COVER
COVER - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Jan. 31, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 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 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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 15,084,028,289 | ||
Entity Common Stock, Shares Outstanding | 52,375,717 | ||
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 28, 2021, are incorporated by reference into Part III hereof of this Form 10-K where indicated. The registrant's definitive 2020 proxy statement will be filed on or about March 18, 2021. | ||
Entity Central Index Key | 0000277135 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||
Net sales | $ 11,797 | $ 11,486 | $ 11,221 |
Cost of goods sold | 7,559 | 7,089 | 6,873 |
Gross profit | 4,238 | 4,397 | 4,348 |
Selling, general and administrative expenses | 3,219 | 3,135 | 3,190 |
Operating earnings | 1,019 | 1,262 | 1,158 |
Other (income) expense: | |||
Interest expense, net | 93 | 79 | 82 |
Other, net | (21) | (26) | (5) |
Total other expense, net | 72 | 53 | 77 |
Earnings before income taxes | 947 | 1,209 | 1,081 |
Income tax provision | 192 | 314 | 258 |
Net earnings | 755 | 895 | 823 |
Less: Net earnings attributable to noncontrolling interest | 60 | 46 | 41 |
Net earnings attributable to W.W. Grainger, Inc. | $ 695 | $ 849 | $ 782 |
Earnings per share: | |||
Basic (in dollars per share) | $ 12.88 | $ 15.39 | $ 13.82 |
Diluted (in dollars per share) | $ 12.82 | $ 15.32 | $ 13.73 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 53.5 | 54.7 | 56.1 |
Diluted (in shares) | 53.7 | 54.9 | 56.5 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 755 | $ 895 | $ 823 |
Other comprehensive earnings (losses): | |||
Foreign currency translation earnings (losses), net of reclassification (see Note 2 and Note 12) | 83 | 26 | (41) |
Postretirement benefit plan gains (losses), net of tax (expense) benefit of $(7), $2, and $3, respectively | 22 | (6) | (7) |
Total other comprehensive (losses) earnings | 105 | 20 | (48) |
Comprehensive earnings, net of tax | 860 | 915 | 775 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | |||
Net earnings | 60 | 46 | 41 |
Foreign currency translation adjustments | 12 | 3 | 3 |
Total comprehensive earnings (losses) attributable to noncontrolling interest | 72 | 49 | 44 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 788 | $ 866 | $ 731 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS Parentheticals - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Postretirement benefit plan reclassification, net of tax benefit | $ (7) | $ 2 | $ 3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 585 | $ 360 |
Accounts receivable (less allowance for credit losses of $27 and $21, respectively) | 1,474 | 1,425 |
Inventories – net | 1,733 | 1,655 |
Prepaid expenses and other current assets | 120 | 104 |
Prepaid income taxes | 7 | 11 |
Total current assets | 3,919 | 3,555 |
Property, buildings and equipment – net | 1,395 | 1,400 |
Deferred income taxes | 14 | 11 |
Goodwill | 391 | 429 |
Intangibles – net | 228 | 304 |
Other assets | 348 | 306 |
Total assets | 6,295 | 6,005 |
Current liabilities | ||
Short-term debt | 0 | 55 |
Current maturities of long-term debt | 8 | 246 |
Trade accounts payable | 779 | 719 |
Accrued compensation and benefits | 240 | 228 |
Accrued contributions to employees’ profit-sharing plans | 67 | 85 |
Accrued expenses | 305 | 318 |
Income taxes payable | 42 | 27 |
Total current liabilities | 1,441 | 1,678 |
Long-term debt (less current maturities) | 2,389 | 1,914 |
Deferred income taxes and tax uncertainties | 110 | 106 |
Other non-current liabilities | 262 | 247 |
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 | 1,239 | 1,182 |
Retained earnings | 8,779 | 8,405 |
Accumulated other comprehensive losses | (61) | (154) |
Treasury stock, at cost - 57,134,828 and 55,971,691 shares, respectively | (8,184) | (7,633) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,828 | 1,855 |
Noncontrolling interest | 265 | 205 |
Total shareholders' equity | 2,093 | 2,060 |
Total liabilities and shareholders' equity | $ 6,295 | $ 6,005 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 27 | $ 21 |
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) | 57,134,828 | 55,971,691 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net earnings | $ 755 | $ 895 | $ 823 |
Provision for credit losses | 22 | 12 | 7 |
Deferred income taxes and tax uncertainties | (5) | 4 | 7 |
Depreciation and amortization | 182 | 229 | 257 |
Impairment of goodwill, intangibles and long lived assets | 187 | 123 | 156 |
Net losses (gains) from sales of assets and business divestitures | 106 | (6) | (6) |
Stock-based compensation | 46 | 40 | 47 |
Subtotal | 538 | 402 | 468 |
Change in operating assets and liabilities | |||
Accounts receivable | (121) | (42) | (79) |
Inventories | (158) | (106) | (129) |
Prepaid expenses and other assets | (23) | (33) | (2) |
Trade accounts payable | 80 | 32 | (51) |
Accrued liabilities | 15 | (84) | 18 |
Income taxes – net | 24 | (3) | 36 |
Other non-current liabilities | 13 | (19) | (27) |
Net cash provided by operating activities | 1,123 | 1,042 | 1,057 |
Cash flows from investing activities: | |||
Additions to property, buildings, equipment and intangibles | (197) | (221) | (239) |
Net proceeds of business acquisitions, divestitures and sales of assets | 20 | 17 | 86 |
Other - net | (2) | 2 | (13) |
Net cash used in investing activities | (179) | (202) | (166) |
Cash flows from financing activities: | |||
Borrowings under lines of credit | 12 | 20 | 26 |
Payments against lines of credit | (65) | (15) | (31) |
Proceeds from long-term debt | 1,584 | 0 | 0 |
Payments of long-term debt | (1,370) | (42) | (96) |
Proceeds from stock options exercised | 70 | 49 | 181 |
Payments for employee taxes withheld from stock awards | (18) | (11) | (12) |
Purchases of treasury stock | (601) | (700) | (425) |
Cash dividends paid | (338) | (328) | (316) |
Other – net | 0 | 4 | 3 |
Net cash used in financing activities | (726) | (1,023) | (670) |
Exchange rate effect on cash and cash equivalents | 7 | 5 | (10) |
Net change in cash and cash equivalents: | 225 | (178) | 211 |
Cash and cash equivalents at beginning of year | 360 | 538 | 327 |
Cash and cash equivalents at end of year | 585 | 360 | 538 |
Supplemental cash flow information: | |||
Cash payments for interest (net of amounts capitalized) | 94 | 84 | 86 |
Cash payments for income taxes | $ 180 | $ 322 | $ 229 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] |
Beginning 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 | ||||
Other comprehensive earnings (losses) | (48) | (36) | |||||
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 |
Cash dividends paid per share (in dollars per share) | $ 5.36 | ||||||
Stock-based compensation | $ 78 | 45 | 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 | (328) | 1 | (313) | (16) | |||
Ending balance at Dec. 31, 2019 | $ 2,060 | 55 | 1,182 | 8,405 | (154) | (7,633) | 205 |
Cash dividends paid per share (in dollars per share) | $ 5.68 | ||||||
Stock-based compensation | $ 98 | 49 | 49 | ||||
Purchases of treasury stock | (601) | (600) | (1) | ||||
Net earnings | 755 | 695 | 60 | ||||
Other comprehensive earnings (losses) | 105 | 93 | 12 | ||||
Capital contribution | 14 | 7 | 7 | ||||
Cash dividends paid | (338) | 1 | (321) | (18) | |||
Ending balance at Dec. 31, 2020 | $ 2,093 | $ 55 | $ 1,239 | $ 8,779 | $ (61) | $ (8,184) | $ 265 |
Cash dividends paid per share (in dollars per share) | $ 5.94 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share (in dollars per share) | $ 5.94 | $ 5.68 | $ 5.36 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
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. The following reportable segments reflect how management reviews and evaluates operating performance through December 31, 2020: • United States (U.S.) - high-touch business • Canada - high-touch business Effective January 1, 2021, the Company operates under the reportable segments listed below to align with its go-to-market strategies and bifurcated business models: • High Touch - North America - the Company’s high-touch businesses provide value-added MRO solutions that are rooted in deep product knowledge and customer expertise. This includes the Grainger-branded businesses in the U.S., Canada, Mexico and Puerto Rico. • Endless Assortment - the Company’s endless assortment businesses provide a simple, transparent and streamlined experience for customers to shop millions of products. This includes the Company’s Zoro Tools, Inc. (Zoro) and MonotaRO Co., Ltd. (MonotaRO) online channels which operate predominately in the U.S., United Kingdom (U.K.) and Japan. 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, the endless assortment business in Japan, with the residual representing the noncontrolling interest. The Company reports MonotaRO on a one-month calendar lag allowing for the timely preparation of Financial Statements. This one-month reporting lag is with the exception of significant transactions or events that occur during the intervening period. There were no significant events during the month of December 2020. 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 accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2020. 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 $31 million and $25 million as of December 31, 2020 and 2019, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $58 million and $57 million as of December 31, 2020 and 2019, 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, 2020 and 2019. 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. 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. Advertising Advertising costs, which include 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 $319 million, $316 million and $241 million for 2020, 2019 and 2018, respectively. 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 Credit Losses The Company’s accounts receivable arise primarily from sales on credit to customers and are stated at their estimated net realizable value. The Company establishes allowances for credit losses on customer accounts that are potentially uncollectible. These allowances 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. 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 receivable. 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. 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 71% 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 $446 million and $426 million higher than reported at December 31, 2020 and December 31, 2019, respectively. Concurrently, net earnings would have increased by $15 million and $24 million and $8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Property, Buildings and Equipment Company property, buildings and equipment are valued at cost. Depreciation is estimated using the straight-line depreciation method over the assets' useful lives as follows: Buildings, structures and improvements 10 to 50 years Furniture, fixtures, machinery and equipment 3 to 15 years Grainger has historically depreciated certain property, building, and equipment using both the declining balance and sum-of-the-years’ digits methods as well as certain buildings 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 match current revenues and costs over updated estimates of the assets' useful lives. The effect of these changes resulted in a decrease of $34 million to depreciation expense for the year ended December 31, 2020. Depreciation expense was $116 million, $150 million and $162 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company capitalized interest costs of $4 million, $9 million and $10 million for the years ended December 31, 2020, 2019 and 2018, respectively. 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. Leases The Company leases certain properties and buildings (including branches, warehouses, distribution centers (DCs) 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 five 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. 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 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, 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. 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. 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 does not expect a material impact from this ASU. 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 2020-04, 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. In October 2020, the FASB issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company does not expect a material impact from this ASU. |
Business Divestitures and Liqui
Business Divestitures and Liquidations | 12 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures | BUSINESS DIVESTITURES AND LIQUIDATIONS Consistent with the Company's strategic focus on broad line MRO distribution in key markets, Grainger divested the Fabory business in Europe (Fabory) on June 30, 2020 and the China business (China) on August 21, 2020. Accordingly, the Company's condensed consolidated statements of earnings, comprehensive earnings and cash flows and related notes include Fabory and China results through the respective dates of divestiture. The proceeds from these divestitures will be used to fund general corporate needs. During the second and third quarters of 2020, Grainger recognized a net loss of approximately $109 million and gain of $5 million in SG&A as a result of the Fabory and China divestitures, respectively, which included net accumulated foreign currency translation losses of $45 million, that were reclassified from Accumulated other comprehensive earnings (losses) (AOCE) to SG&A. During the fourth quarter of 2020, the Company commenced the liquidation of Zoro Tools Europe (ZTE) and recognized $9 million in expense associated with winding down the business. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 United States Canada Total Company (2) Government 21 % 9 % 16 % Heavy Manufacturing 16 % 18 % 15 % Light Manufacturing 13 % 7 % 10 % Transportation 5 % 10 % 5 % Healthcare 10 % — % 7 % Commercial 8 % 9 % 7 % Retail/Wholesale 10 % 3 % 8 % Contractors 9 % 10 % 7 % Natural Resources 2 % 29 % 3 % Other (1) 6 % 5 % 22 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 73 % 4 % 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 smaller international high-touch businesses and account for approximately 23% of revenue for the twelve months ended December 31, 2020. Twelve Months Ended December 31, 2019 United States 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 smaller international high-touch businesses and account for approximately 23% of revenue for the twelve months ended December 31, 2019. |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 12 Months Ended |
Dec. 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 December 31, 2020 December 31, 2019 Land $ 329 $ 332 Building, structures and improvements 1,330 1,329 Furniture, fixtures, machinery and equipment 1,878 1,832 Property, buildings and equipment $ 3,537 $ 3,493 Less: Accumulated depreciation and amortization 2,142 2,093 Property, buildings and equipment, net $ 1,395 $ 1,400 During the first quarter of 2020, the Company recorded approximately $44 million of impairment charges in 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 5 to the Financial Statements. The Company divested Fabory during the second quarter of 2020 (see Note 2 to the Financial Statements). |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Canada Business Given the slowdowns in global oil markets and the economic repercussions from the COVID-19 pandemic in Canada, qualitative tests performed in the second quarter of 2020 indicated the existence of impairment indicators for the Canada business. As such, quantitative tests were performed to evaluate whether any impairment of goodwill was necessary. Based on the result of the quantitative tests, the Company concluded that there was no impairment of goodwill. The enterprise value of the Canada business at June 30, 2020 exceeded its carrying value by more than 25%, which is a 10 percentage point decrease since the date of the last quantitative test, December 31, 2019. Per the impairment test and respective sensitivity analysis, it was noted that an increase of approximately 3% in the pre-tax discount rate or approximately 1.5% decrease in revenue long-term growth rate projections would cause the Canada business enterprise value to fall to the level of its carrying value and thus trigger an impairment. During its annual impairment testing the Company performed qualitative goodwill and intangible asset assessments. The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators, as such quantitative assessments were not required. Changes in assumptions regarding future business performance and macroeconomic conditions, particularly the COVID-19 pandemic and global oil prices, may negatively impact demand generation over a long period, future cash flows and enterprise valuations, which could result in future impairments of goodwill and intangible assets for the Canada business. Fabory Business During the first quarter of 2020, the Company impaired Fabory's goodwill and tradenames. Concurrently, consistent with the circumstances leading to the goodwill and tradenames' impairment, the Company performed a recoverability and fair value test of Fabory’s long-lived assets, including property, buildings and equipment and customer lists and relationships and concluded to impair those assets. As a result, the Company recorded impairment charges totaling $133 million, of which $58 million and $75 million were attributable to the goodwill and intangibles, respectively. The impairments of these assets were driven primarily by revenue slowdown in key Fabory markets, gross profit pressures and a flat-to-declining operating margin against a backdrop of industrial sector declines across Europe, which were further amplified by the long-term implications of the COVID-19 pandemic, among other factors. The Company divested Fabory during the second quarter of 2020 (see Note 2 to the Financial Statements). Company Grainger completed its annual impairment testing during the fourth quarter of 2020. Qualitative tests did not indicate existence of impairment indicators, as such quantitative assessments were not required. The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment 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 Acquisition — — 15 15 Impairment — — (58) (58) Translation — 3 2 5 Balance at December 31, 2020 $ 192 $ 129 $ 70 $ 391 The cumulative goodwill impairments as of December 31, 2020, were $137 million and consisted of $32 million in the Canada business and $105 million in Other businesses. Grainger's current business portfolio had no impairments to goodwill for the twelve months ended December 31, 2020 and 2019. 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, 2020 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 11.8 years $ 223 $ 171 $ 52 $ 401 $ 301 $ 100 Trademarks, trade names and other 14.1 years 36 22 14 36 20 16 Non-amortized trade names and other — 28 — 28 100 38 62 Capitalized software (1) 4.2 years 461 327 134 626 500 126 Total intangible assets 7.1 years $ 748 $ 520 $ 228 $ 1,163 $ 859 $ 304 (1) During the fourth quarter of 2020, the Company completed a $223 million non-cash retirement of fully amortized capitalized software as a result of the Company's review of long-lived assets. The retirement includes assets that became inactive in prior years and has no impact on amortization expense. The 2019 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. Amortization expense of intangible assets presented within SG&A, excluding impairment charges was $60 million, $78 million, and $92 million for the years ended December 31, 2020, 2019 and 2018, respectively. Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2021 $ 63 2022 48 2023 36 2024 18 2025 16 Thereafter 19 Total $ 200 |
SHORT-TERM DEBT
SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 Lines of Credit Outstanding at December 31 $ — $ 55 Maximum month-end balance during the year $ — $ 56 Weighted average interest rate during the year — % 2.32 % Weighted average interest rate at December 31 — % 2.44 % Lines of Credit In February 2020, the Company entered into a five There were no borrowings outstanding under the line of credit as of December 31, 2020 and 2019. The primary purpose of this credit facility is to support the Company's commercial paper program and for general corporate purposes. Commercial Paper The Company issues commercial paper from time to time for general working capital needs. At December 31, 2020, there was none 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. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of December 31, 2020 2019 Carrying Value Fair Value (5) Carrying Value Fair Value (5) 4.60% senior notes due 2045 (1) $ 1,000 $ 1,343 $ 1,000 $ 1,194 3.75% senior notes due 2046 (1) 400 479 400 416 4.20% senior notes due 2047 (1) 400 514 400 449 1.85% senior notes due 2025 (2) 500 526 — — British pound term loan (3) — — 170 170 Euro term loan (3) — — 123 123 Japanese Yen term loan (4) 87 87 — — Canadian dollar revolving credit facility (3) — — 46 46 Other 34 34 42 42 Subtotal 2,421 2,983 2,181 2,440 Less current maturities (8) (8) (246) (246) Debt issuance costs and discounts, net of amortization (24) (24) (21) (21) Long-term debt (less current maturities) $ 2,389 $ 2,951 $ 1,914 $ 2,173 (1) 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. (2) 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. 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 are being amortized to interest expense, net over the term of the 1.85% Notes. 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 on the 1.85% Notes and foreign currency fluctuations related to the financing of international operations. See Note 13 to the Financial Statements for further discussion of these derivative instruments and the Company's hedge accounting policies. (3) In February 2020, the Company repaid the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility with the proceeds of the 1.85% Senior Notes. (4) In August 2020, MonotaRO Co. LTD., the endless assortment business in Japan, entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024, and bears average interest at 0.05%. (5) 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. The scheduled aggregate principal payments related to long-term debt, excluding debt issuance costs and the impact of derivatives, are due as follows (in millions of dollars): Year Payment Amount 2021 $ 8 2022 — 2023 43 2024 44 2025 500 Thereafter 1,805 Total $ 2,400 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, 2020. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2020 | |
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 profit-sharing plan expense was $99 million, $113 million, and $164 million for 2020, 2019 and 2018, 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 $16 million, $19 million, and $13 million for 2020, 2019 and 2018, 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. The net periodic benefits costs were valued with a measurement date of January 1 for each year and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2020 2019 2018 SG&A Service cost $ 5 $ 4 $ 6 Other income (expense) Interest cost 6 7 7 Expected return on assets (8) (12) (13) Amortization of prior service credit (10) (10) (10) Amortization of unrecognized gains (5) (4) (3) Net periodic (benefits) costs $ (12) $ (15) $ (13) Reconciliations of the beginning and ending balances of the postretirement benefit asset (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 asset (obligation) follow (in millions of dollars): 2020 2019 Benefit obligation at beginning of year $ 200 $ 190 Service cost 5 4 Interest cost 6 7 Plan participants' contributions 3 3 Actuarial (gains)/losses (38) 5 Benefits paid (9) (9) Benefit obligation at end of year $ 167 $ 200 Plan assets available for benefits at beginning of year $ 198 $ 176 Actual returns on plan assets 14 28 Plan participants' contributions 3 3 Benefits paid (9) (9) Plan assets available for benefits at end of year 206 198 Noncurrent postretirement benefit asset (obligation) $ 39 $ (2) The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2020 2019 Prior service credit $ 51 $ 61 Unrecognized gains 83 44 Deferred tax (liability) (33) (26) Net accumulated gains $ 101 $ 79 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 10.9 years for 2020. 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 actuarial gains recognized during the plan year are primarily related to changes in assumptions related to certain retiree coverage elections and health reimbursement arrangement (HRA) subsidy. The following assumptions were used to determine net periodic benefit costs at January 1 of each year: For the Years Ended December 31, 2020 2019 2018 Discount rate 3.01 % 4.08 % 3.44 % 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 NA 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 following assumptions were used to determine benefit obligations at December 31: 2020 2019 2018 Discount rate 2.17 % 3.01 % 4.08 % Expected long-term rate of return on plan assets, net of tax 4.00 % 4.00 % 7.13 % Initial healthcare cost trend rate Pre age 65 5.81 % 6.06 % 6.31 % Post age 65 NA NA NA Catastrophic drug benefit NA NA 11.50 % 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 % 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, 2020, the Company decreased the discount rate from 3.01% to 2.17% to reflect the decrease in the market interest rates at December 31, 2020. The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. As of December 31, 2020, the initial healthcare cost trend rate was 5.81% for pre age 65. The healthcare costs trend rates decline each year until reaching the ultimate trend rate of 4.50%. 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 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. In 2020, the Company transitioned the Trust assets from money market funds into a liability driven investment solution which enhances the Trust's after-tax returns and de-risks the Company's exposure by more closely match-funding the underlying liability. This investment strategy reflects the long-term nature of the plan obligation and seeks to reach a balanced allocation between Fixed Income securities and Equities of 65% and 35%, respectively. 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) or at significant other observable inputs (Level 2 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): 2020 2019 Asset Class: Level 1 Inputs: Mutual Funds: Funds - Municipal/Provincial Bonds $ 13 $ — Funds - Corporate Bonds Fund 5 — Federal Money Market Fund 11 204 Level 2 Inputs: Fixed Income: Corporate Bonds 102 — Government/Municipal Bonds 8 — Equity Funds 66 — Plan Assets 205 204 Less: trust assets/(liabilities) 1 (6) Plan assets available for benefits $ 206 $ 198 Consistent with the new investment strategy, the after-tax expected long-term rates of return on plan assets of 4.00% at December 31, 2020 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 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 2021 $ 9 2022 9 2023 10 2024 10 2025 10 2026-2030 47 Total $ 95 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases certain properties and buildings (including branches, warehouses, DCs 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, 2020 ROU Assets Other assets $ 210 Operating lease liabilities Accrued expenses 57 Other non-current liabilities 162 Total operating lease liabilities $ 219 Twelve Months Ended December 31, 2020 Weighted average remaining lease term 5 years Weighted average incremental borrowing rate 1.95 % Cash paid for operating leases $ 69 ROU assets obtained in exchange for operating lease obligations $ 74 Rent expense was $76 million for 2020, 2019 and 2018. These amounts are net of sublease income of $2 million for 2020 and $3 million for 2019 and 2018. Maturities of operating lease liabilities as of December 31, 2020 (in millions of dollars) are as follows: Maturity of operating lease liabilities 2021 $ 59 2022 52 2023 40 2024 24 2025 17 Thereafter 38 Total lease payments 230 Less interest (11) Present value of lease liabilities $ 219 Finance leases as of December 31, 2020 and 2019 were not considered material. Finance lease obligations are reported in Long-term debt. As of December 31, 2020, the Company does not have future lease obligations that have not yet commenced. |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2020 | |
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), performance shares and deferred stock units. As of December 31, 2020, there were 2.1 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 $46 million, $40 million, and $47 million in 2020, 2019 and 2018, respectively, and was primarily comprised of RSUs. Related income tax benefits recognized in earnings were $16 million, $12 million, and $29 million in 2020, 2019 and 2018, respectively. Restricted Stock Units The Company awards RSUs to certain employees and executives. RSUs vest generally over periods from one seven 2020 2019 2018 Shares Weighted Shares Weighted Shares Weighted Beginning nonvested units 326,124 $ 259.88 343,814 $ 245.38 352,919 $ 226.31 Issued 140,815 $ 252.11 96,823 $ 299.25 141,775 $ 284.98 Canceled (26,254) $ 257.56 (36,224) $ 253.22 (56,393) $ 245.08 Vested (123,271) $ 252.05 (78,289) $ 247.96 (94,487) $ 233.75 Ending nonvested units 317,414 $ 259.67 326,124 $ 259.88 343,814 $ 245.38 Fair value of shares vested $ 31 $ 19 $ 22 At December 31, 2020 there was $41 million of total unrecognized compensation expense related to nonvested RSUs that the Company expects to recognize over a weighted average period of 1.9 years. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2020 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK The Company had no shares of preferred stock outstanding as of December 31, 2020 and 2019. The activity related to outstanding common stock and common stock held in treasury was as follows: 2020 2019 2018 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 53,687,528 55,971,691 55,862,360 53,796,859 56,328,863 53,330,356 Exercise of stock options 311,374 (311,374) 232,052 (232,052) 930,258 (930,258) Settlement of restricted stock units, net of 41,019, 26,107, and 39,075 shares retained, respectively 82,241 (82,241) 52,182 (52,182) 80,988 (80,988) Settlement of performance share units, net of 16,830, 6,737, and 1,027 shares retained, respectively 28,098 (28,098) 14,027 (14,027) 1,911 (1,911) Purchase of treasury shares (1,584,850) 1,584,850 (2,473,093) 2,473,093 (1,479,660) 1,479,660 Balance at end of period 52,524,391 57,134,828 53,687,528 55,971,691 55,862,360 53,796,859 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2018, 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) Other comprehensive earnings (loss) before reclassifications, net of tax 36 33 — 69 12 57 Amounts reclassified to Net earnings 47 (11) — 36 — 36 Net current period activity 83 22 — 105 12 93 Balance at December 31, 2020, net of tax $ (155) $ 101 $ (8) $ (62) $ (1) $ (61) |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure | 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. 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 December 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 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 December 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 twelve months ended December 31, 2020 is as follows (in millions of dollars): Twelve Months Ended December 31, 2020 Interest expense, net Other, net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ (21) $ — Interest rate swap designated as hedging instrument $ 21 $ — 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 twelve months ended December 31, 2020 was not material. The fair value and carrying amounts of outstanding derivative instruments in the Condensed Consolidated Balance Sheets as of December 31, 2020 was as follows (in millions of dollars): Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 Interest rate swap Other assets $ 21 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 December 31, 2020 amounted to $521 million. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 2018 U.S. $ 1,015 $ 1,226 $ 1,163 Foreign (68) (17) (82) Total $ 947 $ 1,209 $ 1,081 Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2020 2019 2018 Current income tax expense: U.S. Federal $ 119 $ 199 $ 166 U.S. State 28 44 32 Foreign 65 58 47 Total current 212 301 245 Deferred income tax expense (20) 13 13 Total income tax expense $ 192 $ 314 $ 258 The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2020 and 2019 were as follows (in millions of dollars): As of December 31, 2020 2019 Deferred tax assets: Inventory $ 14 $ 4 Accrued expenses 93 86 Foreign operating loss carryforwards 45 67 Accrued employment-related benefits 37 49 Tax credit carryforward 25 22 Other 8 8 Deferred tax assets 222 236 Less valuation allowance (53) (72) Deferred tax assets, net of valuation allowance $ 169 $ 164 Deferred tax liabilities: Property, buildings, equipment and other capital assets (145) (134) Intangibles (68) (83) Other (10) (12) Deferred tax liabilities (223) (229) Net deferred tax liability $ (54) $ (65) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 14 $ 11 Noncurrent liabilities (foreign) (68) (76) Net deferred tax liability $ (54) $ (65) At December 31, 2020 the Company had $207 million of net operating loss (NOLs) carryforwards related primarily to foreign operations. Some of the operating loss carryforwards may expire at various dates through 2040. 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, 2020 2019 Balance at beginning of period $ (72) $ (72) Increases primarily related to foreign NOLs (16) (9) Releases related to foreign NOLs — 10 Foreign subsidiaries tax impacts due to divestiture 39 — Other changes, net (2) — Increase related to U.S. foreign tax credits (2) (1) Balance at end of period $ (53) $ (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, 2020 2019 2018 Federal income tax $ 199 $ 254 $ 227 State income taxes, net of federal income tax benefit 33 36 32 Clean energy credit — — (20) Foreign rate difference 23 25 20 Foreign subsidiaries tax impacts due to divestiture (61) — 20 Change in valuation allowance 16 11 4 Excess tax benefits from stock-based compensation (4) (2) (15) Other - net (14) (10) (10) Income tax expense $ 192 $ 314 $ 258 Effective tax rate 20.3 % 26.0 % 23.9 % The changes to the Company's effective tax rate for the year ended December 31, 2020 was primarily driven by tax losses in the Company's investment in Fabory due to the impairment and internal reorganization of the Company's holdings of Fabory in the first quarter of 2020. The Company divested Fabory during the second quarter of 2020 (see Note 2 to the Financial Statements). 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. On December 27, 2020, the Consolidated Appropriations Act (CAA) was enacted and extended several of the CARES Act provisions. Neither the CARES or CAA Act had a material impact on the Company’s consolidated financial condition or results of operations as of and for the year ended December 31, 2020. Foreign Undistributed Earnings Estimated gross undistributed earnings of foreign subsidiaries at December 31, 2020, amounted to $429 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. 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, 2020 2019 2018 Balance at beginning of year $ 28 $ 37 $ 45 Additions for tax positions related to the current year 23 3 4 Additions for tax positions of prior years — 1 3 Reductions for tax positions of prior years (2) (1) (5) Reductions due to statute lapse (10) (10) (9) Settlements, audit payments, refunds - net — (2) (1) Balance at end of year $ 39 $ 28 $ 37 The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in this amount are $4 million and $8 million at December 31, 2020 and 2019, 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 2020, the changes to tax positions related generally to the tax losses on the Company’s investment in Fabory along with 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 2016 federal tax return while tax years 2017 through 2020 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, 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 businesses in those geographies. Other businesses include the endless assortment businesses, Zoro and MonotaRO, and smaller high-tough businesses in Europe and the U.K. 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. Effective January 1, 2021, the Company's new reportable segments are High Touch - North America and Endless Assortment. See Note 1 of the Financial Statements for additional information. 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): 2020 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 9,070 $ 476 $ 9,546 $ 2,762 $ 12,308 Intersegment net sales (509) — (509) (2) (511) Net sales to external customers $ 8,561 $ 476 $ 9,037 $ 2,760 11,797 Segment operating earnings $ 1,299 $ (16) $ 1,283 $ (24) $ 1,259 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 Following are reconciliations of the segment information with the consolidated totals per the Financial Statements (in millions of dollars): 2020 2019 2018 Operating earnings: Total operating earnings for reportable segments $ 1,283 $ 1,394 $ 1,289 Other businesses (24) (9) 8 Unallocated expenses (240) (123) (139) Total consolidated operating earnings $ 1,019 $ 1,262 $ 1,158 Assets: United States $ 2,931 $ 2,668 $ 2,496 Canada 178 173 188 Assets for reportable segments $ 3,109 $ 2,841 $ 2,684 Other current and noncurrent assets 2,781 3,003 2,879 Unallocated assets 405 161 310 Total consolidated assets $ 6,295 $ 6,005 $ 5,873 Depreciation and amortization: United States $ 113 $ 148 $ 166 Canada 13 17 19 Depreciation and amortization for reportable segments $ 126 $ 165 $ 185 Other businesses and unallocated 43 45 49 Total consolidated depreciation and amortization $ 169 $ 210 $ 234 Additions to long-lived assets United States $ 92 $ 168 $ 200 Canada 3 9 7 Additions to long-lived assets for reportable segments $ 95 $ 177 $ 207 Other businesses and unallocated 97 72 39 Total consolidated additions to long-lived assets $ 192 $ 249 $ 246 Following are revenue and long-lived assets by geographic location (in millions of dollars): 2020 2019 2018 Revenue by geographic location: United States $ 9,200 $ 8,865 $ 8,613 Canada 494 539 658 Other foreign countries 2,103 2,082 1,950 $ 11,797 $ 11,486 $ 11,221 Long-lived segment assets by geographic location: United States $ 1,139 $ 1,268 $ 1,140 Canada 114 152 136 Other foreign countries 287 327 202 $ 1,540 $ 1,747 $ 1,478 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. 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, 2020 | |
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, as previously disclosed, beginning in the fourth quarter of 2019, Grainger, KMCO, LLC (KMCO) and other defendants have been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO chemical refinery located in Crosby, Harris County, Texas on April 2, 2019. The complaints seek recovery of compensatory and other damages and relief. On May 8, 2020, KMCO filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas for relief under Chapter 7 of Title 11 of the United States Bankruptcy Court in the case KMCO, LLC. As a result of the Chapter 7 proceedings, the claims against KMCO in the Harris County lawsuits were stayed. Effective January 1, 2021, the Bankruptcy Court lifted the stay with respect to KMCO. On December 16, 2020, KMCO filed a product liability-related lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, which seeks unspecified damages. Grainger is investigating each of the various 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 |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) A summary of selected quarterly information for 2020 and 2019 is as follows (in millions of dollars, except for per share amounts): 2020 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 3,001 $ 2,837 $ 3,018 $ 2,941 $ 11,797 COGS 1,880 1,821 1,944 1,914 7,559 Gross profit 1,121 1,016 1,074 1,027 4,238 SG&A 962 811 694 752 3,219 Operating earnings 159 205 380 275 1,019 Net earnings attributable to W.W. Grainger, Inc. $ 173 $ 114 $ 240 $ 168 $ 695 Earnings per share - basic $ 3.20 $ 2.11 $ 4.43 $ 3.14 $ 12.88 Earnings per share - diluted $ 3.19 $ 2.10 $ 4.41 $ 3.12 $ 12.82 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 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
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, the endless assortment business in Japan, with the residual representing the noncontrolling interest. The Company reports MonotaRO on a one-month calendar lag allowing for the timely preparation of Financial Statements. This one-month reporting lag is with the exception of significant transactions or events that occur during the intervening period. There were no significant events during the month of December 2020. |
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 accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2020. 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 $31 million and $25 million as of December 31, 2020 and 2019, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $58 million and $57 million as of December 31, 2020 and 2019, 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, 2020 and 2019. |
COST OF GOODS SOLD | 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. |
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. |
ADVERTISING | Advertising costs, which include 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. |
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) | 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 | 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 CREDIT LOSSES | Accounts Receivable and Allowance for Credit Losses The Company’s accounts receivable arise primarily from sales on credit to customers and are stated at their estimated net realizable value. The Company establishes allowances for credit losses on customer accounts that are potentially uncollectible. These allowances 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. 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 receivable. 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. |
INVENTORIES | InventoriesCompany 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 71% 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 | Company property, buildings and equipment are valued at cost. Depreciation is estimated using the straight-line depreciation method over the assets' useful lives as follows: Buildings, structures and improvements 10 to 50 years Furniture, fixtures, machinery and equipment 3 to 15 years Grainger has historically depreciated certain property, building, and equipment using both the declining balance and sum-of-the-years’ digits methods as well as certain buildings 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 |
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. |
LEASES | Leases The Company leases certain properties and buildings (including branches, warehouses, distribution centers (DCs) 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. |
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 five |
ACCOUNTING FOR DERIVATIVE INSTRUMENTS | 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. |
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 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, 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. 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. 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 does not expect a material impact from this ASU. 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 2020-04, 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. In October 2020, the FASB issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020. The Company does not expect a material impact from this ASU. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 United States Canada Total Company (2) Government 21 % 9 % 16 % Heavy Manufacturing 16 % 18 % 15 % Light Manufacturing 13 % 7 % 10 % Transportation 5 % 10 % 5 % Healthcare 10 % — % 7 % Commercial 8 % 9 % 7 % Retail/Wholesale 10 % 3 % 8 % Contractors 9 % 10 % 7 % Natural Resources 2 % 29 % 3 % Other (1) 6 % 5 % 22 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 73 % 4 % 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 smaller international high-touch businesses and account for approximately 23% of revenue for the twelve months ended December 31, 2020. Twelve Months Ended December 31, 2019 United States 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 smaller international high-touch businesses and account for approximately 23% of revenue for the twelve months ended December 31, 2019. |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 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 December 31, 2020 December 31, 2019 Land $ 329 $ 332 Building, structures and improvements 1,330 1,329 Furniture, fixtures, machinery and equipment 1,878 1,832 Property, buildings and equipment $ 3,537 $ 3,493 Less: Accumulated depreciation and amortization 2,142 2,093 Property, buildings and equipment, net $ 1,395 $ 1,400 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
Schedule of Goodwill | The balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment 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 Acquisition — — 15 15 Impairment — — (58) (58) Translation — 3 2 5 Balance at December 31, 2020 $ 192 $ 129 $ 70 $ 391 |
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, 2020 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 11.8 years $ 223 $ 171 $ 52 $ 401 $ 301 $ 100 Trademarks, trade names and other 14.1 years 36 22 14 36 20 16 Non-amortized trade names and other — 28 — 28 100 38 62 Capitalized software (1) 4.2 years 461 327 134 626 500 126 Total intangible assets 7.1 years $ 748 $ 520 $ 228 $ 1,163 $ 859 $ 304 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2021 $ 63 2022 48 2023 36 2024 18 2025 16 Thereafter 19 Total $ 200 |
SHORT-TERM DEBT (Tables)
SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Short-term Debt [Abstract] | |
Schedule of Short-term Debt | Short-term debt consisted of the following (in millions of dollars): As of December 31, 2020 2019 Lines of Credit Outstanding at December 31 $ — $ 55 Maximum month-end balance during the year $ — $ 56 Weighted average interest rate during the year — % 2.32 % Weighted average interest rate at December 31 — % 2.44 % |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Long-term Debt, Unclassified [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 December 31, 2020 2019 Carrying Value Fair Value (5) Carrying Value Fair Value (5) 4.60% senior notes due 2045 (1) $ 1,000 $ 1,343 $ 1,000 $ 1,194 3.75% senior notes due 2046 (1) 400 479 400 416 4.20% senior notes due 2047 (1) 400 514 400 449 1.85% senior notes due 2025 (2) 500 526 — — British pound term loan (3) — — 170 170 Euro term loan (3) — — 123 123 Japanese Yen term loan (4) 87 87 — — Canadian dollar revolving credit facility (3) — — 46 46 Other 34 34 42 42 Subtotal 2,421 2,983 2,181 2,440 Less current maturities (8) (8) (246) (246) Debt issuance costs and discounts, net of amortization (24) (24) (21) (21) Long-term debt (less current maturities) $ 2,389 $ 2,951 $ 1,914 $ 2,173 (1) 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. (2) 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. 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 are being amortized to interest expense, net over the term of the 1.85% Notes. 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 on the 1.85% Notes and foreign currency fluctuations related to the financing of international operations. See Note 13 to the Financial Statements for further discussion of these derivative instruments and the Company's hedge accounting policies. (3) In February 2020, the Company repaid the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility with the proceeds of the 1.85% Senior Notes. (4) In August 2020, MonotaRO Co. LTD., the endless assortment business in Japan, entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024, and bears average interest at 0.05%. (5) 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 and the impact of derivatives, are due as follows (in millions of dollars): Year Payment Amount 2021 $ 8 2022 — 2023 43 2024 44 2025 500 Thereafter 1,805 Total $ 2,400 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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 consisted of the following components (in millions of dollars): For the Years Ended December 31, 2020 2019 2018 SG&A Service cost $ 5 $ 4 $ 6 Other income (expense) Interest cost 6 7 7 Expected return on assets (8) (12) (13) Amortization of prior service credit (10) (10) (10) Amortization of unrecognized gains (5) (4) (3) Net periodic (benefits) costs $ (12) $ (15) $ (13) |
Schedule of Accumulated and Projected Benefit Obligations | Reconciliations of the beginning and ending balances of the postretirement benefit asset (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 asset (obligation) follow (in millions of dollars): 2020 2019 Benefit obligation at beginning of year $ 200 $ 190 Service cost 5 4 Interest cost 6 7 Plan participants' contributions 3 3 Actuarial (gains)/losses (38) 5 Benefits paid (9) (9) Benefit obligation at end of year $ 167 $ 200 Plan assets available for benefits at beginning of year $ 198 $ 176 Actual returns on plan assets 14 28 Plan participants' contributions 3 3 Benefits paid (9) (9) Plan assets available for benefits at end of year 206 198 Noncurrent postretirement benefit asset (obligation) $ 39 $ (2) |
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, 2020 2019 Prior service credit $ 51 $ 61 Unrecognized gains 83 44 Deferred tax (liability) (33) (26) Net accumulated gains $ 101 $ 79 |
Schedule of Assumptions Used | The following assumptions were used to determine net periodic benefit costs at January 1 of each year: For the Years Ended December 31, 2020 2019 2018 Discount rate 3.01 % 4.08 % 3.44 % 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 NA 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 following assumptions were used to determine benefit obligations at December 31: 2020 2019 2018 Discount rate 2.17 % 3.01 % 4.08 % Expected long-term rate of return on plan assets, net of tax 4.00 % 4.00 % 7.13 % Initial healthcare cost trend rate Pre age 65 5.81 % 6.06 % 6.31 % Post age 65 NA NA NA Catastrophic drug benefit NA NA 11.50 % 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 % |
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): 2020 2019 Asset Class: Level 1 Inputs: Mutual Funds: Funds - Municipal/Provincial Bonds $ 13 $ — Funds - Corporate Bonds Fund 5 — Federal Money Market Fund 11 204 Level 2 Inputs: Fixed Income: Corporate Bonds 102 — Government/Municipal Bonds 8 — Equity Funds 66 — Plan Assets 205 204 Less: trust assets/(liabilities) 1 (6) Plan assets available for benefits $ 206 $ 198 |
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 2021 $ 9 2022 9 2023 10 2024 10 2025 10 2026-2030 47 Total $ 95 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Assets and Liabilities | Information related to operating leases is as follows (in millions of dollars): As of December 31, 2020 ROU Assets Other assets $ 210 Operating lease liabilities Accrued expenses 57 Other non-current liabilities 162 Total operating lease liabilities $ 219 |
Schedule of Operating Lease Information | Twelve Months Ended December 31, 2020 Weighted average remaining lease term 5 years Weighted average incremental borrowing rate 1.95 % Cash paid for operating leases $ 69 ROU assets obtained in exchange for operating lease obligations $ 74 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities as of December 31, 2020 (in millions of dollars) are as follows: Maturity of operating lease liabilities 2021 $ 59 2022 52 2023 40 2024 24 2025 17 Thereafter 38 Total lease payments 230 Less interest (11) Present value of lease liabilities $ 219 |
STOCK INCENTIVE PLANS (Tables)
STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCK INCENTIVE PLANS [Abstract] | |
Activity for restricted stock units | The following table summarizes RSU activity (in millions, except for share and per share amounts): 2020 2019 2018 Shares Weighted Shares Weighted Shares Weighted Beginning nonvested units 326,124 $ 259.88 343,814 $ 245.38 352,919 $ 226.31 Issued 140,815 $ 252.11 96,823 $ 299.25 141,775 $ 284.98 Canceled (26,254) $ 257.56 (36,224) $ 253.22 (56,393) $ 245.08 Vested (123,271) $ 252.05 (78,289) $ 247.96 (94,487) $ 233.75 Ending nonvested units 317,414 $ 259.67 326,124 $ 259.88 343,814 $ 245.38 Fair value of shares vested $ 31 $ 19 $ 22 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
CAPITAL STOCK [Abstract] | |
Schedule of Capital Stock | The activity related to outstanding common stock and common stock held in treasury was as follows: 2020 2019 2018 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 53,687,528 55,971,691 55,862,360 53,796,859 56,328,863 53,330,356 Exercise of stock options 311,374 (311,374) 232,052 (232,052) 930,258 (930,258) Settlement of restricted stock units, net of 41,019, 26,107, and 39,075 shares retained, respectively 82,241 (82,241) 52,182 (52,182) 80,988 (80,988) Settlement of performance share units, net of 16,830, 6,737, and 1,027 shares retained, respectively 28,098 (28,098) 14,027 (14,027) 1,911 (1,911) Purchase of treasury shares (1,584,850) 1,584,850 (2,473,093) 2,473,093 (1,479,660) 1,479,660 Balance at end of period 52,524,391 57,134,828 53,687,528 55,971,691 55,862,360 53,796,859 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2018, 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) Other comprehensive earnings (loss) before reclassifications, net of tax 36 33 — 69 12 57 Amounts reclassified to Net earnings 47 (11) — 36 — 36 Net current period activity 83 22 — 105 12 93 Balance at December 31, 2020, net of tax $ (155) $ 101 $ (8) $ (62) $ (1) $ (61) |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Dec. 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 twelve months ended December 31, 2020 is as follows (in millions of dollars): Twelve Months Ended December 31, 2020 Interest expense, net Other, net Gain or (loss) recognized in earnings Fair value hedge: Hedged item $ (21) $ — Interest rate swap designated as hedging instrument $ 21 $ — 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 December 31, 2020 was as follows (in millions of dollars): Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 Interest rate swap Other assets $ 21 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 2019 2018 U.S. $ 1,015 $ 1,226 $ 1,163 Foreign (68) (17) (82) Total $ 947 $ 1,209 $ 1,081 |
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, 2020 2019 2018 Current income tax expense: U.S. Federal $ 119 $ 199 $ 166 U.S. State 28 44 32 Foreign 65 58 47 Total current 212 301 245 Deferred income tax expense (20) 13 13 Total income tax expense $ 192 $ 314 $ 258 |
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, 2020 and 2019 were as follows (in millions of dollars): As of December 31, 2020 2019 Deferred tax assets: Inventory $ 14 $ 4 Accrued expenses 93 86 Foreign operating loss carryforwards 45 67 Accrued employment-related benefits 37 49 Tax credit carryforward 25 22 Other 8 8 Deferred tax assets 222 236 Less valuation allowance (53) (72) Deferred tax assets, net of valuation allowance $ 169 $ 164 Deferred tax liabilities: Property, buildings, equipment and other capital assets (145) (134) Intangibles (68) (83) Other (10) (12) Deferred tax liabilities (223) (229) Net deferred tax liability $ (54) $ (65) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 14 $ 11 Noncurrent liabilities (foreign) (68) (76) Net deferred tax liability $ (54) $ (65) |
Summary of Valuation Allowance Changes | The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2020 2019 Balance at beginning of period $ (72) $ (72) Increases primarily related to foreign NOLs (16) (9) Releases related to foreign NOLs — 10 Foreign subsidiaries tax impacts due to divestiture 39 — Other changes, net (2) — Increase related to U.S. foreign tax credits (2) (1) Balance at end of period $ (53) $ (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, 2020 2019 2018 Federal income tax $ 199 $ 254 $ 227 State income taxes, net of federal income tax benefit 33 36 32 Clean energy credit — — (20) Foreign rate difference 23 25 20 Foreign subsidiaries tax impacts due to divestiture (61) — 20 Change in valuation allowance 16 11 4 Excess tax benefits from stock-based compensation (4) (2) (15) Other - net (14) (10) (10) Income tax expense $ 192 $ 314 $ 258 Effective tax rate 20.3 % 26.0 % 23.9 % |
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, 2020 2019 2018 Balance at beginning of year $ 28 $ 37 $ 45 Additions for tax positions related to the current year 23 3 4 Additions for tax positions of prior years — 1 3 Reductions for tax positions of prior years (2) (1) (5) Reductions due to statute lapse (10) (10) (9) Settlements, audit payments, refunds - net — (2) (1) Balance at end of year $ 39 $ 28 $ 37 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): 2020 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 9,070 $ 476 $ 9,546 $ 2,762 $ 12,308 Intersegment net sales (509) — (509) (2) (511) Net sales to external customers $ 8,561 $ 476 $ 9,037 $ 2,760 11,797 Segment operating earnings $ 1,299 $ (16) $ 1,283 $ (24) $ 1,259 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 |
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): 2020 2019 2018 Operating earnings: Total operating earnings for reportable segments $ 1,283 $ 1,394 $ 1,289 Other businesses (24) (9) 8 Unallocated expenses (240) (123) (139) Total consolidated operating earnings $ 1,019 $ 1,262 $ 1,158 Assets: United States $ 2,931 $ 2,668 $ 2,496 Canada 178 173 188 Assets for reportable segments $ 3,109 $ 2,841 $ 2,684 Other current and noncurrent assets 2,781 3,003 2,879 Unallocated assets 405 161 310 Total consolidated assets $ 6,295 $ 6,005 $ 5,873 Depreciation and amortization: United States $ 113 $ 148 $ 166 Canada 13 17 19 Depreciation and amortization for reportable segments $ 126 $ 165 $ 185 Other businesses and unallocated 43 45 49 Total consolidated depreciation and amortization $ 169 $ 210 $ 234 Additions to long-lived assets United States $ 92 $ 168 $ 200 Canada 3 9 7 Additions to long-lived assets for reportable segments $ 95 $ 177 $ 207 Other businesses and unallocated 97 72 39 Total consolidated additions to long-lived assets $ 192 $ 249 $ 246 Following are revenue and long-lived assets by geographic location (in millions of dollars): 2020 2019 2018 Revenue by geographic location: United States $ 9,200 $ 8,865 $ 8,613 Canada 494 539 658 Other foreign countries 2,103 2,082 1,950 $ 11,797 $ 11,486 $ 11,221 Long-lived segment assets by geographic location: United States $ 1,139 $ 1,268 $ 1,140 Canada 114 152 136 Other foreign countries 287 327 202 $ 1,540 $ 1,747 $ 1,478 |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
Schedule of Quarterly Financial Information | A summary of selected quarterly information for 2020 and 2019 is as follows (in millions of dollars, except for per share amounts): 2020 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 3,001 $ 2,837 $ 3,018 $ 2,941 $ 11,797 COGS 1,880 1,821 1,944 1,914 7,559 Gross profit 1,121 1,016 1,074 1,027 4,238 SG&A 962 811 694 752 3,219 Operating earnings 159 205 380 275 1,019 Net earnings attributable to W.W. Grainger, Inc. $ 173 $ 114 $ 240 $ 168 $ 695 Earnings per share - basic $ 3.20 $ 2.11 $ 4.43 $ 3.14 $ 12.88 Earnings per share - diluted $ 3.19 $ 2.10 $ 4.41 $ 3.12 $ 12.82 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 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Service fee revenue (approximately) | 1.00% | ||
Accrued sales returns | $ 31 | $ 25 | |
Accrued sales incentives | 58 | 57 | |
Advertising expense | $ 319 | 316 | $ 241 |
Original maturity of cash (days) | 90 days | ||
Percentage of LIFO Inventory | 71.00% | ||
Inventory, LIFO Reserve | $ 446 | 426 | |
Inventory, LIFO Reserve, Effect on Income, Net | 15 | 24 | 8 |
Depreciation | 116 | 150 | 162 |
Capitalized interest costs | $ 4 | $ 9 | $ 10 |
Operating Lease Expiration Date | 2036 | ||
Furniture, fixtures, machinery and equipment | |||
Property, Plant and Equipment, Useful Life | 30 years | ||
Building, structures and improvements | |||
Property, Plant and Equipment, Useful Life | 30 years | ||
Change in Accounting Method Accounted for as Change in Estimate | |||
Depreciation | $ (34) | ||
Minimum | |||
Buildings, Structures and Improvements, Estimated Useful Life | 10 years | ||
Furniture, Fixtures, Machinery Equipment, Estimated Useful Life | 3 years | ||
Capitalized software amortization period | 3 years | ||
Operating lease renewal term | 1 year | ||
Minimum | Furniture, fixtures, machinery and equipment | |||
Property, Plant and Equipment, Useful Life | 40 years | ||
Maximum | |||
Buildings, Structures and Improvements, Estimated Useful Life | 50 years | ||
Furniture, Fixtures, Machinery Equipment, Estimated Useful Life | 15 years | ||
Capitalized software amortization period | 5 years | ||
Operating lease renewal term | 30 years | ||
Maximum | Furniture, fixtures, machinery and equipment | |||
Property, Plant and Equipment, Useful Life | 50 years |
Business Divestitures and Liq_2
Business Divestitures and Liquidations (Details) - Discontinued Operations [Member] - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | |
China Business [Member] | |||
Business Combinations [Abstract] | |||
Net Gain (Loss) on Divestitures | $ 5 | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net Gain (Loss) on Divestitures | $ 5 | ||
Fabory Business [Member] | |||
Business Combinations [Abstract] | |||
Net Gain (Loss) on Divestitures | $ (109) | ||
Accumulated foreign currency translation losses | $ 45 | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net Gain (Loss) on Divestitures | $ (109) | ||
Accumulated foreign currency translation losses | 45 | ||
Zoro Tools Europe [Member] | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Liquidation expenses | $ 9 |
REVENUE (Details)
REVENUE (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 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% |
Other businesses | ||
Disaggregation of Revenue [Line Items] | ||
Percentage Of Company-Wide Revenue | 23.00% | 23.00% |
Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 16.00% | 14.00% |
Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 15.00% | 17.00% |
Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
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 | 7.00% | 6.00% |
Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 8.00% |
Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% | 7.00% |
Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 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 | 22.00% | 21.00% |
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 | 73.00% | 72.00% |
United States | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 21.00% | 18.00% |
United States | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 16.00% | 19.00% |
United States | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 13.00% | 12.00% |
United States | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% | 6.00% |
United States | Healthcare Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 7.00% |
United States | Commercial [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% | 10.00% |
United States | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 9.00% |
United States | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 10.00% |
United States | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 2.00% | 3.00% |
United States | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% | 6.00% |
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 | 4.00% | 5.00% |
Canada | Government Customer [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 9.00% | 6.00% |
Canada | Heavy Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% | 20.00% |
Canada | Light Manufacturing [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% | 6.00% |
Canada | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 8.00% |
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% | 9.00% |
Canada | Retail/Wholesale [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% | 4.00% |
Canada | Contractors [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% | 10.00% |
Canada | Natural Resources [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 29.00% | 33.00% |
Canada | 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 | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | $ 3,537 | $ 3,493 |
Less: Accumulated depreciation and amortization | 2,142 | 2,093 |
PROPERTY, BUILDINGS AND EQUIPMENT – NET | 1,395 | 1,400 |
Property, Plant and Equipment, Transfers and Changes | 44 | |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 329 | 332 |
Building, structures and improvements | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 1,330 | 1,329 |
Furniture, fixtures, machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 1,878 | $ 1,832 |
Property, Buildings, and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of Long-Lived Assets Held-for-use | 24 | |
Right-Of-Use-Assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of Long-Lived Assets Held-for-use | $ 20 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | ||||
Goodwill, Impairment Loss | $ 58 | |||
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 25.00% | |||
Reporting Unit, Change In Percentage of Fair Value in Excess of Carrying Amount | 0.10 | |||
Impairment of goodwill, intangibles and long lived assets | $ 187 | $ 123 | $ 156 | |
Goodwill, Impaired, Accumulated Impairment Loss | 137 | |||
Amortization expense, intangible assets | 60 | 78 | $ 92 | |
Other businesses | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill, Impairment Loss | $ 58 | 58 | ||
Impairment of goodwill, intangibles and long lived assets | 133 | |||
Impairment of Intangible Assets (Excluding Goodwill) | $ 75 | 120 | ||
Goodwill, Impaired, Accumulated Impairment Loss | 105 | |||
Goodwill, Impairment Loss, Rounded | $ 105 | |||
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill, Impairment Loss | 0 | |||
Goodwill, Impaired, Accumulated Impairment Loss | $ 32 | |||
Pro Forma | ||||
Segment Reporting Information [Line Items] | ||||
Reporting Unit, Impairment Trigger, Pre-Tax Discount Rate | 0.03 | |||
Reporting Unit, Impairment Trigger, Decrease In Revenue Long-Term Growth Rate | 0.015 |
GOODWILL AND OTHER INTANGIBLE_4
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, 2020 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 429 | $ 429 | $ 424 |
Acquisition | 15 | ||
Impairment | (58) | ||
Translation | 5 | 5 | |
Goodwill, ending balance | 391 | 429 | |
Other businesses | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 111 | 111 | 112 |
Acquisition | 15 | ||
Impairment | (58) | (58) | |
Translation | 2 | (1) | |
Goodwill, ending balance | 70 | 111 | |
United States | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 192 | 192 | 192 |
Acquisition | 0 | ||
Impairment | 0 | ||
Translation | 0 | 0 | |
Goodwill, ending balance | 192 | 192 | |
Canada | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 126 | 126 | 120 |
Acquisition | 0 | ||
Impairment | 0 | ||
Translation | 3 | 6 | |
Goodwill, ending balance | $ 129 | $ 126 |
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, 2020 | Dec. 31, 2019 | |
Total intangible assets, gross | $ 748 | $ 1,163 |
Finite-lived intangible assets, accumulated amortization | 520 | 859 |
Total | 200 | |
Total intangible assets, net | 228 | 304 |
Customer lists and relationships | ||
Finite-lived intangible assets, gross | 223 | 401 |
Finite-lived intangible assets, accumulated amortization | 171 | 301 |
Total | 52 | 100 |
Trademarks, trade names and other | ||
Finite-lived intangible assets, gross | 36 | 36 |
Finite-lived intangible assets, accumulated amortization | 22 | 20 |
Total | 14 | 16 |
Non-amortized trade names and other | ||
Finite-lived intangible assets, gross | 28 | 100 |
Finite-lived intangible assets, accumulated amortization | 0 | 38 |
Indefinite-lived intangible assets, carrying amount | 28 | 62 |
Capitalized software | ||
Finite-lived intangible assets, gross | 461 | 626 |
Finite-lived intangible assets, accumulated amortization | 327 | 500 |
Total | 134 | $ 126 |
Retirement of fully amortized capitalized software | $ 223 | |
Weighted average life | ||
Finite-lived intangible assets, useful life | 7 years 1 month 6 days | |
Weighted average life | Customer lists and relationships | ||
Finite-lived intangible assets, useful life | 11 years 9 months 18 days | |
Weighted average life | Trademarks, trade names and other | ||
Finite-lived intangible assets, useful life | 14 years 1 month 6 days | |
Weighted average life | Capitalized software | ||
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, 2020USD ($) |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
2021 | $ 63 |
2022 | 48 |
2023 | 36 |
2024 | 18 |
2025 | 16 |
Thereafter | 19 |
Total | $ 200 |
SHORT-TERM DEBT (Details)
SHORT-TERM DEBT (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Feb. 29, 2020 | Oct. 31, 2017 | |
Short-term Debt [Line Items] | ||||
Short-term debt, outstanding | $ 0 | $ 55 | ||
Line of credit [Member] | ||||
Short-term Debt [Line Items] | ||||
Lines of credit | 0 | 55 | ||
Maximum month-end balance during the year | $ 0 | $ 56 | ||
Weighted average interest rate during the year | 0.00% | 2.32% | ||
Weighted average interest rate at December 31 | 0.00% | 2.44% | ||
Commercial Paper [Member] | ||||
Short-term Debt [Line Items] | ||||
Short-term debt, outstanding | $ 0 | |||
Line of credit [Member] | Revolving credit facility [Member] | ||||
Short-term Debt [Line Items] | ||||
Line of credit, maximum borrowing capacity | $ 1,250 | |||
Line Of Credit Facility, Option To Increase Maximum Borrowing Capacity | $ 1,875 | |||
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 | |||
Debt, term | 5 years | |||
Line of credit, outstanding | $ 0 |
LONG-TERM DEBT - SCHEDULE OF LO
LONG-TERM DEBT - SCHEDULE OF LONG-TERM DEBT (Details) $ in Millions | 1 Months Ended | |||||||
Aug. 31, 2020JPY (¥)numberOfPayments | Feb. 29, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jun. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||||||||
Total | $ 2,421 | $ 2,181 | ||||||
Long-Term Debt, Gross, Fair Value Disclosure | 2,983 | 2,440 | ||||||
Other | 34 | 42 | ||||||
Other Long-Term Debt, Fair Value Disclosure | 34 | 42 | ||||||
Less current maturities | (8) | (246) | ||||||
Long-Term Debt, Current Maturities, Fair Value Disclosure | (8) | (246) | ||||||
Debt issuance costs and discounts, net of amortization | (24) | (21) | ||||||
Debt Instrument, Unamortized, Discount (Premium) And Debt Issuance Costs, Net, Fair Value | (24) | (21) | ||||||
Long-term debt (less current maturities and debt issuance costs and discounts) | 2,389 | 1,914 | ||||||
Long-Term Debt, Excluding Current Maturities, Fair Value Disclosure | 2,951 | 2,173 | ||||||
Senior notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Face amount of debt | $ 1,800 | |||||||
British pound term loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | 0 | 170 | ||||||
Long-term Debt, Fair Value | 0 | 170 | ||||||
Euro term loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | 0 | 123 | ||||||
Long-term Debt, Fair Value | 0 | 123 | ||||||
Japanese Yen Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | 87 | 0 | ||||||
Long-term Debt, Fair Value | 87 | 0 | ||||||
Canadian dollar revolving credit facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | 0 | 46 | ||||||
Long-term Debt, Fair Value | 0 | 46 | ||||||
Unsecured Senior Notes, 4.60% [Member] | Senior notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | 1,000 | 1,000 | ||||||
Long-term Debt, Fair Value | $ 1,343 | 1,194 | ||||||
Stated interest rate | 4.60% | 4.60% | ||||||
Face amount of debt | $ 1,000 | |||||||
Unsecured Senior Notes, 3.75% [Member] | Senior notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | $ 400 | 400 | ||||||
Long-term Debt, Fair Value | $ 479 | 416 | ||||||
Stated interest rate | 3.75% | 3.75% | ||||||
Face amount of debt | $ 400 | |||||||
Unsecured Senior Notes, 4.20% [Member] | Senior notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | $ 400 | 400 | ||||||
Long-term Debt, Fair Value | $ 514 | 449 | ||||||
Stated interest rate | 4.20% | 4.20% | ||||||
Face amount of debt | $ 400 | |||||||
Unsecured Senior Notes, 1.85% | Senior notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Total | $ 500 | 0 | ||||||
Long-term Debt, Fair Value | $ 526 | $ 0 | ||||||
Debt issuance costs and discounts, net of amortization | $ (5) | |||||||
Stated interest rate | 1.85% | 1.85% | ||||||
Debt Instrument, Redemption Price, Percentage Upon Change Of Control | 101.00% | |||||||
Basis points | 0.10% | |||||||
Debt redemption percentage | 100.00% | |||||||
Face amount of debt | $ 500 | |||||||
Term Loan Agreement, 0.05% [Member] | Japanese Yen Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Face amount of debt | ¥ | ¥ 9,000,000,000 | |||||||
Debt Instrument, Number Of Semi-Annual Principal Payments | numberOfPayments | 4 | |||||||
Long-term Debt, Weighted Average Interest Rate, over Time | 0.05% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Millions | 1 Months Ended | 12 Months Ended | 24 Months Ended | ||||||
Aug. 31, 2020JPY (¥)numberOfPayments | Feb. 29, 2020USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | May 31, 2017USD ($) | |
Debt Instrument [Line Items] | |||||||||
Partially funded repurchase amount | $ 2,800 | ||||||||
Total repurchase amount previously announced | 3,000 | ||||||||
Repayments debt | $ 1,370 | $ 42 | 96 | ||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | $ 24 | $ 21 | |||||||
Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 1,800 | ||||||||
Debt issuance costs and discounts | $ 24 | $ 24 | |||||||
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 | $ 400 | |||||||
Debt, term | 30 years | ||||||||
Stated interest rate | 4.20% | 4.20% | 4.20% | ||||||
Senior notes [Member] | Unsecured Senior Notes, 3.75% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 400 | ||||||||
Debt, term | 30 years | ||||||||
Stated interest rate | 3.75% | 3.75% | |||||||
Senior notes [Member] | Unsecured Senior Notes, 4.60% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 1,000 | ||||||||
Debt, term | 30 years | ||||||||
Stated interest rate | 4.60% | 4.60% | |||||||
Senior notes [Member] | Unsecured Senior Notes, 1.85% | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 500 | ||||||||
Stated interest rate | 1.85% | 1.85% | |||||||
Basis points | 0.10% | ||||||||
Debt redemption percentage | 100.00% | ||||||||
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | $ 5 | ||||||||
Japanese Yen Term Loan | Term Loan Agreement, 0.05% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | ¥ | ¥ 9,000,000,000 | ||||||||
Debt Instrument, Number Of Semi-Annual Principal Payments | numberOfPayments | 4 | ||||||||
Long-term Debt, Weighted Average Interest Rate, over Time | 0.05% | ||||||||
Minimum | Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 20.00% | ||||||||
Maximum | Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 25.00% |
LONG-TERM DEBT - SCHEDULED AGGR
LONG-TERM DEBT - SCHEDULED AGGREGATE PRINCIPAL PAYMENTS (Details) $ in Millions | Dec. 31, 2020USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2021 | $ 8 |
2022 | 0 |
2023 | 43 |
2024 | 44 |
2025 | 500 |
Thereafter | 1,805 |
Total | $ 2,400 |
EMPLOYEE BENEFITS - Defined Con
EMPLOYEE BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing automatic contribution percentage | 3.00% | ||
Profit sharing plan expense | $ 99 | $ 113 | $ 164 |
Defined contribution plans, expense | $ 16 | $ 19 | $ 13 |
EMPLOYEE BENEFITS - Postretirem
EMPLOYEE BENEFITS - Postretirement Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
HRA credit inflation index for grandfathered retirees | 4.50% | ||
Fixed Income Securities | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Target allocation, percentage | 65.00% | ||
Equity Securities | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Target allocation, percentage | 35.00% | ||
Postretirement Benefits | |||
Postretirement Benefits | |||
Service cost | $ 5 | $ 4 | $ 6 |
Interest cost | 6 | 7 | 7 |
Expected return on assets | (8) | (12) | (13) |
Amortization of prior service credits | (10) | (10) | (10) |
Amortization of unrecognized gains | (5) | (4) | (3) |
Net periodic (benefits) costs | (12) | (15) | (13) |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit obligation at beginning of year | 200 | 190 | |
Service cost | 5 | 4 | 6 |
Interest cost | 6 | 7 | 7 |
Plan participants' contributions | 3 | 3 | |
Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss) | (38) | 5 | |
Benefits paid | (9) | (9) | |
Benefit obligation at end of year | 167 | 200 | 190 |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||
Plan assets available for benefits at beginning of year | 198 | 176 | |
Actual returns on plan assets | 14 | 28 | |
Plan participants' contributions | 3 | 3 | |
Benefits paid | (9) | (9) | |
Plan assets available for benefits at end of year | 206 | 198 | $ 176 |
Assets for Plan Benefits, Defined Benefit Plan | (39) | ||
Noncurrent postretirement benefit obligation | 2 | ||
Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax [Abstract] | |||
Prior service credit | 51 | 61 | |
Unrecognized gains | 83 | 44 | |
Deferred tax (liability) | (33) | (26) | |
Net accumulated gains | $ 101 | $ 79 | |
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 | 10 years 10 months 24 days | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||
Discount rate | 3.01% | 4.08% | 3.44% |
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 | 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, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Discount rate | 2.17% | 3.01% | 4.08% |
Expected long-term rate of return on plan assets, net of tax | 4.00% | 4.00% | 7.13% |
Pre age 65 | 5.81% | 6.06% | 6.31% |
Catastrophic drug benefit | 11.50% | ||
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 | 0.00% | 2.50% | 2.50% |
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | |||
2021 | $ 9 | ||
2022 | 9 | ||
2023 | 10 | ||
2024 | 10 | ||
2025 | 10 | ||
2026-2030 | 47 | ||
Total | $ 95 |
EMPLOYEE BENEFITS - Summary of
EMPLOYEE BENEFITS - Summary of Plan Assets (Details) - Postretirement Benefits - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 206 | $ 198 | $ 176 |
Fair Value, Inputs, Level 1, 2 and 3 | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | 205 | 204 | |
Funds - Municipal/Provincial Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 13 | 0 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel1Member | ||
Funds - Corporate Bonds Fund | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 5 | 0 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel1Member | ||
Federal Money Market Fund | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 11 | 204 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel1Member | ||
Corporate Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 102 | 0 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel2Member | ||
Government/Municipal Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 8 | 0 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel2Member | ||
Equity Funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 66 | 0 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | us-gaap:FairValueInputsLevel2Member | ||
Trust Assets and Liabilities, Net | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 1 | $ (6) |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Rent expense included in SG&A | $ 76 | $ 76 | $ 76 |
LEASES - Schedule of Operating
LEASES - Schedule of Operating Lease Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | |||
Operating Lease, Right-of-Use Asset | $ 210 | ||
Accrued expenses | 57 | ||
Other non-current liabilities | 162 | ||
Total operating lease liabilities | $ 219 | ||
Weighted average remaining lease term | 5 years | ||
Weighted average incremental borrowing rate | 1.95% | ||
Cash paid for operating leases | $ 69 | ||
ROU assets obtained in exchange for operating lease obligations | 74 | ||
Rent expense included in SG&A | 76 | $ 76 | $ 76 |
Sublease income | $ 2 | $ 3 |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Operating Leases (Details) $ in Millions | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 59 |
2022 | 52 |
2023 | 40 |
2024 | 24 |
2025 | 17 |
Thereafter | 38 |
Total lease payments | 230 |
Less interest | (11) |
Present value of lease liabilities | $ 219 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilities |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent |
STOCK INCENTIVE PLANS (Details)
STOCK INCENTIVE PLANS (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock available for grant under stock incentive plans (in shares) | 2.1 | ||
Pretax stock-based compensation expense | $ 46 | $ 40 | $ 47 |
Income tax benefits recognized in earnings for stock-based compensation expense | 16 | 12 | 29 |
RSU expense | $ 32 | $ 27 | $ 23 |
STOCK INCENTIVE PLANS - Restric
STOCK INCENTIVE PLANS - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted Average Price Per Share [Abstract] | |||
RSU expense | $ 32 | $ 27 | $ 23 |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of shares vested | $ 31 | $ 19 | $ 22 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |||
Outstanding at beginning of period (in shares) | 326,124 | 343,814 | 352,919 |
Issued (in shares) | 140,815 | 96,823 | 141,775 |
Canceled (in shares) | (26,254) | (36,224) | (56,393) |
Vested (in shares) | (123,271) | (78,289) | (94,487) |
Outstanding at end of period (in shares) | 317,414 | 326,124 | 343,814 |
Weighted Average Price Per Share [Abstract] | |||
Outstanding at beginning of period, weighted average price per share (in dollars per share) | $ 259.88 | $ 245.38 | $ 226.31 |
Issued, weighted average price per share (in dollars per share) | 252.11 | 299.25 | 284.98 |
Cancelled, weighted average price per share (in dollars per share) | 257.56 | 253.22 | 245.08 |
Vested, weighted average price per share (in dollars per share) | 252.05 | 247.96 | 233.75 |
Outstanding at end of period, weighted average price per share (in dollars per share) | $ 259.67 | $ 259.88 | $ 245.38 |
Unrecognized compensation | $ 41 | ||
Weighted average period to recognize (in years) | 1 year 10 months 24 days | ||
Minimum | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year | ||
Maximum | Restricted Stock Units | |||
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, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 | |
Balance at beginning of period, treasury stock (in shares) | 55,971,691 | ||
Balance at end of period, treasury stock (in shares) | 57,134,828 | 55,971,691 | |
Stock Issued During Period, Shares, Restricted Stock Award, Retained | 41,019 | 26,107 | 39,075 |
Stock Issued During Period, Shares, Performance Share Units, Retained | 16,830 | 6,737 | 1,027 |
Common Stock [Member] | |||
Balance at beginning of period, common stock (in shares) | 53,687,528 | 55,862,360 | 56,328,863 |
Exercised (in shares) | 311,374 | 232,052 | 930,258 |
Settlement of restricted stock units, net of 41,019, 26,107 and 39,075 shares retained, respectively (in shares) | 82,241 | 52,182 | 80,988 |
Settlement of performance share units, net of 16,830, 6,737 and 1,027 shares retained, respectively (in shares) | 28,098 | 14,027 | 1,911 |
Purchase of treasury shares (in shares) | (1,584,850) | (2,473,093) | (1,479,660) |
Balance at end of period, common stock (in shares) | 52,524,391 | 53,687,528 | 55,862,360 |
Treasury Stock [Member] | |||
Balance at beginning of period, treasury stock (in shares) | 55,971,691 | 53,796,859 | 53,330,356 |
Exercised (in shares) | (311,374) | (232,052) | (930,258) |
Settlement of restricted stock units, net of 41,019, 26,107 and 39,075 shares retained, respectively (in shares) | (82,241) | (52,182) | (80,988) |
Settlement of performance share units, net of 16,830, 6,737 and 1,027 shares retained, respectively (in shares) | (28,098) | (14,027) | (1,911) |
Purchase of treasury shares (in shares) | 1,584,850 | 2,473,093 | 1,479,660 |
Balance at end of period, treasury stock (in shares) | 57,134,828 | 55,971,691 | 53,796,859 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 2,060 | $ 2,093 | $ 1,828 |
Net current period activity | 105 | 20 | (48) |
Ending balance | 2,093 | 2,060 | 2,093 |
Foreign Currency Translation and Other | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (238) | (264) | (223) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 36 | 25 | (43) |
Amounts reclassified to Net earnings | 47 | 1 | 2 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 83 | 26 | (41) |
Ending balance | (155) | (238) | (264) |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (167) | (187) | (154) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 69 | 30 | (40) |
Amounts reclassified to Net earnings | 36 | (10) | (8) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 105 | 20 | (33) |
Ending balance | (62) | (167) | (187) |
AOCI Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (13) | (16) | (19) |
Ending balance | (1) | (13) | (16) |
Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Other comprehensive earnings (loss) before reclassifications, net of tax | 12 | 3 | 3 |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 12 | 3 | 3 |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (154) | (171) | (135) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 57 | 27 | (43) |
Amounts reclassified to Net earnings | 36 | (10) | (8) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 93 | 17 | (36) |
Ending balance | (61) | (154) | (171) |
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 | 79 | 82 | 73 |
Other comprehensive earnings (loss) before reclassifications, net of tax | 33 | 8 | 4 |
Amounts reclassified to Net earnings | (11) | (11) | (10) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 22 | (3) | 9 |
Ending balance | 101 | 79 | 82 |
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 | (8) | (5) | (4) |
Other comprehensive earnings (loss) before reclassifications, net of tax | 0 | (3) | (1) |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 0 | (3) | (1) |
Ending balance | $ (8) | $ (8) | $ (5) |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | |||
Derivative Instruments and Hedges, Liabilities | $ 521 | ||
Derivative Asset, Fair Value, Gross Asset | (93) | $ (79) | $ (82) |
Other Operating Income (Expense), Net | 21 | $ 26 | $ 5 |
Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | 500 | ||
Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | 21 | ||
Other Operating Income (Expense), Net | 0 | ||
Derivative Asset, Fair Value, Gross Asset | 21 | ||
Fair Value Hedging [Member] | Designated as Hedging Instrument [Member] | Other Contract | |||
Derivative [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | (21) | ||
Other Operating Income (Expense), Net | 0 | ||
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | 34 | ||
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Cross Currency Interest Rate Contract [Member] | |||
Derivative [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | 0 | ||
Other Operating Income (Expense), Net | (2) | ||
Derivative Asset, Fair Value, Gross Asset | 2 | ||
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Other Contract | |||
Derivative [Line Items] | |||
Derivative Asset, Fair Value, Gross Asset | 0 | ||
Other Operating Income (Expense), Net | $ 2 |
INCOME TAXES - Net Earnings Bef
INCOME TAXES - Net Earnings Before Income Taxes by Geographical Area (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net earnings before income taxes by geographical area | |||
U.S. | $ 1,015 | $ 1,226 | $ 1,163 |
Foreign | (68) | (17) | (82) |
Earnings before income taxes | $ 947 | $ 1,209 | $ 1,081 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current income tax expense: | |||
U.S. Federal | $ 119 | $ 199 | $ 166 |
U.S. State | 28 | 44 | 32 |
Foreign | 65 | 58 | 47 |
Total current | 212 | 301 | 245 |
Deferred income tax expense | (20) | 13 | 13 |
Income tax expense | 192 | 314 | $ 258 |
Undistributed earnings of foreign subsidiaries | 429 | ||
Liability for tax uncertainties | $ 4 | $ 8 |
INCOME TAXES - Income Tax Effec
INCOME TAXES - Income Tax Effects of Temporary Differences (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | |||
Operating Loss Carryforwards | $ 207 | ||
Deferred tax assets: | |||
Inventory | 14 | $ 4 | |
Accrued expenses | 93 | 86 | |
Foreign operating loss carryforwards | 45 | 67 | |
Accrued employment-related benefits | 37 | 49 | |
Tax credit carryforward | 25 | 22 | |
Other | 8 | 8 | |
Deferred tax assets | 222 | 236 | |
Less valuation allowance | (53) | (72) | $ (72) |
Deferred tax assets, net of valuation allowance | 169 | 164 | |
Deferred tax liabilities: | |||
Property, buildings, equipment and other capital assets | (145) | (134) | |
Intangibles | (68) | (83) | |
Other | (10) | (12) | |
Deferred tax liabilities | (223) | (229) | |
Net deferred tax liability | (54) | (65) | |
The net deferred tax asset (liability) is classified as follows: | |||
Noncurrent assets | 14 | 11 | |
Noncurrent liabilities | $ (68) | $ (76) |
INCOME TAXES - Changes in Valua
INCOME TAXES - Changes in Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Balance at beginning of period | $ (72) | $ (72) |
Balance at end of period | (53) | (72) |
Increases primarily related to foreign NOLs | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (16) | (9) |
Releases related to foreign NOLs | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 0 | 10 |
Foreign subsidiaries tax impacts due to divestiture | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 39 | 0 |
Other changes, net | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (2) | 0 |
Increase related to U.S. foreign tax credits | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | $ (2) | $ (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, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of income tax expense with federal income taxes at the statutory rate | |||
Federal income tax | $ 199 | $ 254 | $ 227 |
State income taxes, net of federal income tax benefit | 33 | 36 | 32 |
Clean energy credit | 0 | 0 | (20) |
Foreign rate difference | 23 | 25 | 20 |
Foreign subsidiaries tax impacts due to divestiture | (61) | 0 | 20 |
U.S. tax legislation impact | 16 | 11 | 4 |
Excess tax benefits from stock-based compensation | (4) | (2) | (15) |
Other - net | (14) | (10) | (10) |
Income tax expense | $ 192 | $ 314 | $ 258 |
Effective tax rate | 20.30% | 26.00% | 23.90% |
INCOME TAXES - Changes in Liabi
INCOME TAXES - Changes in Liability for Tax Uncertainties, Excluding Interest (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Liability for tax uncertainties | $ 4 | $ 8 | |
Changes in liability for tax uncertainties, excluding interest | |||
Balance at beginning of year | 28 | 37 | $ 45 |
Additions for tax positions related to the current year | 23 | 3 | 4 |
Additions for tax positions of prior years | 0 | 1 | 3 |
Reductions for tax positions of prior years | (2) | (1) | (5) |
Reductions due to statute lapse | (10) | (10) | (9) |
Settlements, audit payments, refunds - net | 0 | (2) | (1) |
Balance at end of year | $ 39 | $ 28 | $ 37 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||||||||
Operating Lease, Right-of-Use Asset | $ 210 | $ 210 | |||||||||
Number of reportable segments | segment | 2 | ||||||||||
Service fee revenue | 1.00% | ||||||||||
Summarized Information: | |||||||||||
Net sales | 2,941 | $ 3,018 | $ 2,837 | $ 3,001 | $ 2,847 | $ 2,947 | $ 2,893 | $ 2,799 | $ 11,797 | $ 11,486 | $ 11,221 |
Operating earnings | 275 | $ 380 | $ 205 | $ 159 | 181 | $ 338 | $ 380 | $ 363 | 1,019 | 1,262 | 1,158 |
Total assets | 6,295 | 6,005 | 6,295 | 6,005 | 5,873 | ||||||
Long-lived assets | 1,540 | 1,747 | 1,540 | 1,747 | 1,478 | ||||||
United States | |||||||||||
Summarized Information: | |||||||||||
Net sales | 9,200 | 8,865 | 8,613 | ||||||||
Long-lived assets | 1,139 | 1,268 | 1,139 | 1,268 | 1,140 | ||||||
Canada | |||||||||||
Summarized Information: | |||||||||||
Net sales | 494 | 539 | 658 | ||||||||
Long-lived assets | 114 | 152 | 114 | 152 | 136 | ||||||
Other foreign countries | |||||||||||
Summarized Information: | |||||||||||
Net sales | 2,103 | 2,082 | 1,950 | ||||||||
Long-lived assets | 287 | 327 | 287 | 327 | 202 | ||||||
Operating segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 9,546 | 9,344 | 9,241 | ||||||||
Operating earnings | 1,283 | 1,394 | 1,289 | ||||||||
Total assets | 3,109 | 2,841 | 3,109 | 2,841 | 2,684 | ||||||
Depreciation and amortization | 169 | 210 | 234 | ||||||||
Additions to long-lived assets | 192 | 249 | 246 | ||||||||
Other businesses | |||||||||||
Summarized Information: | |||||||||||
Net sales | 2,762 | 2,651 | 2,441 | ||||||||
Operating earnings | (24) | (9) | 8 | ||||||||
Operating segments and other businesses | |||||||||||
Summarized Information: | |||||||||||
Net sales | 12,308 | 11,995 | 11,682 | ||||||||
Operating earnings | 1,259 | 1,385 | 1,297 | ||||||||
Intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | (511) | (509) | (461) | ||||||||
Total reportable segments excluding intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | 9,037 | 8,839 | 8,784 | ||||||||
Unallocated in consolidation | |||||||||||
Summarized Information: | |||||||||||
Operating earnings | (240) | (123) | (139) | ||||||||
Total assets | 405 | 161 | 405 | 161 | 310 | ||||||
Total reportable segments intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | (509) | (505) | (457) | ||||||||
Other businesses, intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | (2) | (4) | (4) | ||||||||
Other businesses excluding intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | 2,760 | 2,647 | 2,437 | ||||||||
Unallocated expense | |||||||||||
Summarized Information: | |||||||||||
Total assets | 2,781 | 3,003 | 2,781 | 3,003 | 2,879 | ||||||
Depreciation and amortization | 43 | 45 | 49 | ||||||||
Additions to long-lived assets | 97 | 72 | 39 | ||||||||
United States | |||||||||||
Summarized Information: | |||||||||||
Net sales | 8,561 | 8,310 | 8,131 | ||||||||
United States | Operating segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 9,070 | 8,815 | 8,588 | ||||||||
Operating earnings | 1,299 | 1,391 | 1,338 | ||||||||
Total assets | 2,931 | 2,668 | 2,931 | 2,668 | 2,496 | ||||||
Depreciation and amortization | 113 | 148 | 166 | ||||||||
Additions to long-lived assets | 92 | 168 | 200 | ||||||||
United States | Intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | (509) | (505) | (457) | ||||||||
Canada | |||||||||||
Summarized Information: | |||||||||||
Net sales | 476 | 529 | 653 | ||||||||
Canada | Operating segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 476 | 529 | 653 | ||||||||
Operating earnings | (16) | 3 | (49) | ||||||||
Total assets | $ 178 | $ 173 | 178 | 173 | 188 | ||||||
Depreciation and amortization | 13 | 17 | 19 | ||||||||
Additions to long-lived assets | 3 | 9 | 7 | ||||||||
Canada | Intersegment net sales | |||||||||||
Summarized Information: | |||||||||||
Net sales | 0 | 0 | 0 | ||||||||
United States and Canada | |||||||||||
Summarized Information: | |||||||||||
Operating earnings | 1,283 | 1,394 | 1,289 | ||||||||
United States and Canada | Operating segments | |||||||||||
Summarized Information: | |||||||||||
Depreciation and amortization | 126 | 165 | 185 | ||||||||
Additions to long-lived assets | $ 95 | $ 177 | $ 207 |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||
Net sales | $ 2,941 | $ 3,018 | $ 2,837 | $ 3,001 | $ 2,847 | $ 2,947 | $ 2,893 | $ 2,799 | $ 11,797 | $ 11,486 | $ 11,221 |
Cost of goods sold | 1,914 | 1,944 | 1,821 | 1,880 | 1,765 | 1,848 | 1,772 | 1,704 | 7,559 | 7,089 | 6,873 |
Gross profit | 1,027 | 1,074 | 1,016 | 1,121 | 1,082 | 1,099 | 1,121 | 1,095 | 4,238 | 4,397 | 4,348 |
Selling, general and administrative expenses | 752 | 694 | 811 | 962 | 901 | 761 | 741 | 732 | 3,219 | 3,135 | 3,190 |
Operating earnings | 275 | 380 | 205 | 159 | 181 | 338 | 380 | 363 | 1,019 | 1,262 | 1,158 |
Net earnings attributable to W.W. Grainger, Inc. | $ 168 | $ 240 | $ 114 | $ 173 | $ 103 | $ 233 | $ 260 | $ 253 | $ 695 | $ 849 | $ 782 |
Earnings per share - basic (in dollars per share) | $ 3.14 | $ 4.43 | $ 2.11 | $ 3.20 | $ 1.89 | $ 4.27 | $ 4.69 | $ 4.50 | $ 12.88 | $ 15.39 | $ 13.82 |
Earnings per share - diluted (in dollars per share) | $ 3.12 | $ 4.41 | $ 2.10 | $ 3.19 | $ 1.88 | $ 4.25 | $ 4.67 | $ 4.48 | $ 12.82 | $ 15.32 | $ 13.73 |