COVER
COVER | 3 Months Ended |
Mar. 31, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2020 |
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 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 Common Stock, Shares Outstanding | 53,467,936 |
Entity Central Index Key | 0000277135 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 3,001 | $ 2,799 |
Cost of goods sold | 1,880 | 1,704 |
Gross profit | 1,121 | 1,095 |
Selling, general and administrative expenses | 962 | 732 |
Operating earnings | 159 | 363 |
Other (income) expense: | ||
Interest expense, net | 21 | 19 |
Other, net | (4) | (7) |
Total other expense, net | 17 | 12 |
Earnings before income taxes | 142 | 351 |
Income tax (benefit) provision | (43) | 89 |
Net earnings | 185 | 262 |
Less: Net earnings attributable to noncontrolling interest | 12 | 9 |
Net earnings attributable to W.W. Grainger, Inc. | $ 173 | $ 253 |
Earnings per share: | ||
Basic (in dollars per share) | $ 3.20 | $ 4.50 |
Diluted (in dollars per share) | $ 3.19 | $ 4.48 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 53.6 | 55.6 |
Diluted (in shares) | 53.8 | 55.9 |
Cash dividends paid per share (in dollars per share) | $ 1.44 | $ 1.36 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 185 | $ 262 |
Other comprehensive earnings (losses): | ||
Foreign currency translation adjustments, net of reclassification | (58) | 4 |
Postretirement benefit plan reclassification, net of tax benefit of $1 million and $1 million, respectively | (3) | (3) |
Other | 1 | 0 |
Total other comprehensive earnings (losses) | (60) | 1 |
Comprehensive earnings, net of tax | 125 | 263 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | ||
Net earnings | 12 | 9 |
Foreign currency translation adjustments | 3 | (2) |
Total comprehensive earnings (losses) attributable to noncontrolling interest | 15 | 7 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 110 | $ 256 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICAL) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Postretirement benefit plan reclassification, net of tax benefit | $ 1 | $ 1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,492 | $ 360 |
Accounts receivable (less allowances for doubtful accounts of $24 and $21, respectively) | 1,613 | 1,425 |
Inventories - net | 1,615 | 1,655 |
Prepaid expenses and other current assets | 129 | 104 |
Prepaid income taxes | 65 | 11 |
Total current assets | 4,914 | 3,555 |
PROPERTY, BUILDINGS AND EQUIPMENT - NET | 1,357 | 1,400 |
DEFERRED INCOME TAXES | 10 | 11 |
GOODWILL | 361 | 429 |
INTANGIBLES - NET | 226 | 304 |
OTHER ASSETS | 309 | 306 |
TOTAL ASSETS | 7,177 | 6,005 |
CURRENT LIABILITIES | ||
Short-term debt | 17 | 55 |
Current maturities of long-term debt | 21 | 246 |
Trade accounts payable | 863 | 719 |
Accrued compensation and benefits | 177 | 228 |
Accrued contributions to employees’ profit sharing plans | 19 | 85 |
Accrued expenses | 384 | 318 |
Income taxes payable | 19 | 27 |
Total current liabilities | 1,500 | 1,678 |
LONG-TERM DEBT (less current maturities) | 3,303 | 1,914 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 99 | 106 |
OTHER NON-CURRENT LIABILITIES | 245 | 247 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued | 55 | 55 |
Additional contributed capital | 1,192 | 1,182 |
Retained earnings | 8,500 | 8,405 |
Accumulated other comprehensive losses | (217) | (154) |
Treasury stock, at cost – 56,191,283 and 55,971,691 shares, respectively | (7,720) | (7,633) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,810 | 1,855 |
Noncontrolling interest | 220 | 205 |
Total shareholders' equity | 2,030 | 2,060 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 7,177 | $ 6,005 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 24 | $ 21 |
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued | 0 | 0 |
Cumulative preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.5 | $ 0.5 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost | 56,191,283 | 55,971,691 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net earnings | $ 185 | $ 262 |
Provision for credit losses | 6 | 4 |
Deferred income taxes and tax uncertainties | (7) | (4) |
Depreciation and amortization | 45 | 57 |
Net losses (gains) from sales of assets and business divestitures | 3 | (2) |
Impairment of goodwill, intangibles and long-lived assets | 177 | 0 |
Stock-based compensation | 9 | 5 |
Subtotal | 233 | 60 |
Change in operating assets and liabilities: | ||
Accounts receivable | (217) | (102) |
Inventories | 19 | 20 |
Prepaid expenses and other assets | (26) | (30) |
Trade accounts payable | 155 | 64 |
Accrued liabilities | (36) | (207) |
Income taxes - net | (62) | 64 |
Other non-current liabilities | (7) | (4) |
Subtotal | (174) | (195) |
Net cash provided by operating activities | 244 | 127 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property, buildings, equipment and intangibles | (50) | (60) |
Proceeds from sales of assets | 0 | 6 |
Other | (2) | 2 |
Net cash used in investing activities | (52) | (52) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under lines of credit | 9 | 10 |
Payments against lines of credit | (45) | (7) |
Proceeds from Issuance of Long-term Debt | 1,500 | 0 |
Payments of long-term debt | (345) | (14) |
Proceeds from stock options exercised | 19 | 3 |
Payments for employee taxes withheld from stock awards | (5) | (3) |
Purchases of treasury stock | (100) | (135) |
Cash dividends paid | (78) | (76) |
Other - net | 0 | 1 |
Net cash provided by (used in) financing activities | 955 | (221) |
Exchange rate effect on cash and cash equivalents | (15) | 0 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 1,132 | (146) |
Cash and cash equivalents at beginning of year | 360 | 538 |
Cash and cash equivalents at end of period | $ 1,492 | $ 392 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Contributed Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock [Member] | Noncontrolling Interest [Member] |
Beginning balance at Dec. 31, 2018 | $ 2,093 | $ 55 | $ 1,134 | $ 7,869 | $ (171) | $ (6,966) | $ 172 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 6 | 3 | 3 | ||||
Purchases of treasury stock | (135) | (135) | |||||
Net earnings | 262 | 253 | 9 | ||||
Other comprehensive (losses) earnings | 1 | 3 | (2) | ||||
Capital contribution | 2 | 2 | |||||
Cash dividends paid | (77) | (77) | |||||
Ending balance at Mar. 31, 2019 | 2,152 | 55 | 1,137 | 8,045 | (168) | (7,098) | 181 |
Beginning balance at Dec. 31, 2019 | 2,060 | 55 | 1,182 | 8,405 | (154) | (7,633) | 205 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation | 23 | 10 | 13 | ||||
Purchases of treasury stock | (100) | (100) | |||||
Net earnings | 185 | 173 | 12 | ||||
Other comprehensive (losses) earnings | (60) | (63) | 3 | ||||
Cash dividends paid | (78) | (78) | |||||
Ending balance at Mar. 31, 2020 | $ 2,030 | $ 55 | $ 1,192 | $ 8,500 | $ (217) | $ (7,720) | $ 220 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENT OF SHAREDHOLDERS' EQUITY (PARENTHETICAL) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity (Parentheticals) [Abstract] | ||
Cash dividends paid per share (in dollars per share) | $ 1.44 | $ 1.36 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | BACKGROUND AND BASIS OF PRESENTATION 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, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries. The Condensed Consolidated Financial Statements (Financial Statements) of the Company and the related notes are unaudited and should be read in conjunction with the consolidated financial statements and associated notes for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 20, 2020 (the 2019 Form 10-K). The Condensed Consolidated Balance Sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by accounting principles generally accepted in the United States of America (U.S.) for complete financial statements. The unaudited financial information reflects all adjustments (primarily consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the statements contained in this report. |
UPDATE TO SIGNIFICANT ACCOUNTIN
UPDATE TO SIGNIFICANT ACCOUNTING POLICIES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
UPDATE TO SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
UPDATE TO SIGNIFICANT ACCOUNTING POLICIES | UPDATE TO SIGNIFICANT ACCOUNTING POLICIES Other than the recently implemented accounting policies related to the allowances for credit losses per the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13 (see Notes 3 and 5 to the Financial Statements), change in depreciation estimates (see Note 6 to the Financial Statements) and accounting for derivative instruments (see Note 10 to the Financial Statements), there have been no material changes to the Company’s significant accounting policies disclosed in the 2019 Form 10-K, Part II, Item 8. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In June 2016, the FASB issued 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, 2019-11 and 2020-02. 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 adopted this ASU effective January 1, 2020. While the adoption of this ASU did not have a material impact on the Company's Financial Statements, it required changes to the Company’s process of estimating expected credit losses on trade receivables . See Note 5 for further information on the Company’s allowances for credit losses. 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. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments . The amendments in this update represent changes to clarify or improve the codification and correct unintended application. This ASU was effective immediately upon issuance and its adoption did not have a material impact on the Company's Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Total service revenue is not material and accounted for approximately 1% of the Company's revenue for the three months ended March 31, 2020 and 2019, respectively. 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: Three Months Ended March 31, 2020 2019 U.S. Canada Total Company (2) U.S. Canada Total Company (2) Government 18 % 9 % 14 % 17 % 6 % 13 % Heavy Manufacturing 18 % 19 % 17 % 19 % 21 % 18 % Light Manufacturing 13 % 6 % 11 % 13 % 6 % 11 % Transportation 5 % 9 % 5 % 6 % 8 % 5 % Healthcare 9 % — % 6 % 7 % — % 6 % Commercial 9 % 9 % 8 % 10 % 9 % 8 % Retail/Wholesale 9 % 4 % 7 % 8 % 4 % 7 % Contractors 10 % 10 % 8 % 10 % 10 % 8 % Natural Resources 3 % 29 % 3 % 3 % 32 % 4 % Other (1) 6 % 5 % 21 % 7 % 4 % 20 % Total 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 73 % 4 % 100 % 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 accounts for approximately 23% of revenue for the three months ended March 31, 2020 and 2019 . Total accrued sales returns were approximately $ 26 million and $ 25 million as of March 31, 2020 and December 31, 2019 , respectively and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $ 57 million as of March 31, 2020 and December 31, 2019 , and are reported as part of Accrued expenses. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of March 31, 2020 and December 31, 2019 . |
ACCOUNTS RECEIVABLE AND ALLOWAN
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES [Abstract] | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 December 31, 2019 Land $ 329 $ 332 Building, structures and improvements 1,316 1,329 Furniture, fixtures, machinery and equipment 1,833 1,832 Property, buildings and equipment $ 3,478 $ 3,493 Less: Accumulated depreciation and amortization and impairment 2,121 2,093 Property, buildings and equipment, net $ 1,357 $ 1,400 Grainger has historically depreciated certain property, building, and equipment using both the declining balance and sum-of-the-years’ digits methods over estimated useful lives of approximately thirty years . In accordance with its policy, the Company periodically reviews information impacting the pattern of consumption for its capital assets and useful lives to ensure that estimates of depreciation expenses are appropriate. The Company’s investment in its supply chain infrastructure and technology triggered the review of these patterns of consumption. Pursuant to the review and effective January 1, 2020, the method of estimating depreciation for these assets was changed to the straight-line method and useful lives to forty and fifty years . The Company determined that these changes in depreciation method and useful lives were considered a change in accounting estimate effected by a change in accounting principle, and as such have been accounted for on a prospective basis. Grainger believes the changes to the straight-line method and useful lives are appropriate estimations of the Company's current patterns of economic consumption of its capital assets and appropriately match current revenues and costs over updated estimates of the assets' useful lives. The effect of these changes resulted in a decrease of $ 8 million to depreciation expense for the three months ended March 31, 2020 . During the three months ended March 31, 2020, the Company recorded approximately $ 44 million of impairment charges in Selling, General and Administrative Expenses (SG&A) in connection with the impairment of Fabory’s long-lived assets, including property, buildings and equipment for approximately $24 million and right-to-use (ROU) assets for approximately $20 million (presented in Other assets) due to the factors discussed in Note 7. There were no |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Grainger tests reporting units' goodwill and intangible assets for impairment annually during the fourth quarter and more frequently if impairment indicators exist. Accordingly, Grainger performs quarterly 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, including the current global outbreak of the Coronavirus (COVID-19 pandemic) and macro-economic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of reporting units or intangible assets is less than their carrying value. If indicators of impairment are identified a quantitative impairment test is performed. Qualitative tests for the quarter indicated the existence of impairment indicators for Fabory (included in other businesses). Some of these indicators for Fabory included revenue slowdown in key markets, gross profit pressures and a flat-to-declining operating margin against a backdrop of industrial sector declines across Europe, which was further amplified by the long-term implications of the COVID-19 pandemic, among other factors. As a result, the Company concluded that Fabory’s goodwill and tradenames were fully impaired. Concurrently, consistent with the circumstances leading to the goodwill impairment, the Company performed a recoverability and fair value test of Fabory’s long-lived assets, including customer lists and relationships and concluded to impair those assets. The aggregate impairment charge for Fabory’s goodwill and intangible assets in the three months ended March 31, 2020 amounted to approximately $ 132 million and was recorded in SG&A. See Note 6 for further discussion of the impairment of Fabory's long-lived assets. The balances and changes in the carrying amount of Goodwill by segment, including the Fabory impairment, are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2019 $ 192 $ 120 $ 112 $ 424 Translation — 6 (1 ) 5 Balance at December 31, 2019 192 126 111 429 Impairment — — (58 ) (58 ) Translation — (10 ) — (10 ) Balance at March 31, 2020 $ 192 $ 116 $ 53 $ 361 United States Canada Other businesses Total Cumulative goodwill impairment charges, December 31, 2019 $ — $ 32 $ 152 $ 184 Impairment — — 58 58 Cumulative goodwill impairment charges, March 31, 2020 $ — $ 32 $ 210 $ 242 During the three months ended March 31, 2020 , the Company recorded a $58 million goodwill impairment charge in SG&A in connection with an impairment of the Fabory business. There were no goodwill impairments during the three months ended March 31, 2019 . The balances in Intangible assets, net are as follows (in millions of dollars ): March 31, 2020 December 31, 2019 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 14.1 years $ 287 $ 229 $ 58 $ 401 $ 301 $ 100 Trademarks, trade names and other 14.2 years 34 20 14 36 20 16 Non-amortized trade names and other Indefinite 61 34 27 100 38 62 Capitalized software 4.2 years 637 510 127 626 500 126 Total intangible assets 7.8 years $ 1,019 $ 793 $ 226 $ 1,163 $ 859 $ 304 With the exception of Fabory, based on the operating results for the three months ended March 31, 2020 and other considerations, the Company believes that it is more likely than not that the enterprise value for each of its reporting units and the fair value of intangibles is still greater than their carrying values. Accordingly, no goodwill impairment indicators were present at March 31, 2020 that would necessitate an interim impairment assessment. The Company will continue to monitor business plans throughout 2020 to determine if an interim goodwill evaluation should be conducted. Changes in assumptions regarding future business performance and macroeconomic conditions, particularly the COVID-19 pandemic and oil and gas prices in Canada, may have a significant impact on future cash flows and reporting unit or intangible valuations. A significant downturn in global economic growth, or recessionary conditions in the U.S., Canada and Japan for prolonged periods, may lead to reduced customer demand in Grainger’s major reporting units or material supply chain interruptions or product shortages. To the extent that such developing economic conditions negatively impact customer demand for the Company's products or product availability over a long period, the Company's businesses, results of operations and financial condition could be significantly and adversely affected, which could result in future impairments of goodwill and intangible assets. |
RESTRUCTURING
RESTRUCTURING | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING RESERVES | RESTRUCTURING The Company continues to evaluate performance and take restructuring actions across all businesses to reduce operating costs and streamline operations. In the three months ended March 31, 2020 and 2019 , the Company recorded restructuring charges of approximately $ 7 million and $ 2 million, respectively. These charges primarily consisted of involuntary employee termination costs in the U.S. and Canada, which are all included in SG&A. The reserve balance as of March 31, 2020 and December 31, 2019 was approximately $ 13 million and $ 10 million, respectively, and is primarily included in Accrued compensation and benefits. The remaining reserves are expected to be paid through 2020. |
SHORT-TERM AND LONG-TERM DEBT
SHORT-TERM AND LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
SHORT-TERM AND LONG-TERM DEBT | SHORT-TERM AND LONG-TERM DEBT During the three months ended March 31, 2020, the Company entered into several financing transactions: • In February 2020, the Company issued $ 500 million of unsecured 1.85% Senior Notes ( 1.85% Notes) and used the proceeds to repay the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility, and to fund general working capital needs. • In connection with the 1.85% Notes, in February 2020, the Company entered into derivative instrument agreements to manage its risks associated with interest rates of the 1.85% Notes and foreign currency fluctuations related to the financing of international operations. See Note 10 for further discussion of these derivative instruments and the Company's hedge accounting policies. • In February 2020, the Company entered into a five-year unsecured credit agreement pursuant to which the Company may obtain loans in various currencies on a revolving basis in an aggregate amount not exceeding the U.S. Dollar equivalent of $ 1.25 billion ($ 1.25 billion credit facility), which may be increased from time to time up to $ 1.875 billion at the request of the Company, subject to obtaining additional commitments and other customary conditions. The $ 1.25 billion credit facility replaced the Company's former $ 750 million unsecured revolving credit facility, originated in October 2017, which was scheduled to mature in October 2022. • In March 2020, the Company received approximately $ 1 billion after drawing down on its $ 1.25 billion credit facility as a proactive measure to increase its cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic. Short-term debt consisted of outstanding lines of credit of $ 17 million and $55 million as of March 31, 2020 and December 31, 2019 , respectively. Long-term debt, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of March 31, 2020 As of December 31, 2019 Carrying Value Fair Value (3) Carrying Value Fair Value (3) 4.60% senior notes due 2045 $ 1,000 $ 1,167 $ 1,000 $ 1,194 3.75% senior notes due 2046 400 381 400 416 4.20% senior notes due 2047 400 433 400 449 1.85% senior notes due 2025 (1) 500 500 — — $1.25 billion credit facility (2) 1,000 1,000 — — British pound term loan — — 170 170 Euro term loan — — 123 123 Canadian dollar revolving credit facility — — 46 46 Other 51 51 42 42 Subtotal (4) 3,351 3,532 2,181 2,440 Less current maturities (21 ) (21 ) (246 ) (246 ) Debt issuance costs and discounts, net of amortization (27 ) (27 ) (21 ) (21 ) Long-term debt (less current maturities) $ 3,303 $ 3,484 $ 1,914 $ 2,173 (1) The 1.85% Notes mature in February 2025 and they require no principal payments until the maturity date and interest is payable semi-annually on February 15 and August 15, beginning in August 2020. Prior to January 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at a “make-whole” redemption price. This 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 1.85% Notes plus 10 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 1.85% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. On or after January 15, 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $5 million associated with the issuance of the 1.85% Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and is being amortized to interest expense, net over the term of the 1.85% Notes. (2) The $1.25 billion credit facility matures in February 2025. Borrowings under the credit facility bear interest, at the Company’s option, either at (a) the Eurocurrency rate for specified interest periods plus a margin determined with reference to the rating on the Company’s non-credit-enhanced, senior unsecured long-term debt or (b) the base rate, which is the highest of (i) 1% , (ii) the Wall Street Journal prime rate, (iii) the higher of (A) the federal funds rate and (B) the Federal Reserve Bank of New York overnight rate, in each case plus 0.50% per annum or (iv) the Eurocurrency rate for a one month interest period plus 1.00% per annum, plus, in each case, a margin determined with reference to the rating on the Company’s non-credit-enhanced, senior unsecured long-term debt. No principal payments are required on the credit facility until the maturity date. (3)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. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company maintains various agreements with bank counterparties that permit the Company to enter into "over-the-counter" derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates of its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes. Accounting for derivative instruments The Company recognizes all derivative instruments as assets or liabilities in the Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction, type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Company uses statistical methods and qualitative comparisons of critical terms. The extent to which a derivative has been and is expected to continue to be, highly effective at offsetting changes in the fair value or cash flows of the hedged item is assessed and documented periodically. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. For those derivative instruments that are designated and qualify as hedging instruments, the Company classifies them as fair value hedges or cash flow hedges. Fair value hedges The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swap, along with the gain or loss on the hedged item, is recorded in earnings under the same line item, interest expense, net. The notional amount of the Company’s outstanding fair value hedges as of March 31, 2020 was $500 million . Cash flow hedges The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of accumulated other comprehensive earnings (AOCE) and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of March 31, 2020 was approximately $34 million . The effect of the Company's fair value and cash flow hedges on the Company's Condensed Consolidated Statement of Earnings for the three months ended March 31, 2020 is as follows (in millions of dollars): Interest expense, net Other, net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ (18 ) $ — Interest rate swap designated as hedging instrument $ 18 $ — Cash flow hedge: Hedged item $ — $ (2 ) Cross-currency swap designated as hedging instrument $ — $ 2 The effect of the Company’s fair value and cash flow hedges on AOCE for the three months ended March 31, 2020 was not material. The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of March 31, 2020 was as follows (in millions of dollars): Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Prepaid expenses and other current assets $ 2 Interest rate swap Other assets $ 18 The carrying amount of the liability hedged by the interest rate swap (long-term debt), including the cumulative amount of fair value hedging adjustments, as of March 31, 2020 amounted to $518 million . |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The reconciliations of income tax expense with federal income taxes at the statutory rate are as follows (in millions of dollars): Three Months Ended March 31, 2020 2019 Federal income tax $ 30 $ 74 States income taxes, net of federal benefit (2 ) 10 Foreign rate difference 2 5 Goodwill impairment 2 — Tax benefit related to the Fabory business (82 ) — Change in tax contingencies 3 — Change in valuation allowance 3 1 Investment in foreign subsidiary 3 — Other, net (2 ) (1 ) Income tax (benefit) expense $ (43 ) $ 89 Effective tax rate (30.4 )% 25.4 % The Company's effective tax rate for the three months ended March 31, 2020 was negative 30.4% compared to 25.4% in the three months ended March 31, 2019. The negative tax rate this quarter was primarily driven by a tax benefit from losses in the Company’s investment in the Fabory business. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. The CARES Act did not have a material impact on the Company's consolidated financial condition or results of operations as of and for the three months ended March 31, 2020. The Company plans to defer the timing of federal tax estimates and payroll taxes as permitted by the CARES Act. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
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-touch 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. Following is a summary of segment results (in millions of dollars): Three Months Ended March 31, 2020 U.S. Canada Total Reportable Segments Other businesses Total Total net sales $ 2,307 $ 129 $ 2,436 $ 698 $ 3,134 Intersegment net sales (133 ) — (133 ) — (133 ) Net sales to external customers $ 2,174 $ 129 $ 2,303 $ 698 $ 3,001 Segment operating earnings $ 340 $ (3 ) $ 337 $ (138 ) $ 199 Three Months Ended March 31, 2019 U.S. Canada Total Reportable Segments Other businesses Total Total net sales $ 2,149 $ 136 $ 2,285 $ 633 $ 2,918 Intersegment net sales (118 ) — (118 ) (1 ) (119 ) Net sales to external customers $ 2,031 $ 136 $ 2,167 $ 632 $ 2,799 Segment operating earnings $ 364 $ (5 ) $ 359 $ 30 $ 389 Following are reconciliations of segment information with the consolidated totals per the Financial Statements (in millions of dollars): Three Months Ended March 31, 2020 2019 Operating earnings: Total operating earnings for reportable segments $ 337 $ 359 Other businesses (138 ) 30 Unallocated expenses (40 ) (26 ) Total consolidated operating earnings $ 159 $ 363 As of March 31, 2020 December 31, 2019 Assets: United States $ 2,845 $ 2,668 Canada 167 173 Assets for reportable segments 3,012 2,841 Other current and noncurrent assets 2,767 3,003 Unallocated assets 1,398 161 Total consolidated assets $ 7,177 $ 6,005 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, and the dynamic nature of the inventory offered, including the evolving list of products stocked and additional products available online but not stocked. Unallocated amounts include corporate-level support and administrative expenses, corporate-level assets consisting primarily of cash, property, buildings and equipment, intersegment eliminations and other adjustments. Unallocated expenses and assets are not included in any reportable segment. |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [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, safety or compliance, privacy and cybersecurity matters, general negligence, contract disputes, environmental issues, unclaimed property, wage and hour laws, intellectual property, advertising, consumer protection, pricing (including disaster or emergency declaration pricing statutes), employment practices, regulatory compliance, anti-bribery and corruption 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 condition 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 condition or results of operations. |
NEW ACCOUNTING STANDARDS (Polic
NEW ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Update to Significant Accounting Policies and New Accounting Standards | UPDATE TO SIGNIFICANT ACCOUNTING POLICIES Other than the recently implemented accounting policies related to the allowances for credit losses per the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13 (see Notes 3 and 5 to the Financial Statements), change in depreciation estimates (see Note 6 to the Financial Statements) and accounting for derivative instruments (see Note 10 to the Financial Statements), there have been no material changes to the Company’s significant accounting policies disclosed in the 2019 Form 10-K, Part II, Item 8. In June 2016, the FASB issued 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, 2019-11 and 2020-02. 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 adopted this ASU effective January 1, 2020. While the adoption of this ASU did not have a material impact on the Company's Financial Statements, it required changes to the Company’s process of estimating expected credit losses on trade receivables . See Note 5 for further information on the Company’s allowances for credit losses. 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. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments . The amendments in this update represent changes to clarify or improve the codification and correct unintended application. This ASU was effective immediately upon issuance and its adoption did not have a material impact on the Company's Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on the Financial Statements. |
ACCOUNTS RECEIVABLE AND ALLOW_2
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES [Abstract] | |
Accounts Receivable and Allowance for Credit Losses, Policy | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES The Company’s accounts receivable arise primarily from sales on credit to customers. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivables. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Goodwill, Policy | GOODWILL AND INTANGIBLE ASSETS Grainger tests reporting units' goodwill and intangible assets for impairment annually during the fourth quarter and more frequently if impairment indicators exist. Accordingly, Grainger performs quarterly 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, including the current global outbreak of the Coronavirus (COVID-19 pandemic) and macro-economic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of reporting units or intangible assets is less than their carrying value. If indicators of impairment are identified a quantitative impairment test is performed. |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenues | The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Three Months Ended March 31, 2020 2019 U.S. Canada Total Company (2) U.S. Canada Total Company (2) Government 18 % 9 % 14 % 17 % 6 % 13 % Heavy Manufacturing 18 % 19 % 17 % 19 % 21 % 18 % Light Manufacturing 13 % 6 % 11 % 13 % 6 % 11 % Transportation 5 % 9 % 5 % 6 % 8 % 5 % Healthcare 9 % — % 6 % 7 % — % 6 % Commercial 9 % 9 % 8 % 10 % 9 % 8 % Retail/Wholesale 9 % 4 % 7 % 8 % 4 % 7 % Contractors 10 % 10 % 8 % 10 % 10 % 8 % Natural Resources 3 % 29 % 3 % 3 % 32 % 4 % Other (1) 6 % 5 % 21 % 7 % 4 % 20 % Total 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 73 % 4 % 100 % 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 accounts for approximately 23% of revenue for the three months ended March 31, 2020 and 2019 . |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, BUILDINGS AND EQUIPMENT | Property, buildings and equipment consisted of the following (in millions of dollars): As of March 31, 2020 December 31, 2019 Land $ 329 $ 332 Building, structures and improvements 1,316 1,329 Furniture, fixtures, machinery and equipment 1,833 1,832 Property, buildings and equipment $ 3,478 $ 3,493 Less: Accumulated depreciation and amortization and impairment 2,121 2,093 Property, buildings and equipment, net $ 1,357 $ 1,400 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The balances and changes in the carrying amount of Goodwill by segment, including the Fabory impairment, are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2019 $ 192 $ 120 $ 112 $ 424 Translation — 6 (1 ) 5 Balance at December 31, 2019 192 126 111 429 Impairment — — (58 ) (58 ) Translation — (10 ) — (10 ) Balance at March 31, 2020 $ 192 $ 116 $ 53 $ 361 United States Canada Other businesses Total Cumulative goodwill impairment charges, December 31, 2019 $ — $ 32 $ 152 $ 184 Impairment — — 58 58 Cumulative goodwill impairment charges, March 31, 2020 $ — $ 32 $ 210 $ 242 |
Schedule of Finite-Lived Intangible Assets By Major Class | The balances in Intangible assets, net are as follows (in millions of dollars ): March 31, 2020 December 31, 2019 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 14.1 years $ 287 $ 229 $ 58 $ 401 $ 301 $ 100 Trademarks, trade names and other 14.2 years 34 20 14 36 20 16 Non-amortized trade names and other Indefinite 61 34 27 100 38 62 Capitalized software 4.2 years 637 510 127 626 500 126 Total intangible assets 7.8 years $ 1,019 $ 793 $ 226 $ 1,163 $ 859 $ 304 |
SHORT-TERM AND LONG-TERM DEBT (
SHORT-TERM AND LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | Long-term debt, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of March 31, 2020 As of December 31, 2019 Carrying Value Fair Value (3) Carrying Value Fair Value (3) 4.60% senior notes due 2045 $ 1,000 $ 1,167 $ 1,000 $ 1,194 3.75% senior notes due 2046 400 381 400 416 4.20% senior notes due 2047 400 433 400 449 1.85% senior notes due 2025 (1) 500 500 — — $1.25 billion credit facility (2) 1,000 1,000 — — British pound term loan — — 170 170 Euro term loan — — 123 123 Canadian dollar revolving credit facility — — 46 46 Other 51 51 42 42 Subtotal (4) 3,351 3,532 2,181 2,440 Less current maturities (21 ) (21 ) (246 ) (246 ) Debt issuance costs and discounts, net of amortization (27 ) (27 ) (21 ) (21 ) Long-term debt (less current maturities) $ 3,303 $ 3,484 $ 1,914 $ 2,173 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The effect of the Company's fair value and cash flow hedges on the Company's Condensed Consolidated Statement of Earnings for the three months ended March 31, 2020 is as follows (in millions of dollars): Interest expense, net Other, net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ (18 ) $ — Interest rate swap designated as hedging instrument $ 18 $ — Cash flow hedge: Hedged item $ — $ (2 ) Cross-currency swap designated as hedging instrument $ — $ 2 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of March 31, 2020 was as follows (in millions of dollars): Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Prepaid expenses and other current assets $ 2 Interest rate swap Other assets $ 18 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliations of income tax expense with federal income taxes at the statutory rate are as follows (in millions of dollars): Three Months Ended March 31, 2020 2019 Federal income tax $ 30 $ 74 States income taxes, net of federal benefit (2 ) 10 Foreign rate difference 2 5 Goodwill impairment 2 — Tax benefit related to the Fabory business (82 ) — Change in tax contingencies 3 — Change in valuation allowance 3 1 Investment in foreign subsidiary 3 — Other, net (2 ) (1 ) Income tax (benefit) expense $ (43 ) $ 89 Effective tax rate (30.4 )% 25.4 % |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): Three Months Ended March 31, 2020 U.S. Canada Total Reportable Segments Other businesses Total Total net sales $ 2,307 $ 129 $ 2,436 $ 698 $ 3,134 Intersegment net sales (133 ) — (133 ) — (133 ) Net sales to external customers $ 2,174 $ 129 $ 2,303 $ 698 $ 3,001 Segment operating earnings $ 340 $ (3 ) $ 337 $ (138 ) $ 199 Three Months Ended March 31, 2019 U.S. Canada Total Reportable Segments Other businesses Total Total net sales $ 2,149 $ 136 $ 2,285 $ 633 $ 2,918 Intersegment net sales (118 ) — (118 ) (1 ) (119 ) Net sales to external customers $ 2,031 $ 136 $ 2,167 $ 632 $ 2,799 Segment operating earnings $ 364 $ (5 ) $ 359 $ 30 $ 389 |
Schedule of Reconciliation of Operating Earnings from Segment to Consolidated | Following are reconciliations of segment information with the consolidated totals per the Financial Statements (in millions of dollars): Three Months Ended March 31, 2020 2019 Operating earnings: Total operating earnings for reportable segments $ 337 $ 359 Other businesses (138 ) 30 Unallocated expenses (40 ) (26 ) Total consolidated operating earnings $ 159 $ 363 As of March 31, 2020 December 31, 2019 Assets: United States $ 2,845 $ 2,668 Canada 167 173 Assets for reportable segments 3,012 2,841 Other current and noncurrent assets 2,767 3,003 Unallocated assets 1,398 161 Total consolidated assets $ 7,177 $ 6,005 |
Schedule of Reconciliation of Assets from Segment to Consolidated | Following are reconciliations of segment information with the consolidated totals per the Financial Statements (in millions of dollars): Three Months Ended March 31, 2020 2019 Operating earnings: Total operating earnings for reportable segments $ 337 $ 359 Other businesses (138 ) 30 Unallocated expenses (40 ) (26 ) Total consolidated operating earnings $ 159 $ 363 As of March 31, 2020 December 31, 2019 Assets: United States $ 2,845 $ 2,668 Canada 167 173 Assets for reportable segments 3,012 2,841 Other current and noncurrent assets 2,767 3,003 Unallocated assets 1,398 161 Total consolidated assets $ 7,177 $ 6,005 |
REVENUE Narrative (Details)
REVENUE Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Accrued sales returns | $ 26 | $ 25 |
Accrued sales incentives | $ 57 | $ 57 |
Service Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Percent of Total Company Revenue | 1.00% |
REVENUE (Details)
REVENUE (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
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% | 13.00% |
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 | 11.00% | 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% | 6.00% |
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 | 3.00% | 4.00% |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 21.00% | 20.00% |
Other Segments [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Percent of Total Company Revenue | 23.00% | 23.00% |
United States [Member] | ||
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 | 73.00% | 72.00% |
United States [Member] | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% | 17.00% |
United States [Member] | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% | 19.00% |
United States [Member] | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 13.00% | 13.00% |
United States [Member] | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 6.00% |
United States [Member] | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 7.00% |
United States [Member] | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 10.00% |
United States [Member] | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 8.00% |
United States [Member] | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
United States [Member] | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% | 3.00% |
United States [Member] | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 7.00% |
Canada [Member] | ||
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 | 4.00% | 5.00% |
Canada [Member] | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 6.00% |
Canada [Member] | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 19.00% | 21.00% |
Canada [Member] | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 6.00% |
Canada [Member] | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 8.00% |
Canada [Member] | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 0.00% | 0.00% |
Canada [Member] | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 9.00% |
Canada [Member] | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% | 4.00% |
Canada [Member] | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
Canada [Member] | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 29.00% | 32.00% |
Canada [Member] | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 4.00% |
PROPERTY, BUILDINGS AND EQUIP_3
PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||||
Property, buildings and equipment | $ 3,478 | $ 3,493 | ||
Less: Accumulated depreciation and amortization and impairment | 2,121 | 2,093 | ||
PROPERTY, BUILDINGS AND EQUIPMENT - NET | 1,357 | 1,400 | ||
Impairment charge | 44 | |||
Land [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, buildings and equipment | 329 | 332 | ||
Building, Structures and Improvements [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, buildings and equipment | 1,316 | $ 1,329 | ||
Estimated useful lives | 40 years | 30 years | ||
Furniture, Fixtures, Machinery and Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Property, buildings and equipment | 1,833 | $ 1,832 | ||
Estimated useful lives | 50 years | 30 years | ||
Property, Buildings and Equipment [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charge | 24 | $ 0 | ||
Right-Of-Use Assets [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charge | 20 | |||
Change in Accounting Method Accounted for as Change in Estimate [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 8 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Selling, General and Administrative Expenses [Member] | |
Segment Reporting Information [Line Items] | |
Goodwill and Intangible Asset Impairment | $ 132 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 429 | $ 424 |
Impairment | (58) | |
Translation | (10) | 5 |
Goodwill, ending balance | 361 | 429 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, beginning balance | 184 | |
Impairment | 58 | |
Cumulative goodwill impairment charges, ending balance | 242 | 184 |
United States [Member] | ||
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, beginning balance | 0 | |
Impairment | 0 | |
Cumulative goodwill impairment charges, ending balance | 0 | 0 |
Canada [Member] | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 126 | 120 |
Impairment | 0 | |
Translation | (10) | 6 |
Goodwill, ending balance | 116 | 126 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, beginning balance | 32 | |
Impairment | 0 | |
Cumulative goodwill impairment charges, ending balance | 32 | 32 |
Other Businesses [Member] | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 111 | 112 |
Impairment | (58) | |
Translation | 0 | (1) |
Goodwill, ending balance | 53 | 111 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, beginning balance | 152 | |
Impairment | 58 | |
Cumulative goodwill impairment charges, ending balance | $ 210 | $ 152 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets included in Other assets and intangibles (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Total intangible assets, gross | $ 1,019 | $ 1,163 |
Total intangible assets, net | 226 | 304 |
Finite-lived intangible assets, accumulated amortization | 793 | 859 |
Customer lists and relationships [Member] | ||
Finite-lived intangible assets, gross | 287 | 401 |
Finite-lived intangible assets, accumulated amortization | 229 | 301 |
Finite-lived intangible assets, net | 58 | 100 |
Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, gross | 34 | 36 |
Finite-lived intangible assets, accumulated amortization | 20 | 20 |
Finite-lived intangible assets, net | 14 | 16 |
Non-amortized trade names and other [Member] | ||
Finite-lived intangible assets, gross | 61 | 100 |
Finite-lived intangible assets, accumulated amortization | 34 | 38 |
Indefinite-lived intangible assets, carrying amount | 27 | 62 |
Capitalized software [Member] | ||
Finite-lived intangible assets, gross | 637 | 626 |
Finite-lived intangible assets, accumulated amortization | 510 | 500 |
Finite-lived intangible assets, net | $ 127 | $ 126 |
Weighted average [Member] | ||
Finite-lived intangible assets, useful life | 7 years 9 months 18 days | |
Weighted average [Member] | Customer lists and relationships [Member] | ||
Finite-lived intangible assets, useful life | 14 years 1 month 6 days | |
Weighted average [Member] | Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, useful life | 14 years 2 months 12 days | |
Weighted average [Member] | Capitalized software [Member] | ||
Finite-lived intangible assets, useful life | 4 years 2 months 12 days |
RESTRUCTURING (Details)
RESTRUCTURING (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Selling, General and Administrative Expenses [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring related costs | $ 7 | $ 2 | |
Employee Related Liabilities, Current [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring reserve balance | $ 13 | $ 10 |
SHORT-TERM AND LONG-TERM DEBT -
SHORT-TERM AND LONG-TERM DEBT - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||||
Mar. 31, 2020 | Feb. 29, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Oct. 31, 2017 | |
Debt Instrument [Line Items] | ||||||
Debt issuance costs and discounts, net of amortization | $ (27) | $ (27) | $ (21) | |||
Borrowings under lines of credit | 9 | $ 10 | ||||
Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding lines of credit | 17 | 17 | $ 55 | |||
Revolving Credit Facility [Member] | Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line Of Credit Facility, Option To Increase Maximum Borrowing Capacity | 1,875 | $ 1,875 | ||||
Maximum availability of revolving credit facility | $ 1,250 | |||||
Borrowings under lines of credit | $ 1,000 | |||||
Revolving Credit Facility [Member] | Base Rate [Member] | Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate | 1.00% | |||||
Revolving Credit Facility [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member] | Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate | 0.50% | |||||
Revolving Credit Facility [Member] | Eurodollar [Member] | Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Effective interest rate | 1.00% | |||||
Senior Notes, 1.85% due 2025 [Member] | Senior Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt principal amount | $ 500 | |||||
Interest rate | 1.85% | |||||
Basis points | 0.10% | |||||
Redemption price, percentage upon change of control | 101.00% | |||||
Redemption price | 100.00% | |||||
Debt issuance costs and discounts, net of amortization | $ 5 | |||||
5-Year Unsecured Revolving Line Of Credit [Member] | Domestic Line of Credit [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum availability of revolving credit facility | $ 750 |
SHORT-TERM AND LONG-TERM DEBT_2
SHORT-TERM AND LONG-TERM DEBT - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Feb. 29, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Other | $ 51 | $ 42 | |
Other, fair value | 51 | 42 | |
Long-term debt, gross | 3,351 | 2,181 | |
Long-term debt, gross, fair value | 3,532 | 2,440 | |
Less current maturities | (21) | (246) | |
Less current maturities, fair value | (21) | (246) | |
Debt issuance costs and discounts, net of amortization | (27) | (21) | |
Debt issuance costs and discounts, fair value | (27) | (21) | |
Long-term debt (less current maturities) | 3,303 | 1,914 | |
Long-term debt, excluding current maturities, , fair value | 3,484 | 2,173 | |
British pound denominated term loan and revolving credit facility [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 170 | |
Long-term debt, fair value | 0 | 170 | |
Euro denominated term loan and revolving credit facility [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 123 | |
Long-term debt, fair value | 0 | 123 | |
Canadian dollar revolving credit facility [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 46 | |
Long-term debt, fair value | 0 | 46 | |
Senior Notes, 4.60% due 2045 [Member] | Senior notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,000 | 1,000 | |
Long-term debt, fair value | 1,167 | 1,194 | |
Senior Notes, 3.75% due 2046 [Member] | Senior notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 400 | 400 | |
Long-term debt, fair value | 381 | 416 | |
Senior Notes, 4.20% due 2047 [Member] | Senior notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 400 | 400 | |
Long-term debt, fair value | 433 | 449 | |
Senior Notes, 1.85% due 2025 [Member] | Senior notes [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 500 | 0 | |
Long-term debt, fair value | 500 | 0 | |
Debt issuance costs and discounts, net of amortization | $ 5 | ||
Revolving Credit Facility [Member] | Line of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,000 | 0 | |
Long-term debt, fair value | $ 1,000 | $ 0 |
DERIVATIVE INSTRUMENTS - Narrat
DERIVATIVE INSTRUMENTS - Narrative (Details) $ in Millions | Mar. 31, 2020USD ($) |
Derivative [Line Items] | |
Derivative instruments and hedges, liabilities | $ 518 |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | |
Derivative [Line Items] | |
Derivative, notional amount | 500 |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |
Derivative [Line Items] | |
Derivative, notional amount | $ 34 |
DERIVATIVE INSTRUMENTS - Schedu
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative [Line Items] | ||
Interest expense, net | $ (21) | $ (19) |
Other, net | 4 | $ 7 |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Other Contract [Member] | ||
Derivative [Line Items] | ||
Interest expense, net | (18) | |
Other, net | 0 | |
Designated as Hedging Instrument [Member] | Fair Value Hedging [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Interest expense, net | 18 | |
Other, net | 0 | |
Fair Value and Carrying Amounts | 18 | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Other Contract [Member] | ||
Derivative [Line Items] | ||
Interest expense, net | 0 | |
Other, net | (2) | |
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Cross Currency Interest Rate Contract [Member] | ||
Derivative [Line Items] | ||
Interest expense, net | 0 | |
Other, net | 2 | |
Fair Value and Carrying Amounts | $ 2 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (30.40%) | 25.40% |
INCOME TAXES INCOME TAXES - Rec
INCOME TAXES INCOME TAXES - Reconciliation of Income Tax Expense with Federal Income Taxes at the Statutory Rate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax | $ 30 | $ 74 |
State income taxes, net of federal income tax benefit | (2) | 10 |
Foreign rate difference | 2 | 5 |
Goodwill impairment | 2 | 0 |
Tax benefit related to the Fabory business | (82) | 0 |
Change in tax contingencies | 3 | 0 |
Change in valuation allowance | 3 | 1 |
Investment in foreign subsidiary | 3 | 0 |
Other, net | (2) | (1) |
Income tax expense | $ (43) | $ 89 |
Effective tax rate | (30.40%) | 25.40% |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 2 |
SEGMENT INFORMATION - Summary o
SEGMENT INFORMATION - Summary of Segment Results (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | $ 7,177 | $ 6,005 | |
Summarized Information | |||
Net sales to external customers | 3,001 | $ 2,799 | |
Total consolidated operating earnings | 159 | 363 | |
United States [Member] | |||
Summarized Information | |||
Net sales to external customers | 2,174 | 2,031 | |
Canada [Member] | |||
Summarized Information | |||
Net sales to external customers | 129 | 136 | |
United States And Canada Segments [Member] | |||
Summarized Information | |||
Net sales to external customers | 2,303 | 2,167 | |
Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | 698 | 632 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 3,012 | 2,841 | |
Summarized Information | |||
Net sales to external customers | 3,134 | 2,918 | |
Total consolidated operating earnings | 199 | 389 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | United States [Member] | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 2,845 | 2,668 | |
Summarized Information | |||
Net sales to external customers | 2,307 | 2,149 | |
Total consolidated operating earnings | 340 | 364 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | Canada [Member] | |||
Segment Reporting Information [Line Items] | |||
TOTAL ASSETS | 167 | $ 173 | |
Summarized Information | |||
Net sales to external customers | 129 | 136 | |
Total consolidated operating earnings | (3) | (5) | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | United States And Canada Segments [Member] | |||
Summarized Information | |||
Net sales to external customers | 2,436 | 2,285 | |
Total consolidated operating earnings | 337 | 359 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | 698 | 633 | |
Total consolidated operating earnings | (138) | 30 | |
Intersegment Eliminations [Member] | |||
Summarized Information | |||
Net sales to external customers | (133) | (119) | |
Intersegment Eliminations [Member] | United States [Member] | |||
Summarized Information | |||
Net sales to external customers | (133) | (118) | |
Intersegment Eliminations [Member] | Canada [Member] | |||
Summarized Information | |||
Net sales to external customers | 0 | 0 | |
Intersegment Eliminations [Member] | United States And Canada Segments [Member] | |||
Summarized Information | |||
Net sales to external customers | (133) | (118) | |
Intersegment Eliminations [Member] | Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | $ 0 | $ (1) |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Reconciliation of Operating Earnings from Segment to Consolidated (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | $ 159 | $ 363 | |
Assets | 7,177 | $ 6,005 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | 199 | 389 | |
Assets | 3,012 | 2,841 | |
Eliminations and Unallocated in Consolidation [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | (40) | (26) | |
Assets | 1,398 | 161 | |
Segment Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Assets | 2,767 | 3,003 | |
United States And Canada Segments [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | 337 | 359 | |
Other Businesses [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | (138) | 30 | |
United States [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | 340 | 364 | |
Assets | 2,845 | 2,668 | |
Canada [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Segment Reporting Information [Line Items] | |||
Total consolidated operating earnings | (3) | $ (5) | |
Assets | $ 167 | $ 173 |
SEGMENT INFORMATION - Schedul_2
SEGMENT INFORMATION - Schedule of Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | $ 7,177 | $ 6,005 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 3,012 | 2,841 |
Segment Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 2,767 | 3,003 |
Eliminations and Unallocated in Consolidation [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 1,398 | 161 |
United States [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | 2,845 | 2,668 |
Canada [Member] | Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
TOTAL ASSETS | $ 167 | $ 173 |