credit, outstanding | $ 0 | $ 0 |
LONG-TERM DEBT - SCHEDULE OF LO
LONG-TERM DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | May 31, 2017 | May 31, 2016 | Jun. 30, 2015 |
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 2,181 | $ 2,193 | |||
Long-Term Debt, Gross, Fair Value Disclosure | 2,440 | 2,159 | |||
Other | 42 | 49 | |||
Other Long-Term Debt, Fair Value Disclosure | 42 | 49 | |||
Less current maturities | (246) | (81) | |||
Long-Term Debt, Current Maturities, Fair Value Disclosure | (246) | (81) | |||
Debt issuance costs and discounts, net of amortization | (21) | (22) | |||
Debt Instrument, Unamortized, Discount (Premium) And Debt Issuance Costs, Net, Fair Value | (21) | (22) | |||
Long-term debt (less current maturities and debt issuance costs and discounts) | 1,914 | 2,090 | |||
Long-Term Debt, Excluding Current Maturities, Fair Value Disclosure | 2,173 | 2,056 | |||
British pound term loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 170 | 174 | |||
Long-term Debt, Fair Value | 170 | 174 | |||
Euro term loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 123 | 126 | |||
Long-term Debt, Fair Value | 123 | 126 | |||
Canadian dollar revolving credit facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 46 | 44 | |||
Long-term Debt, Fair Value | 46 | 44 | |||
Unsecured Senior Notes, 4.60% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 1,000 | 1,000 | |||
Long-term Debt, Fair Value | $ 1,194 | 1,026 | |||
Stated interest rate | 4.60% | 4.60% | |||
Unsecured Senior Notes, 3.75% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 400 | 400 | |||
Long-term Debt, Fair Value | $ 416 | 357 | |||
Stated interest rate | 3.75% | 3.75% | |||
Unsecured Senior Notes, 4.20% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 400 | 400 | |||
Long-term Debt, Fair Value | $ 449 | $ 383 | |||
Stated interest rate | 4.20% | 4.20% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Aug. 31, 2016EUR (€) | Sep. 30, 2014CAD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Aug. 31, 2015GBP (£) | Jun. 30, 2015USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | May 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||||
Partially funded repurchase amount | $ 2,800,000,000 | |||||||||
Total repurchase amount previously announced | 3,000,000,000 | |||||||||
Repayments debt | $ 42,000,000 | $ 96,000,000 | 39,000,000 | |||||||
August 2016 Credit Agreement [Member] | Revolving credit facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | € | € 20,000,000 | |||||||||
Senior notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,800,000,000 | |||||||||
Debt issuance costs and discounts | $ 24,000,000 | $ 24,000,000 | ||||||||
Senior notes [Member] | Debt redemption, period one [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt redemption percentage | 101.00% | |||||||||
Senior notes [Member] | Debt redemption, period two [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt redemption percentage | 100.00% | |||||||||
Senior notes [Member] | Unsecured Senior Notes, 4.20% [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 400,000,000 | $ 400,000,000 | ||||||||
Debt, term | 30 years | 30 years | 30 years | |||||||
Stated interest rate | 4.20% | 4.20% | 4.20% | |||||||
Long-term Debt, Fair Value | $ 449,000,000 | 383,000,000 | ||||||||
Senior notes [Member] | Unsecured Senior Notes, 3.75% [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 400,000,000 | |||||||||
Stated interest rate | 3.75% | 3.75% | ||||||||
Long-term Debt, Fair Value | $ 416,000,000 | 357,000,000 | ||||||||
Senior notes [Member] | Unsecured Senior Notes, 4.60% [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,000,000,000 | |||||||||
Stated interest rate | 4.60% | 4.60% | ||||||||
Long-term Debt, Fair Value | $ 1,194,000,000 | $ 1,026,000,000 | ||||||||
Line of credit [Member] | Revolving credit facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | £ | £ 20,000,000 | |||||||||
Term loan [Member] | British pound term loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | £ | £ 160,000,000 | |||||||||
Debt, term | 5 years | |||||||||
Semi annual payments | £ | £ 4,000,000 | |||||||||
Weighted average interest rate | 1.47% | 1.34% | ||||||||
Term loan [Member] | August 2016 Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | € | € 110,000,000 | |||||||||
Debt, term | 5 years | |||||||||
Effective interest rate | 0.45% | 0.45% | ||||||||
Revolving credit facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 175,000,000 | |||||||||
Weighted average interest rate | 2.82% | |||||||||
Euro term loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term Debt, Fair Value | $ 123,000,000 | $ 126,000,000 | ||||||||
London Interbank Offered Rate (LIBOR) [Member] | Term loan [Member] | British pound term loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis points | 0.75% | |||||||||
Euro Interbank Offered Rate (EURIBOR) [Member] | Term loan [Member] | August 2016 Credit Agreement [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis points | 0.45% | |||||||||
Canadian Dollar Offered Rate (CDOR) [Member] | Revolving credit facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis points | 0.80% | |||||||||
Minimum [Member] | Senior notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis points | 20.00% | |||||||||
Maximum [Member] | Senior notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis points | 25.00% |
LONG-TERM DEBT - SCHEDULED AGGR
LONG-TERM DEBT - SCHEDULED AGGREGATE PRINCIPAL PAYMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2020 | $ 246 | $ 81 |
2021 | 129 | |
2022 | 0 | |
2023 | 0 | |
2024 | 6 | |
Thereafter | 1,800 | |
Total | $ 2,181 | $ 2,193 |
EMPLOYEE BENEFITS - Defined Con
EMPLOYEE BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing automatic contribution percentage | 3.00% | ||
Profit sharing plan expense | $ 113 | $ 164 | $ 120 |
Defined contribution plans, expense | $ 19 | $ 13 | $ 18 |
Minimum [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing contribution percentage | 8.00% | ||
Maximum [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing contribution percentage | 18.00% |
EMPLOYEE BENEFITS - Postretirem
EMPLOYEE BENEFITS - Postretirement Benefits (Details) - USD ($) $ in Millions | Aug. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Profit Sharing Automatic Contribution By Employer, Percentage | 3.00% | |||
Postretirement benefit plan re-measurement, net of tax | $ 29 | |||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Actuarial (gains) | $ (76) | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||
HRA credit inflation index for grandfathered retirees | 2.50% | |||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Pension and Other Postretirement Benefits Cost (Reversal of Cost) | $ 113 | $ 164 | $ 120 | |
Defined Contribution Plan, Cost | 19 | 13 | 18 | |
Postretirement Benefits [Member] | ||||
Postretirement Benefits | ||||
Service cost | 4 | 6 | 7 | |
Interest cost | 7 | 7 | 8 | |
Expected return on assets | (12) | (13) | (12) | |
Amortization of prior service credits | (10) | (10) | (7) | |
Amortization of unrecognized gains | (4) | (3) | (2) | |
Net periodic (benefits) costs | (15) | (13) | (6) | |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Benefit obligation at beginning of year | 190 | 208 | ||
Service cost | 4 | 6 | 7 | |
Interest cost | 7 | 7 | 8 | |
Plan participants' contributions | 3 | 3 | ||
Plan amendment | 5 | (26) | ||
Benefits paid | (9) | (9) | ||
Prescription drug rebates | 0 | 1 | ||
Benefit obligation at end of year | 200 | 190 | $ 208 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Prescription drug rebates | 0 | 1 | ||
Noncurrent postretirement benefit obligation | 2 | 14 | ||
Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax [Abstract] | ||||
Prior service credit | 61 | 71 | ||
Unrecognized gains | 44 | 37 | ||
Deferred tax (liability) | (26) | (26) | ||
Net accumulated gains | $ 79 | $ 82 | ||
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract] | ||||
Net unrecognized gains (losses), amortization period | 11 years 1 month 6 days | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||||
Discount rate | 4.08% | 3.44% | 4.00% | |
Long-term rate of return on plan assets, net of tax | 7.13% | 7.13% | 7.13% | |
Pre age 65 | 6.31% | 6.56% | 6.81% | |
Post age 65 | 9.36% | |||
Catastrophic drug benefit | 12.50% | |||
Ultimate healthcare cost trend rate | 4.50% | 4.50% | 4.50% | |
Year ultimate healthcare cost trend rate reached | 2026 | 2026 | 2026 | |
HRA credit inflation index for grandfathered retirees | 2.50% | 2.50% | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||
Discount rate | 3.01% | 4.08% | 3.44% | |
Expected long-term rate of return on plan assets, net of tax | 4.00% | 7.13% | 7.13% | |
Pre age 65 | 6.06% | 6.31% | 6.56% | |
Catastrophic drug benefit | 11.50% | 12.50% | ||
Ultimate healthcare cost trend rate | 4.50% | 4.50% | 4.50% | |
Year ultimate healthcare cost trend rate reached | 2026 | 2026 | 2026 | |
HRA credit inflation index for grandfathered retirees | 2.50% | 2.50% | 2.50% | |
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
2020 | $ 9 | |||
2021 | 10 | |||
2022 | 11 | |||
2023 | 12 | |||
2024 | 12 | |||
2025-2029 | 62 | |||
Total | 116 | |||
Postretirement Benefits [Member] | Vanguard Federal Money Market Fund [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 0 | |||
Plan assets available for benefits at end of year | 109 | $ 0 | ||
Postretirement Benefits [Member] | Fidelity Government Money Market Fund [Domain] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 0 | |||
Plan assets available for benefits at end of year | 95 | 0 | ||
Postretirement Benefits [Member] | Fidelity Spartan US Equity Index Fund [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 80 | |||
Plan assets available for benefits at end of year | 0 | 80 | ||
Postretirement Benefits [Member] | Vanguard 500 Index Fund [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 93 | |||
Plan assets available for benefits at end of year | 0 | 93 | ||
Postretirement Benefits [Member] | Vanguard Total International Stock Member | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 26 | |||
Plan assets available for benefits at end of year | 0 | 26 | ||
Postretirement Benefits [Member] | Total Registered Investment Companies [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Less: trust liabilities | (6) | (23) | ||
Postretirement Benefits [Member] | Total Registered Investment Companies [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 199 | |||
Plan assets available for benefits at end of year | 204 | 199 | ||
Postretirement Benefits [Member] | Plan Assets [Member] | ||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Prescription drug rebates | 0 | 1 | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 176 | 189 | ||
Actual (losses) returns on plan assets | 28 | (8) | ||
Plan participants' contributions | 3 | 3 | ||
Benefits paid | (9) | (9) | ||
Prescription drug rebates | 0 | 1 | ||
Plan assets available for benefits at end of year | $ 198 | $ 176 | $ 189 | |
Minimum [Member] | ||||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Profit Sharing Contribution Percentage | 8.00% | |||
Maximum [Member] | ||||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Profit Sharing Contribution Percentage | 18.00% |
LEASES - Schedule of Operating
LEASES - Schedule of Operating Lease Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 | |
Leases [Abstract] | ||||
Operating Lease, Right-of-Use Asset | $ 223 | $ 208 | ||
Accrued expenses | 58 | |||
Other non-current liabilities | 171 | |||
Total operating lease liabilities | $ 229 | $ 205 | ||
Weighted average remaining lease term | 5 years | |||
Weighted average incremental borrowing rate | 2.30% | |||
Cash paid for operating leases | $ 67 | |||
ROU assets obtained in exchange for operating lease obligations | 88 | |||
Rent expense included in SG&A | 76 | $ 76 | $ 76 | |
Sublease income | $ 3 | $ 3 | $ 2 |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Operating Leases (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 |
Leases [Abstract] | ||
Weighted average remaining lease term | 5 years | |
2020 | $ 63 | |
2021 | 55 | |
2022 | 45 | |
2023 | 30 | |
2024 | 16 | |
Thereafter | 30 | |
Total lease payments | 239 | |
Less interest | (10) | |
Present value of lease liabilities | $ 229 | $ 205 |
STOCK INCENTIVE PLANS (Details)
STOCK INCENTIVE PLANS (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock available for grant under stock incentive plans (in shares) | 2.3 | ||
Pretax stock-based compensation expense | $ 40 | $ 47 | $ 33 |
Income tax benefits recognized in earnings for stock-based compensation expense | 15 | $ 26 | $ 26 |
Restricted Stock Units [Member] | |||
Stock Options Exercised [Abstract] | |||
Unrecognized compensation | $ 45 | ||
Weighted average period to recognize (in years) | 2 years 1 month 6 days | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expiration period | 10 years | ||
Stock Options Exercised [Abstract] | |||
Unrecognized compensation | $ 10.5 | ||
Weighted average period to recognize (in years) | 1 year 9 months 18 days | ||
Maximum [Member] | Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 7 years | ||
Minimum [Member] | Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year |
STOCK INCENTIVE PLANS - Stock O
STOCK INCENTIVE PLANS - Stock Options Outstanding and Exercisable (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |||
Stock or Unit Option Plan Expense | $ 8 | $ 9 | $ 13 |
Stock Options [Member] | |||
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |||
Unrecognized compensation | $ 10.5 | ||
Weighted average period to recognize (in years) | 1 year 9 months 18 days |
STOCK INCENTIVE PLANS - Restric
STOCK INCENTIVE PLANS - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Price Per Share [Abstract] | |||
Restricted Stock or Unit Expense | $ 27 | $ 23 | $ 17 |
Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of shares vested | $ 19 | $ 22 | $ 21 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |||
Outstanding at beginning of period (in shares) | 343,814 | 352,919 | 373,403 |
Issued (in shares) | 96,823 | 141,775 | 129,378 |
Canceled (in shares) | (36,224) | (56,393) | (47,488) |
Vested (in shares) | (78,289) | (94,487) | (102,374) |
Outstanding at end of period (in shares) | 326,124 | 343,814 | 352,919 |
Weighted Average Price Per Share [Abstract] | |||
Outstanding at beginning of period, weighted average price per share (in dollars per share) | $ 245.38 | $ 226.31 | $ 221.77 |
Issued, weighted average price per share (in dollars per share) | 299.25 | 284.98 | 222.53 |
Cancelled, weighted average price per share (in dollars per share) | 253.22 | 245.08 | 229.36 |
Vested, weighted average price per share (in dollars per share) | 247.96 | 233.75 | 203.51 |
Outstanding at end of period, weighted average price per share (in dollars per share) | $ 259.88 | $ 245.38 | $ 226.31 |
Unrecognized compensation | $ 45 | ||
Weighted average period to recognize (in years) | 2 years 1 month 6 days | ||
Minimum [Member] | Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year | ||
Maximum [Member] | Restricted Stock Units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 7 years |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 | |
Balance at beginning of period, treasury stock (in shares) | 53,796,859 | ||
Balance at end of period, treasury stock (in shares) | 55,971,691 | 53,796,859 | |
Shares retained after settlement of restricted stock units (in shares) | 26,107 | 39,075 | 36,585 |
Shares retained after settlement of performance share units (in shares) | 6,737 | 1,027 | 9,334 |
Outstanding Common Stock [Member] | |||
Balance at beginning of period, common stock (in shares) | 55,862,360 | 56,328,863 | 58,804,314 |
Exercise of stock options (in shares) | 232,052 | 930,258 | 407,542 |
Settlement of restricted stock units, net of 26,107, 39,075 and 36,585 shares retained, respectively (in shares) | 52,182 | 80,988 | 103,331 |
Settlement of performance share units, net of 6,737, 1,027 and 9,334 shares retained, respectively (in shares) | 14,027 | 1,911 | 13,978 |
Purchase of treasury shares (in shares) | (2,473,093) | (1,479,660) | (3,000,302) |
Balance at end of period, common stock (in shares) | 53,687,528 | 55,862,360 | 56,328,863 |
Treasury Stock [Member] | |||
Balance at beginning of period, treasury stock (in shares) | 53,796,859 | 53,330,356 | 50,854,905 |
Exercise of stock options (in shares) | (232,052) | (930,258) | (407,542) |
Settlement of restricted stock units, net of 26,107, 39,075 and 36,585 shares retained, respectively (in shares) | (52,182) | (80,988) | (103,331) |
Settlement of performance share units, net of 6,737, 1,027 and 9,334 shares retained, respectively (in shares) | (14,027) | (1,911) | (13,978) |
Purchase of treasury shares (in shares) | 2,473,093 | 1,479,660 | 3,000,302 |
Balance at end of period, treasury stock (in shares) | 55,971,691 | 53,796,859 | 53,330,356 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 2,093 | $ 1,828 | $ 1,905 |
Net current period activity | 20 | (48) | 142 |
Ending balance | 2,060 | 2,093 | 1,828 |
Foreign Currency Translation and Other | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (264) | (223) | (316) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 25 | (43) | 75 |
Amounts reclassified to Net earnings | 1 | 2 | 18 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 26 | (41) | 93 |
Ending balance | (238) | (264) | (223) |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (187) | (154) | (296) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 30 | (40) | 162 |
Amounts reclassified to Net earnings | (10) | (8) | (20) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 20 | (33) | 142 |
Ending balance | (167) | (187) | (154) |
AOCI Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (16) | (19) | (23) |
Ending balance | (13) | (16) | (19) |
Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Other comprehensive earnings (loss) before reclassifications, net of tax | 3 | 3 | 4 |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 3 | 3 | 4 |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (171) | (135) | (273) |
Net current period activity | 17 | (51) | 138 |
Ending balance | (154) | (171) | (135) |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (171) | (135) | (273) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 27 | (43) | 158 |
Amounts reclassified to Net earnings | (10) | (8) | (20) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 17 | (36) | 138 |
Ending balance | (154) | (171) | (135) |
Defined Postretirement Benefit Plan | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | 82 | 73 | 25 |
Other comprehensive earnings (loss) before reclassifications, net of tax | 8 | 4 | 86 |
Amounts reclassified to Net earnings | (11) | (10) | (38) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | (3) | 9 | 48 |
Ending balance | 79 | 82 | 73 |
Other Employment-related Benefit Plans | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (5) | (4) | (5) |
Other comprehensive earnings (loss) before reclassifications, net of tax | (3) | (1) | 1 |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | (3) | (1) | 1 |
Ending balance | $ (8) | $ (5) | $ (4) |
INCOME TAXES - Net Earnings Bef
INCOME TAXES - Net Earnings Before Income Taxes by Geographical Area (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net earnings before income taxes by geographical area | |||
U.S. | $ 1,226 | $ 1,163 | $ 971 |
Foreign | (17) | (82) | (35) |
Earnings before income taxes | $ 1,209 | $ 1,081 | $ 936 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current income tax expense: | |||
U.S. Federal | $ 199 | $ 166 | $ 248 |
U.S. State | 44 | 32 | 29 |
Foreign | 58 | 47 | 22 |
Total current | 301 | 245 | 299 |
Deferred income tax expense | 13 | 13 | 14 |
Income tax expense | 314 | 258 | $ 313 |
Undistributed earnings of foreign subsidiaries | 402 | ||
Liability for tax uncertainties | $ 8 | $ 13 |
INCOME TAXES - Income Tax Effec
INCOME TAXES - Income Tax Effects of Temporary Differences (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | |||
Operating Loss Carryforwards | $ 286 | ||
Deferred tax assets: | |||
Accrued expenses | 86 | $ 35 | |
Foreign operating loss carryforwards | 67 | 64 | |
Accrued employment-related benefits | 49 | 49 | |
Tax credit carryforward | 22 | 22 | |
Other | 12 | 11 | |
Deferred tax assets | 236 | 181 | |
Less valuation allowance | (72) | (72) | $ (84) |
Deferred tax assets, net of valuation allowance | 164 | 109 | |
Deferred tax liabilities: | |||
Property, buildings and equipment | (134) | (44) | |
Intangibles | (83) | (105) | |
Prepaids | (6) | (6) | |
Other | (6) | (8) | |
Deferred tax liabilities | (229) | (163) | |
Net deferred tax liability | (65) | (54) | |
The net deferred tax asset (liability) is classified as follows: | |||
Noncurrent assets | 11 | 12 | |
Noncurrent liabilities | $ (76) | $ (66) |
INCOME TAXES - Changes in Valua
INCOME TAXES - Changes in Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Balance at beginning of period | $ (72) | $ (84) |
Balance at end of period | (72) | (72) |
Valuation allowance increases primarily related to foreign NOLs [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (9) | (3) |
Valuation allowance releases related to foreign NOLs [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 10 | 16 |
Valuation allowance increase related to U.S. foreign tax credits [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | $ (1) | $ (1) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expense with Federal Income Taxes at the Statutory Rate (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of income tax expense with federal income taxes at the statutory rate | |||
Federal income tax | $ 254 | $ 227 | $ 327 |
State income taxes, net of federal income tax benefit | 36 | 32 | 20 |
Clean energy credit | 0 | (20) | (38) |
Foreign rate difference | 25 | 20 | 10 |
Goodwill impairment | 0 | 20 | 0 |
U.S. tax legislation impact | 0 | 0 | (3) |
Excess tax benefits from stock-based compensation | (2) | (15) | (14) |
Other - net | 1 | (6) | 11 |
Income tax expense | $ 314 | $ 258 | $ 313 |
Effective tax rate | 26.00% | 23.90% | 33.50% |
INCOME TAXES - Changes in Liabi
INCOME TAXES - Changes in Liability for Tax Uncertainties, Excluding Interest (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Liability for tax uncertainties | $ 8 | $ 13 | |
Changes in liability for tax uncertainties, excluding interest | |||
Balance at beginning of year | 37 | 45 | $ 59 |
Additions for tax positions related to the current year | 3 | 4 | 4 |
Additions for tax positions of prior years | 1 | 3 | 5 |
Reductions for tax positions of prior years | (1) | (5) | (13) |
Reductions due to statute lapse | (10) | (9) | (5) |
Settlements, audit payments, refunds - net | (2) | (1) | (5) |
Balance at end of year | $ 28 | $ 37 | $ 45 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||||||||||
Operating Lease, Right-of-Use Asset | $ 223 | $ 223 | $ 208 | |||||||||
Number of reportable segments | segment | 2 | |||||||||||
Service fee revenue | 1.00% | |||||||||||
Summarized Information: | ||||||||||||
Net sales | 2,847 | $ 2,947 | $ 2,893 | $ 2,799 | $ 2,763 | $ 2,831 | $ 2,861 | $ 2,766 | $ 11,486 | $ 11,221 | $ 10,425 | |
Operating earnings | 181 | $ 338 | $ 380 | $ 363 | 290 | $ 189 | $ 344 | $ 335 | 1,262 | 1,158 | 1,035 | |
Total assets | 6,005 | 5,873 | 6,005 | 5,873 | 5,804 | |||||||
Long-lived assets | 1,747 | 1,478 | 1,747 | 1,478 | 1,544 | |||||||
Geographical Information | United States | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 8,865 | 8,613 | 7,948 | |||||||||
Long-lived assets | 1,268 | 1,140 | 1,268 | 1,140 | 1,098 | |||||||
Geographical Information | Canada | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 539 | 658 | 761 | |||||||||
Long-lived assets | 152 | 136 | 152 | 136 | 199 | |||||||
Geographical Information | Other foreign countries | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 2,082 | 1,950 | 1,716 | |||||||||
Long-lived assets | 327 | 202 | 327 | 202 | 247 | |||||||
Segments | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 11,995 | 11,682 | 10,833 | |||||||||
Operating earnings | 1,385 | 1,297 | 1,179 | |||||||||
Total assets | 2,841 | 2,684 | 2,841 | 2,684 | 2,589 | |||||||
Depreciation and amortization | 210 | 234 | 241 | |||||||||
Additions to long-lived assets | 249 | 246 | 262 | |||||||||
Intersegment eliminations [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | (509) | (461) | (408) | |||||||||
Segment other current and noncurrent assets [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Total assets | 3,003 | 2,879 | 3,003 | 2,879 | 3,033 | |||||||
Depreciation and amortization | 45 | 49 | 53 | |||||||||
Additions to long-lived assets | 72 | 39 | 67 | |||||||||
Unallocated in consolidation [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Operating earnings | (123) | (139) | (144) | |||||||||
Total assets | 161 | 310 | 161 | 310 | 182 | |||||||
United States | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 8,310 | 8,131 | 7,556 | |||||||||
United States | Segments | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 8,815 | 8,588 | 7,960 | |||||||||
Operating earnings | 1,391 | 1,338 | 1,200 | |||||||||
Total assets | 2,668 | 2,496 | 2,668 | 2,496 | 2,310 | |||||||
Depreciation and amortization | 148 | 166 | 169 | |||||||||
Additions to long-lived assets | 168 | 200 | 187 | |||||||||
United States | Intersegment eliminations [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | (505) | (457) | (404) | |||||||||
Canada | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 529 | 653 | 753 | |||||||||
Canada | Segments | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 529 | 653 | 753 | |||||||||
Operating earnings | 3 | (49) | (77) | |||||||||
Total assets | $ 173 | $ 188 | 173 | 188 | 279 | |||||||
Depreciation and amortization | 17 | 19 | 19 | |||||||||
Additions to long-lived assets | 9 | 7 | 8 | |||||||||
Canada | Intersegment eliminations [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 0 | 0 | 0 | |||||||||
United States and Canada | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 8,839 | 8,784 | 8,309 | |||||||||
Operating earnings | 1,394 | 1,289 | 1,123 | |||||||||
United States and Canada | Segments | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 9,344 | 9,241 | 8,713 | |||||||||
Operating earnings | 1,394 | 1,289 | 1,123 | |||||||||
Depreciation and amortization | 165 | 185 | 188 | |||||||||
Additions to long-lived assets | 177 | 207 | 195 | |||||||||
United States and Canada | Intersegment eliminations [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | (505) | (457) | (404) | |||||||||
Other businesses | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 2,647 | 2,437 | 2,116 | |||||||||
Other businesses | Segments | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | 2,651 | 2,441 | 2,120 | |||||||||
Operating earnings | (9) | 8 | 56 | |||||||||
Other businesses | Intersegment eliminations [Member] | ||||||||||||
Summarized Information: | ||||||||||||
Net sales | $ (4) | $ (4) | $ (4) |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||
Net sales | $ 2,847 | $ 2,947 | $ 2,893 | $ 2,799 | $ 2,763 | $ 2,831 | $ 2,861 | $ 2,766 | $ 11,486 | $ 11,221 | $ 10,425 |
Cost of goods sold | 1,765 | 1,848 | 1,772 | 1,704 | 1,697 | 1,752 | 1,750 | 1,674 | 7,089 | 6,873 | 6,327 |
Gross profit | 1,082 | 1,099 | 1,121 | 1,095 | 1,066 | 1,079 | 1,111 | 1,092 | 4,397 | 4,348 | 4,098 |
Selling, general and administrative expenses | 901 | 761 | 741 | 732 | 776 | 890 | 767 | 757 | 3,135 | 3,190 | 3,063 |
Operating earnings | 181 | 338 | 380 | 363 | 290 | 189 | 344 | 335 | 1,262 | 1,158 | 1,035 |
Net earnings attributable to W.W. Grainger, Inc. | $ 103 | $ 233 | $ 260 | $ 253 | $ 209 | $ 104 | $ 237 | $ 232 | $ 849 | $ 782 | $ 586 |
Earnings per share - basic (in dollars per share) | $ 1.89 | $ 4.27 | $ 4.69 | $ 4.50 | $ 3.71 | $ 1.84 | $ 4.19 | $ 4.09 | $ 15.39 | $ 13.82 | $ 10.07 |
Earnings per share - diluted (in dollars per share) | $ 1.88 | $ 4.25 | $ 4.67 | $ 4.48 | $ 3.68 | $ 1.82 | $ 4.16 | $ 4.07 | $ 15.32 | $ 13.73 | $ 10.02 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Line of credit [Member] - Revolving credit facility [Member] | 1 Months Ended | |
Feb. 29, 2020USD ($)term_extension | Aug. 31, 2015GBP (£) | |
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | £ | £ 20,000,000 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ | $ 1,250,000,000 | |
Debt, term | 5 years | |
Number of term extensions | term_extension | 2 | |
Term extension | 1 year |