CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (USD $) | |||
In Thousands, except Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Income Statement [Abstract] | |||
Net sales | $6,221,991 | $6,850,032 | $6,418,014 |
Cost of merchandise sold | 3,623,465 | 4,041,810 | 3,814,391 |
Gross profit | 2,598,526 | 2,808,222 | 2,603,623 |
Warehousing, marketing and administrative expenses | 1,933,302 | 2,025,550 | 1,932,970 |
Operating earnings | 665,224 | 782,672 | 670,653 |
Other income and (expense): | |||
Interest income | 1,358 | 5,069 | 12,125 |
Interest expense | (8,766) | (14,485) | (2,974) |
Equity in net income of unconsolidated entities | 1,497 | 3,642 | 2,016 |
Gain (write-off) of investment in unconsolidated entities | 47,343 | (6,031) | 0 |
Other non-operating income | 964 | 2,668 | 404 |
Other non-operating expense | (283) | (317) | (363) |
Total other income and (expense) | 42,113 | (9,454) | 11,208 |
Earnings before income taxes | 707,337 | 773,218 | 681,861 |
Income taxes | 276,565 | 297,863 | 261,741 |
Net earnings | 430,772 | 475,355 | 420,120 |
Less: Net earnings attributable to noncontrolling interest | 306 | 0 | 0 |
Net earnings attributable to W.W. Grainger, Inc. | $430,466 | $475,355 | $420,120 |
Earnings per share | |||
Basic | 5.7 | 6.07 | 5.01 |
Diluted | 5.62 | 5.97 | 4.91 |
Weighted average number of shares outstanding: | |||
Basic | 73,786,346 | 76,579,856 | 82,403,958 |
Diluted | 74,891,852 | 77,887,620 | 84,173,381 |
1_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statement of Income and Comprehensive Income [Abstract] | |||
Net earnings | $430,772 | $475,355 | $420,120 |
Other comprehensive earnings (losses): | |||
Foreign currency translation adjustments, net of tax (expense) benefit of $(7,813), $11,454 and $(9,279), respectively | 54,693 | (79,287) | 53,545 |
Reclassification of cumulative currency translation gain | (3,145) | 0 | 0 |
Defined postretirement benefit plan: | |||
Prior service (cost) credit arising during period | (8,715) | 0 | 9,433 |
Amortization of prior service credit | (1,215) | (1,215) | (437) |
Amortization of transition asset | (143) | (143) | (143) |
Net gain (loss) arising during period | 3,402 | (49,872) | 11,620 |
Amortization of unrecognized losses | 4,135 | 1,312 | 2,094 |
Income tax benefit (expense) | 984 | 19,368 | (8,756) |
Net defined postretirement benefit plan adjustments | (1,552) | (30,550) | 13,811 |
Gain (loss) on other employment-related benefit plans, net of tax benefit (expense) of $205, $544 and $(878), respectively | (554) | (859) | 1,384 |
Total other comprehensive earnings (losses) | 49,442 | (110,696) | 68,740 |
Comprehensive earnings, net of tax | 480,214 | 364,659 | 488,860 |
Comprehensive earnings attributable to noncontrolling interest: | |||
Net earnings | (306) | 0 | 0 |
Foreign currency translation adjustments | 1,457 | 0 | 0 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $481,365 | $364,659 | $488,860 |
PARENTHETICAL DATA TO THE CONDE
PARENTHETICAL DATA TO THE CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Statement of Income and Comprehensive Income [Abstract] | |||
Foreign currency translation adjustments, tax (expense) benefit | ($7,813) | $11,454 | ($9,279) |
Gain (loss) on other employment-related benefit plans, tax benefit (expense) | $205 | $544 | ($878) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | |||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
| Dec. 31, 2007
|
CURRENT ASSETS | |||
Cash and cash equivalents | $459,871 | $396,290 | $113,437 |
Marketable securities at cost, which approximates market value | 0 | 0 | 20,074 |
Accounts receivable (less allowances for doubtful accounts of $25,850, $26,481 and $25,830, respectively) | 624,910 | 589,416 | 602,650 |
Inventories | 889,679 | 1,009,932 | 946,327 |
Prepaid expenses and other assets | 88,364 | 73,359 | 61,666 |
Deferred income taxes | 42,023 | 52,556 | 56,663 |
Prepaid income taxes | 26,668 | 22,556 | 0 |
Total current assets | 2,131,515 | 2,144,109 | 1,800,817 |
PROPERTY, BUILDINGS AND EQUIPMENT | |||
Land | 237,867 | 192,916 | 178,321 |
Buildings, structures and improvements | 1,078,439 | 1,048,440 | 977,837 |
Furniture, fixtures, machinery and equipment | 950,187 | 890,507 | 848,118 |
TOTAL PROPERTY, BUILDINGS AND EQUIPMENT | 2,266,493 | 2,131,863 | 2,004,276 |
Less accumulated depreciation and amortization | 1,313,222 | 1,201,552 | 1,125,931 |
Property, buildings and equipment - net | 953,271 | 930,311 | 878,345 |
DEFERRED INCOME TAXES | 79,472 | 97,442 | 54,658 |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 3,508 | 20,830 | 14,759 |
GOODWILL | 351,182 | 213,159 | 233,028 |
OTHER ASSETS AND INTANGIBLES - NET | 207,384 | 109,566 | 112,421 |
TOTAL ASSETS | 3,726,332 | 3,515,417 | 3,094,028 |
CURRENT LIABILITIES | |||
Short-term debt | 34,780 | 19,960 | 102,060 |
Current maturities of long-term debt | 53,128 | 21,257 | 4,590 |
Trade accounts payable | 300,791 | 290,802 | 297,929 |
Accrued compensation and benefits | 135,323 | 162,380 | 182,275 |
Accrued contributions to employees' profit sharing plans | 121,895 | 146,922 | 126,483 |
Accrued expenses | 124,150 | 118,633 | 102,607 |
Income taxes payable | 6,732 | 1,780 | 10,459 |
Total current liabilities | 776,799 | 761,734 | 826,403 |
LONG-TERM DEBT (less current maturities) | 437,500 | 488,228 | 4,895 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 62,215 | 33,219 | 20,727 |
ACCRUED EMPLOYMENT-RELATED BENEFITS COSTS | 222,619 | 198,431 | 143,895 |
SHAREHOLDERS' EQUITY | |||
Common Stock - $0.50 par value - 300,000,000 shares authorized; 109,659,219 shares issued | 54,830 | 54,830 | 54,830 |
Additional contributed capital | 596,358 | 564,728 | 475,350 |
Retained earnings | 3,966,508 | 3,670,726 | 3,316,875 |
Accumulated other comprehensive earnings (losses) | 12,374 | (38,525) | 72,171 |
Treasury stock, at cost - 37,382,703, 34,878,190 and 30,199,804 shares, respectively | (2,466,350) | (2,217,954) | (1,821,118) |
Total W.W. Grainger, Inc. shareholders' equity | 2,163,720 | 2,033,805 | 2,098,108 |
Noncontrolling interest | 63,479 | 0 | 0 |
Total shareholders' equity | 2,227,199 | 2,033,805 | 2,098,108 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $3,726,332 | $3,515,417 | $3,094,028 |
2_PARENTHETICAL DATA TO THE CON
PARENTHETICAL DATA TO THE CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | |||
In Thousands, except Share data | Dec. 31, 2009
| Dec. 31, 2008
| Dec. 31, 2007
|
CURRENT ASSETS | |||
Allowance for doubtful accounts receivable | $25,850 | $26,481 | $25,830 |
SHAREHOLDERS' EQUITY | |||
Cumulative Preferred Stock - $5 par value | $5 | $5 | $5 |
Cumulative Preferred Stock - 12,000,000 shares authorized | 12,000,000 | 12,000,000 | 12,000,000 |
Common Stock - $0.50 par value | 0.5 | 0.5 | 0.5 |
Common Stock - 300,000,000 shares authorized | 300,000,000 | 300,000,000 | 300,000,000 |
Common Stock - 109,659,219 shares issued | 109,659,219 | 109,659,219 | 109,659,219 |
Treasury stock, shares | 37,382,703 | 34,878,190 | 30,199,804 |
3_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net earnings | $430,772 | $475,355 | $420,120 |
Provision for losses on accounts receivable | 10,748 | 12,924 | 15,436 |
Deferred income taxes and tax uncertainties | 21,683 | 5,182 | (18,632) |
Depreciation and amortization | 147,531 | 139,570 | 131,999 |
Stock-based compensation | 40,407 | 45,945 | 35,551 |
Tax benefit of stock incentive plans | 2,894 | 1,925 | 3,193 |
Net losses (gains) on property, buildings and equipment | 8,642 | (9,232) | (7,254) |
Income from unconsolidated entities - net | (1,497) | (3,642) | (2,016) |
(Gain) write-off of unconsolidated entities | (47,343) | 6,031 | 0 |
Change in operating assets and liabilities - net of business acquisitions | |||
(Increase) decrease in accounts receivable | 2,794 | (5,592) | (41,814) |
(Increase) decrease in inventories | 175,286 | (92,518) | (97,234) |
(Increase) decrease in prepaid expenses | (11,180) | (33,629) | (2,342) |
Increase (decrease) in trade accounts payable | (16,736) | (6,960) | (39,436) |
Increase (decrease) in other current liabilities | (52,944) | 199 | 54,457 |
Increase (decrease) in current income taxes payable | 2,472 | (7,784) | 2,304 |
Increase (decrease) in accrued employment-related benefits cost | 22,080 | 3,216 | 17,705 |
Other - net | (3,213) | (924) | (3,162) |
Net cash provided by operating activities | 732,396 | 530,066 | 468,875 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Additions to property, buildings and equipment | (142,414) | (194,975) | (197,423) |
Proceeds from sales of property, buildings and equipment | 1,684 | 13,620 | 12,084 |
Cash paid for business acquisitions, net of cash acquired, and other investments | (121,833) | (14,793) | (9,480) |
Investments in unconsolidated entities | 0 | (6,487) | (2,138) |
Net cash used in investing activities | (262,563) | (202,635) | (196,957) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net (decrease) increase in commercial paper | 0 | (95,947) | 95,947 |
Borrowings under line of credit | 46,125 | 29,959 | 14,107 |
Payments against line of credit | (43,583) | (15,437) | (7,751) |
Proceeds from issuance of long-term debt | 0 | 500,000 | 0 |
Payments of long-term debt | (18,856) | 0 | 0 |
Proceeds from stock options exercised | 91,165 | 46,833 | 113,500 |
Excess tax benefits from stock-based compensation | 19,030 | 13,533 | 30,696 |
Purchase of treasury stock | (372,727) | (394,247) | (647,293) |
Cash dividends paid | (134,684) | (121,504) | (113,093) |
Net cash used in financing activities | (413,530) | (36,810) | (513,887) |
Exchange rate effect on cash and cash equivalents | 7,278 | (7,768) | 6,935 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 63,581 | 282,853 | (235,034) |
Cash and cash equivalents at beginning of year | 396,290 | 113,437 | 348,471 |
Cash and cash equivalents at end of year | 459,871 | 396,290 | 113,437 |
Supplemental cash flow information: | |||
Cash payments for interest (net of amounts capitalized) | 8,766 | 14,508 | 4,409 |
Cash payments for income taxes | 235,043 | 306,960 | 244,541 |
Noncash investing activities: | |||
Fair value of noncash assets acquired in business acquisitions | 324,913 | 41,068 | 5,039 |
Liabilities assumed in business acquisitions | ($75,530) | ($6,778) | ($341) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | |||||||
In Thousands | Common Stock
| Additional Contributed Capital
| Retained Earnings
| Accumulated Other Comprehensive Earnings (Losses)
| Treasury Stock
| Noncontrolling Interest
| Total
|
Beginning Balance at Dec. 31, 2006 | $54,829 | $478,454 | $3,007,606 | $3,431 | ($1,366,705) | $0 | |
Cumulative effect of a change in accounting principle | 0 | 0 | 870 | 0 | 0 | 0 | |
Reinstatement of equity method | 0 | 0 | 1,372 | 0 | 0 | 0 | |
Exercise of stock options | 0 | (19,991) | 0 | 0 | 133,491 | 0 | |
Tax benefits on stock-based compensation awards | 0 | 33,889 | 0 | 0 | 0 | 0 | |
Stock option expense | 0 | 16,888 | 0 | 0 | 0 | 0 | |
Amortization of other stock-based compensation awards | 0 | 18,667 | 0 | 0 | 0 | 0 | |
Vesting of restricted stock | 0 | 0 | 0 | 0 | (1,126) | 0 | |
Settlement of other stock-based compensation awards | 1 | (2,557) | 0 | 0 | 1,189 | 0 | |
Purchase of treasury stock | 0 | (50,000) | 0 | 0 | (587,967) | 0 | |
Net earnings | 0 | 0 | 420,120 | 0 | 0 | 0 | 420,120 |
Other comprehensive earnings | 0 | 0 | 0 | 68,740 | 0 | 0 | 68,740 |
Cash dividends paid | 0 | 0 | (113,093) | 0 | 0 | 0 | |
Ending Balance at Dec. 31, 2007 | 54,830 | 475,350 | 3,316,875 | 72,171 | (1,821,118) | 0 | 2,098,108 |
Exercise of stock options | 0 | (12,663) | 0 | 0 | 59,460 | 0 | |
Tax benefits on stock-based compensation awards | 0 | 15,458 | 0 | 0 | 0 | 0 | |
Stock option expense | 0 | 19,868 | 0 | 0 | 0 | 0 | |
Amortization of other stock-based compensation awards | 0 | 26,077 | 0 | 0 | 0 | 0 | |
Vesting of restricted stock | 0 | 0 | 0 | 0 | (417) | 0 | |
Settlement of other stock-based compensation awards | 0 | (9,362) | 0 | 0 | 5,209 | 0 | |
Purchase of treasury stock | 0 | 50,000 | 0 | 0 | (461,088) | 0 | |
Net earnings | 0 | 0 | 475,355 | 0 | 0 | 0 | 475,355 |
Other comprehensive earnings | 0 | 0 | 0 | (110,696) | 0 | 0 | (110,696) |
Cash dividends paid | 0 | 0 | (121,504) | 0 | 0 | 0 | |
Ending Balance at Dec. 31, 2008 | 54,830 | 564,728 | 3,670,726 | (38,525) | (2,217,954) | 0 | 2,033,805 |
Exercise of stock options | 0 | (15,614) | 0 | 0 | 106,255 | 96 | |
Tax benefits on stock-based compensation awards | 0 | 21,924 | 0 | 0 | 0 | 0 | |
Stock option expense | 0 | 16,100 | 0 | 0 | 0 | 98 | |
Amortization of other stock-based compensation awards | 0 | 24,307 | 0 | 0 | 0 | 0 | |
Vesting of restricted stock | 0 | 0 | 0 | 0 | (926) | 0 | |
Settlement of other stock-based compensation awards | 0 | (15,087) | 0 | 0 | 8,525 | 0 | |
Purchase of treasury stock | 0 | 0 | 0 | 0 | (362,250) | 0 | |
Net earnings | 0 | 0 | 430,466 | 0 | 0 | 306 | 430,772 |
Other comprehensive earnings | 0 | 0 | 0 | 50,899 | 0 | (1,457) | 49,442 |
Cash dividends paid | 0 | 0 | (134,684) | 0 | 0 | 0 | |
Change in subsidiary ownership | 0 | 0 | 0 | 0 | 0 | 64,436 | 306 |
Ending Balance at Dec. 31, 2009 | $54,830 | $596,358 | $3,966,508 | $12,374 | ($2,466,350) | $63,479 | $2,227,199 |
PARENTHETICAL DATA TO THE CONSO
PARENTHETICAL DATA TO THE CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | |||
12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share | 1.78 | 1.55 | 1.34 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | INDUSTRY INFORMATION W.W. Grainger, Inc. is the leading broad-line supplier of facilities maintenance and other related products and services in North America, with operations primarily in the United States, Canada, Japan and Mexico.In this report, the words Company or Grainger mean W.W.Grainger, Inc. and its subsidiaries. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions are eliminated from the consolidated financial statements. INVESTMENTS IN UNCONSOLIDATED ENTITIES For investments in which the Company owns or controls from 20% to 50% of the voting shares, the equity method of accounting is used. Changes in interest arising from the issuance of stock by an investee are accounted for as additional contributed capital. See Note 6 to the Consolidated Financial Statements. MANAGEMENT ESTIMATES In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION The financial statements of the Companys foreign subsidiaries are measured using the local currency as the functional currency. Net exchange gains or losses resulting from the translation of financial statements of foreign operations and related long-term debt are recorded as a separate component of other comprehensive earnings. See Notes 2 and 14 to the Consolidated Financial Statements. SUBSEQUENT EVENTS The Company has evaluated subsequent events through February 25, 2010, the date the financial statements were issued. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | REVENUE RECOGNITION Revenues recognized include product sales, billings for freight and handling charges and fees earned for services provided. The Company recognizes product sales and billings for freight and handling charges primarily on the date products are shipped to, or picked up by, the customer. The Companys standard shipping terms are FOB shipping point. On occasion, the Company will negotiate FOB destination terms. These sales are recognized upon delivery to the customer. Fee revenues, which account for less than 1% of total revenues, are recognized after services are completed. COST OF MERCHANDISE SOLD Cost of merchandise sold includes product and product-related costs, vendor consideration, freight-out and handling costs. The Company defines handling costs as those costs incurred to fulfill a shipped sales order. VENDOR CONSIDERATION The Company receives rebates and allowances from its vendors to promote their products. The Company utilizes numerous advertising programs to promote its vendors products, including catalogs and other printed media, Internet and other marketing programs. Most of these programs relate to multiple vendors, which makes supporting the specific, identifiable and incremental criteria difficult, and would require numerous assumptions and judgments. Based on the inexact nature of trying to track reimbursements to the exact advertising expenditure for each vendor, the Company treats most vendor advertising allowances as a reduction of Cost of merchandise sold rather than a reduction of operating (advertising) expenses. Rebates earned from vendors that are based on product purchases are capitalized into inventory as part of product purchase price. These rebates are credited to cost of merchandise sold based on sales. Vendor rebates that are earned based on products sold are credited directly to Cost of merchandise sold. ADVERTISING Advertising costs are expensed in the year the related advertisement is first presented. Advertising expense was $114.6 million, $120.7 million and $122.4 million for 2009, 2008, and 2007, respectively. Most vendor-provided allowances are classified as an offset to Cost of merchandise sold. For additional information see VENDOR CONSIDERATION above. Catalog expense is amortized equally over the life of the catalog, beginning in the month of its distribution. Advertising costs for catalogs that have not been distributed by year-end are capitalized as Prepaid expenses. Amounts included in Prepaid expenses at December 31, 2009, 2008, and 2007 were $48.1 million, $39.5 million, and $32.1 million, respectively. WAREHOUSING, MARKETING AND ADMINISTRATIVE EXPENSES Included in this category are purchasing, branch operations, information services, and marketing and selling expenses, as well as other types of general and administrative costs. STOCK INCENTIVE PLANS The Company measures all share-based payments using fair-value-based methods and records compensation expense related to these payments over the vesting period. See Note 12 to the Consolidated Financial Statements. INCOME TAXES Income taxes are recognized during the year in which transactions enter |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
BUSINESS ACQUISITIONS | During 2009, the Company acquired three companies for approximately $134 million, less cash acquired.The total cost of the acquisitions has been allocated to the assets acquired and the liabilities assumed based upon their estimated fair values at the respective dates of acquisition.The estimated purchase price allocations are preliminary and subject to revisions based on additional valuation work related to intangibles.Purchased identifiable intangible assets totalled approximately $49 million and will be amortized on a straight-line basis over a weighted average life of 15 years (lives ranging from one to 20 years).Acquired intangibles primarily consist of product line copyrights, proprietary software, customer relationships and trade names.The Company recorded approximately $108 million of goodwill and other intangibles associated with these acquisitions.The goodwill is partially deductible for tax purposes. In September 2009, the Company acquired 380,000 common shares of MonotaRO Co., Ltd. (MonotaRO) for approximately $4 million increasing its interest from 48 percent to 53 percent.As a result of the Company obtaining controlling voting interest over MonotaRO, the Company consolidated MonotaROs balance sheet as of September 30, 2009.MonotaROs earnings are reported on a one month lag which began in October 2009.The Company previously accounted for its 48 percent interest in MonotaRO as an equity method investment.Upon obtaining the controlling interest, the previously held equity interest was remeasured to fair value, resulting in a pre-tax gain of $47 million ($28 million after tax) reported as other income in the Companys consolidated statement of earnings.The gain includes $3 million reclassified from Accumulated other comprehensive earnings.Both the gain on the previously held equity investment and the fair value of the noncontrolling interest in MonotaRO of $61 million were based on the closing market price of MonotaROs common stock on the acquisition date.The Company has recorded separately identifiable intangible assets totalling $66 million.The amortizable intangibles primarily consist of customer relationships which will be amortized on a straight-line basis over 15 years.The indefinite-lived intangible ($32 million) is related to the MonotaRO trade name. The estimated purchase price allocations are preliminary and subject to revisions based on additional valuation work of intangibles.The goodwill recognized in the transaction amounted to approximately $58 million and is not deductible for tax purposes. In June 2009, the Company acquired the remaining 50.1% of its joint venture in India, Grainger Industrial Supply India Private Limited, formerly known as Asia Pacific Brands India Private Limited, for $1 million.See Note 6 to the Consolidated Financial Statements for additional information regarding this acquisition. During 2008, the Company acquired two companies for approximately $34 million and during 2007, the Company acquired one company for approximately $5 million. The results of these acquisitions are included in the Companys consolidated results from the respective dates of acquisition. Due to the immaterial |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | The following table shows the activity in the allowance for doubtful accounts (in thousands of dollars): For the Years Ended December 31, 2009 2008 2007 Balance at beginning of period $ 26,481 $ 25,830 $ 18,801 Provision for uncollectible accounts 10,748 12,924 15,436 Write-off of uncollectible accounts, net ofrecoveries (12,254 ) (11,501 ) (8,755 ) Foreign currency translation impact 875 (772 ) 348 Balance at end of period $ 25,850 $ 26,481 $ 25,830 |
INVENTORIES
INVENTORIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
INVENTORIES | Inventories primarily consist of merchandise purchased for resale.Inventories would have been $333.3 million, $317.0 million and $287.7 million higher than reported at December 31, 2009, 2008 and 2007, respectively, if the FIFO method of inventory accounting had been used for all Company inventories. Net earnings would have increased by $10.0 million, $18.1 million and $10.8 million for the years ended December 31, 2009, 2008 and 2007, respectively, using the FIFO method of accounting. Inventory values using the FIFO method of accounting approximate replacement cost. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | The table below summarizes the activity in the investments in unconsolidated entities (in thousands of dollars): Grainger Industrial Supply MonotaRO MRO Korea India Co., Ltd. Co., Ltd. Private Ltd. Total Balance at December 31, 2006 $ 8,492 $ $ $ 8,492 Cash investments 2,138 2,138 Equity earnings 1,401 615 2,016 Reinstatement to equity method of accounting 1,372 1,372 Foreign currency gain 620 121 741 Balance at December 31, 2007 10,513 4,246 14,759 Cash investments 6,487 6,487 Equity earnings (losses) 4,303 (205 ) (456 ) 3,642 Write-off (6,031 ) (6,031 ) Foreign currency gain (loss) 3,008 (1,035 ) 1,973 Balance at December 31, 2008 17,824 3,006 20,830 Cash investments 4,013 1,194 5,207 Equity earnings 1,249 248 1,497 Dividends (878 ) (878 ) Foreign currency (loss) gain (468 ) 254 (214 ) Gain (loss) on previously held equity interest 44,275 (77 ) 44,198 Investment eliminated in consolidation (66,015 ) (1,117 ) (67,132 ) Balance at December 31, 2009 $ $ 3,508 $ $ 3,508 Ownership interest at December 31, 2009 52.9 % 49.0 % 100.0 % In September 2009, the Company acquired 380,000 common shares of MonotaRO Co., Ltd. (MonotaRO) for approximately $4 million, increasing its interest from 48 percent to 53 percent.The results of MonotaRO are now included in the Companys consolidated results from the date of obtaining a controlling voting interest.The Company previously accounted for its 48 percent interest in MonotaRO as an equity method investment.Upon obtaining the controlling interest, the previously held equity interest was remeasured to fair value, resulting in a pre-tax gain of $47 million ($28 million after-tax) reported in the Companys consolidated statement of earnings.The gain includes $3 million reclassified from Accumulated other comprehensive earnings. In July 2008, the Company acquired a 49.9% interest in Grainger Industrial Supply India Private Limited (Grainger India), formerly known as Asia Pacific Brands India Private Limited, from its sole shareholder for $5.4 million.In addition, the Company and the joint venture partner each made a $1.1 million capital infusion intended to help grow the business.In the fourth quarter 2008, the Company wrote-off its investment due to the economic slowdown in India and the loss of a major supplier that accounted for approximately 25% of the joint ventures annual revenue. These conditions severely affected Grainger Indias ability to secure additional financing to meet its current obligations and continue as a going concern. The Company accounted for this invest |
CAPITALIZED SOFTWARE
CAPITALIZED SOFTWARE | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
CAPITALIZED SOFTWARE | Amortization of capitalized software is on a straight-line basis over three and five years. Amortization begins when the software is available for its intended use. Amortization expense was $22.7 million, $22.7 million and $21.0 million for the years ended December 31, 2009, 2008 and 2007, respectively. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. |
SHORT-TERM DEBT
SHORT-TERM DEBT | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
SHORT-TERM DEBT | The following summarizes information concerning short-term debt (in thousands of dollars): As of December 31, 2009 2008 2007 Line of Credit Outstanding at December 31 $ 34,780 $ 19,960 $ 6,113 Maximum month-end balance during the year $ 35,371 $ 19,960 $ 11,234 Average amount outstanding during the year $ 33,554 $ 13,022 $ 7,756 Weighted average interest rate during the year 5.22 % 6.23 % 6.48 % Weighted average interest rate at December 31 5.06 % 4.86 % 6.57 % Commercial Paper Outstanding at December 31 $ $ $ 95,947 Maximum month-end balance during the year $ $ 319,860 $ 139,104 Average amount outstanding during the year $ $ 54,589 $ 28,030 Weighted average interest rate during the year % 3.08 % 5.38 % Weighted average interest rate at December 31 % % 4.30 % The Company had $83.7 million, $29.2 million and $31.1 million of uncommitted lines of credit denominated in foreign currencies at December 31, 2009, 2008 and 2007, respectively. At December 31, 2009, there was $34.8 million outstanding under these lines of credit relating to borrowings of foreign subsidiaries. The foreign subsidiaries utilize the lines of credit to meet business growth and operating needs. Commercial paper was used to fund periodic working capital requirements and the accelerated share repurchase program. Refer to Note 13 to the Consolidated Financial Statements for further discussion of the Companys share repurchase program. A portion of the proceeds from the $500 million term loan was used to refinance $311 million in outstanding commercial paper in May of 2008. Refer to Note 9 to the Consolidated Financial Statements for further discussion on the use of proceeds from the term loan. In 2009, 2008 and 2007, the Company had a committed line of credit totaling $250.0 million for which the Company pays a commitment fee of 0.04% for each year. There were no borrowings under the committed line of credit. The Company had $24.7 million, $18.8 million, and $15.8 million of letters of credit at December 31, 2009, 2008 and 2007, respectively, primarily related to the Companys insurance program. The Company also had $5.6 million, $6.0 million and $3.2 million at December 31, 2009, 2008 and 2007, respectively, in letters of credit to facilitate the purchase of products from foreign sources. |
LONG-TERM DEBT
LONG-TERM DEBT | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
LONG-TERM DEBT | Long-term debt consisted of the following (in thousands of dollars): As of December 31, 2009 2008 2007 Bank term loan $ 483,333 $ 500,000 $ Industrial development revenue and private activity bonds 7,295 9,485 9,485 Less current maturities (53,128 ) (21,257 ) (4,590 ) $ 437,500 $ 488,228 $ 4,895 In May 2008, the Company entered into a $500 million, unsecured four-year bank term loan. Proceeds were used to pay down short-term debt and for general corporate purposes. The weighted average interest rate paid on the term loan during 2009 was 1.1%. The Company at its option may prepay the term loan in whole or in part. The industrial development revenue and private activity bonds include various issues that bear interest at variable rates capped at 15%, and come due in various amounts from 2010 through 2021. The weighted average interest rate paid on the bonds during the year was 1.09%. Interest rates on some of the issues are subject to change at certain dates in the future. The bondholders may require the Company to redeem certain bonds concurrent with a change in interest rates and certain other bonds annually. In addition, $2.4 million of these bonds had an unsecured liquidity facility available at December31,2009, for which the Company compensated a bank through a commitment fee of 0.07%. There were no borrowings related to this facility at December 31, 2009. The Company classified $2.4million, $4.6 million, and $4.6 million of bonds currently subject to redemption options in current maturities of long-term debt at December 31, 2009, 2008, and 2007, respectively. The scheduled aggregate principal payments are due as follows (in thousands of dollars): Year Payment Amount 2010 $ 50,728 2011 50,900 2012 387,500 2013 - 2014 and after 1,500 The Companys debt instruments include only standard affirmative and negative covenants for debt instruments of similar amounts and structure. The Companys debt instruments do not contain financial or performance covenants restrictive to the business of the Company, reflecting its strong financial position. The Company is in compliance with all debt covenants for the year ended December 31, 2009. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
EMPLOYEE BENEFITS | Retirement Plans A majority of the Companys employees are covered by a noncontributory profit sharing plan.This plan provides for annual employer contributions generally based upon a formula related primarily to earnings before federal income taxes, limited to a percentage of the total eligible compensation paid to all eligible employees. The plan was amended in 2008, to establish a minimum contribution of 8% and a maximum contribution of 18% of total eligible compensation paid to eligible employees.Prior to 2008, there was no minimum percentage and the maximum percentage was 25%.The Company also sponsors additional defined contribution plans, which cover most of the other employees. Provisions under all plans were $128.1 million, $145.4 million, and $130.2 million for the years ended December 31, 2009, 2008 and 2007, respectively. Postretirement Benefits The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its employees 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 Companys accumulated postretirement benefit obligation (APBO) and net periodic benefit costs include the effect of the federal subsidy provided by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Act). The Medicare Act provides a federal subsidy to retiree healthcare benefit plan sponsors that provide a prescription drug benefit that is at least actuarially equivalent to that provided by Medicare. As a result of the subsidy, the APBO has been reduced by $43.0 million, $45.4 million and $40.4 million as of December 31, 2009, 2008 and 2007, respectively. The subsidy has reduced net periodic benefits costs by approximately $4.7 million, $5.2 million and $6.4million for the years ended December 31, 2009, 2008 and 2007, respectively. The net periodic benefits costs charged to operating expenses, which were valued with a measurement date of January 1 for each year, consisted of the following components (in thousands of dollars): For the Years Ended December 31, 2009 2008 2007 Service cost $ 12,305 $ 9,699 $ 10,856 Interest cost 10,730 9,490 8,973 Expected return on assets (3,402 ) (4,466 ) (4,049 ) Amortization of prior service credit (1,215 ) (1,215 ) (437 ) Amortization of transition asset (143 ) (143 ) (143 ) Amortization of unrecognized losses 4,135 1,312 2,094 Net periodic benefits costs $ 22,410 $ 14,677 $ 17,294 The Company has elected to amortize the amount of net unrecognized losses over a period equal to the average remaining service period for active plan participants expected to retire and receive benefits of approximately 16.8 years for 2009. Reconciliations of the beginning and ending balances of the APBO, whic |
LEASES
LEASES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
LEASES | The Company leases certain land, buildings and equipment under noncancellable operating leases that expire at various dates through 2036. The Company capitalizes all significant leases that qualify for capitalization, of which there were none at December 31, 2009. Many of the building leases obligate the Company to pay real estate taxes, insurance and certain maintenance costs, and contain multiple renewal provisions, exercisable at the Companys option. Leases that contain predetermined fixed escalations of the minimum rentals are recognized in rental expense on a straight-line basis over the lease term. Cash or rent abatements received upon entering into certain operating leases are also recognized on a straight-line basis over the lease term. At December 31, 2009, the approximate future minimum lease payments for all operating leases were as follows (in thousands of dollars): Future Minimum Lease Payments 2010 $ 42,832 2011 37,187 2012 32,554 2013 28,640 2014 24,260 Thereafter 51,451 Total minimum payments required 216,924 Less amounts representing sublease income (568 ) $ 216,356 Rent expense, including items under lease and items rented on a month-to-month basis, was $45.3 million, $44.8 million and $42.1 million for 2009, 2008 and 2007, respectively. These amounts are net of sublease income of $0.7 million, $0.6 million and $0.5 million for 2009, 2008 and 2007, respectively. |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
STOCK INCENTIVE PLANS | The Company maintains stock incentive plans under which the Company may grant a variety of incentive awards to employees and directors. Shares of common stock were authorized for issuance under the plans in connection with awards of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. As of December 31, 2009, restricted stock, restricted stock units, performance shares, stock units and non-qualified stock options have been granted. In 2005, the shareholders of the Company approved the 2005 Incentive Plan(Plan), which replaced all prior active plans (Prior Plans). Awards previously granted under PriorPlans will remain outstanding in accordance with their terms.A total of 9.5 million shares of common stock have been reserved for issuance under the Plan. As of December 31, 2009, there were 1,086,221 shares available for grant under the Plan. Pre-tax stock-based compensation expense was $40.7 million, $46.1 million, and $35.7 million in 2009, 2008 and 2007, respectively.Related income tax benefits recognized in earnings were $14.1 million, $18.2 million and $11.8 million in 2009, 2008 and 2007, respectively. Options In 2009, 2008 and 2007, the Company issued stock option grants to employees as part of their incentive compensation. Stock option grants were 763,370, 721,600 and 578,120 for the years 2009, 2008 and 2007, respectively. In 2009, 2008 and 2007, the Company provided broad-based stock option grants covering 181,100, 161,400 and 162,100 shares, respectively, to those employees who reached major service milestones and were not participants in other stock option programs. Option awards are granted with an exercise price equal to the closing market price of the Companys stock on the last trading day preceding the date of grant. The options generally vest over three years, although accelerated vesting is provided in certain circumstances. Awards generally expire ten years from the grant date. Transactions involving stock options are summarized as follows: Shares Subject to Option Weighted Average Price Per Share Options Exercisable Outstanding at January 1, 2007 8,454,869 $ 53.00 4,627,249 Granted 740,220 $ 82.21 Exercised (2,430,523 ) $ 47.74 Canceled or expired (236,580 ) $ 67.29 Outstanding at December 31, 2007 6,527,986 $ 58.19 3,447,856 Granted 883,000 $ 84.58 Exercised (953,199 ) $ 50.07 Canceled or expired (103,920 ) $ 73.14 Outstanding at December 31, 2008 6,353,867 $ 62.95 3,633,612 Granted 944,470 $ 79.69 Exercised (1,689,581 ) $ 57.18 Canceled or expired (134,160 ) $ 78.98 Outstanding at December 31, 2009 5,474,596 $ 68.07 3,141,996 At December 31, 2009, there was $12.9 million of total unrecognized compensation expense related to nonvested option awards, which the Company expects to recognize over a weighted average period of 1.7 years. The following table sum |
CAPITAL STOCK
CAPITAL STOCK | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
CAPITAL STOCK | The Company had no shares of preferred stock outstanding as of December 31, 2009, 2008 and 2007. The activity of outstanding common stock and common stock held in treasury was as follows: 2009 2008 2007 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 74,781,029 34,878,190 79,459,415 30,199,804 84,067,627 25,590,311 Exercise of stock options, net of 17,050, 2,725 and 3,318 shares swapped in stock-for-stock exchange, respectively 1,672,531 (1,672,531 ) 950,474 (950,474 ) 2,427,205 (2,427,205 ) Cancellation of shares related to tax withholdings on restricted stock vesting (12,531 ) 12,531 (4,874 ) 4,874 (14,867 ) 14,867 Settlement of restricted stock units, net of 67,382, 48,488 and 16,739 shares retained, respectively 131,753 (131,753 ) 101,962 (101,962 ) 31,057 (29,776 ) Settlement of performance share units, net of 12,172 shares retained 25,088 (25,088 ) Purchase of treasury shares (4,321,354 ) 4,321,354 (5,725,948 ) 5,725,948 (7,051,607 ) 7,051,607 Balance at end of period 72,276,516 37,382,703 74,781,029 34,878,190 79,459,415 30,199,804 On August 20, 2007, the Company entered into an accelerated share repurchase agreement (ASR) with Goldman, Sachs Co. (Goldman) to purchase $500 million of its outstanding common stock. The Company paid Goldman $500 million on August 23, 2007, in exchange for an initial delivery of 5,316,007 shares. The ASR was treated as an equity transaction. At settlement, the Company was to receive or pay additional shares of its common stock or cash (at Graingers option), based upon the volume weighted average price during the term of the agreement.Accordingly, on January 4, 2008, the Company received 415,274 shares of its common stock from Goldman as final settlement of the ASR. A total of 5,731,281 shares were repurchased under the ASR. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE EARNINGS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE EARNINGS | The following table sets forth the components of Accumulated other comprehensive earnings (losses) (in thousands of dollars): As of December 31, 2009 2008 2007 Foreign currency translation adjustments $ 63,304 $ 3,943 $ 94,683 Postretirement benefit plan Prior service (cost) credit (552 ) 9,377 10,592 Transition asset 714 857 1,000 Unrecognized losses (66,430 ) (73,966 ) (25,405 ) Unrecognized (losses) gains on other employment-relatedbenefit plans (827 ) (68 ) 1,335 Deferred tax asset (liability) 14,708 21,332 (10,034 ) Total accumulated other comprehensive earnings (losses) 10,917 (38,525 ) 72,171 Less: Foreign currency translation adjustments attributable to noncontrolling interest (1,457 ) Total accumulated other comprehensive earnings (losses) attributable to W.W. Grainger, Inc. $ 12,374 $ (38,525 ) $ 72,171 Foreign currency translation adjustments result from the translation of assets and liabilities of foreign subsidiaries. The increase in foreign currency translation adjustments in 2009 was primarily due to the weakening of the U.S. dollar versus the Canadian dollar and Mexican peso.In 2008, foreign currency translation adjustments decreased primarily due to the strengthening of the U.S. dollar versus these same currencies. The decrease in unrecognized losses related tothe postretirement benefit planin 2009 was primarily due to an increase in the discount rate and an increase in the return on plan assets, offset by changes in other actuarial assumptions. The increase in unrecognized losses in 2008 was primarily due to the impact of a reduction in discount rates and losses on plan assets. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
NONCONTROLLING INTEREST | The following table sets forth the effect on W.W. Grainger Inc.s equity resulting from changes in the Companys ownership interest in MonotaRO Co., Ltd. (in thousands of dollars): For the Years Ended December 31, 2009 2008 2007 Net earnings attributable to W.W. Grainger, Inc. $ 430,466 $ 475,355 $ 420,120 Transfers from the noncontrolling interest: Increase in W.W. Grainger, Inc. Additional Contributed Capital for MonotaRO stock option exercises 34 Change from net earnings attributable to W.W. Grainger, Inc. and transfer from noncontrolling interest $ 430,500 $ 475,355 $ 420,120 |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
INCOME TAXES | The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Income tax expense consisted of the following (in thousands of dollars): For the Years Ended December 31, 2009 2008 2007 Current provision: Federal $ 203,375 $ 246,731 $ 238,220 State 36,078 39,673 42,401 Foreign 15,860 18,044 15,329 Total current 255,313 304,448 295,950 Deferred tax provision (benefit): Federal 16,446 (5,968 ) (28,520 ) State 2,894 (1,049 ) (5,013 ) Foreign 1,912 432 (676 ) Total deferred 21,252 (6,585 ) (34,209 ) Total provision $ 276,565 $ 297,863 $ 261,741 Net earnings before income taxes by geographical area consisted of the following (in thousands of dollars): For the Years Ended December 31, 2009 2008 2007 United States $ 679,648 $ 731,315 $ 646,762 Foreign 27,689 41,903 35,099 $ 707,337 $ 773,218 $ 681,861 The income tax effects of temporary differences that gave rise to the net deferred tax asset were (in thousands of dollars): As of December 31, 2009 2008 2007 Deferred tax assets: Inventory $ 11,554 $ 22,674 $ 19,577 Accrued expenses 29,262 29,966 30,295 Accrued employment-related benefits 163,333 144,125 111,147 Foreign operating loss carryforwards 12,547 10,833 10,239 Property, buildings and equipment 921 3,189 Other 13,947 11,352 8,064 Deferred tax assets 230,643 219,871 182,511 Less valuation allowance (20,810 ) (15,977 ) (13,551 ) Deferred tax assets, net of valuation allowance $ 209,833 $ 203,894 $ 168,960 Deferred tax liabilities: Purchased tax benefits $ (5,178 ) $ (5,812 ) $ (6,779 ) Property, buildings and equipment (7,318 ) Intangibles (67,821 ) (17,083 ) (16,884 ) Software (8,835 ) (12,774 ) (9,710 ) Prepaids (22,889 ) (21,893 ) (16,625 ) Foreign currency gain (10,020 ) (2,206 ) (13,661 ) Deferred tax liabilities (122,061 ) (59,768 ) (63,659 ) Net deferred tax asset $ 87,772 $ 144,126 $ 105,301 The net deferred tax asset is classified as follows: Current assets $ 42,023 $ 52,556 $ 56,663 Noncurrent assets 79,472 97,442 54,658 Noncurrent liabilities (foreign) |
EARNINGS PER SHARE
EARNINGS PER SHARE | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
EARNINGS PER SHARE | In June 2008, the FASB issued authoritative guidance which states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Effective January 1, 2009, the Company adopted the authoritative guidance.The Companys unvested share-based payment awards, such as certain Performance Shares, Restricted Stock and Restricted Stock Units that contain nonforfeitable rights to dividends, meet the criteria of a participating security.The adoption has changed the methodology of computing the Companys earnings per share to the two-class method from the treasury stock method.As a result, the Company has restated previously reported earnings per share.This change has not affected previously reported consolidated net earnings or net cash flows from operations.Under the two-class method, earnings are allocated between common stock and participating securities.Under the authoritative guidance the presentation of basic and diluted earnings per share is required only for each class of common stock and not for participating securities.As such, the Company will present basic and diluted earnings per share for its one class of common stock. The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period.The Companys reported net earnings is reduced by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders for purposes of calculating earnings per share. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock or the two-class method.The Company has determined the two-class method to be the more dilutive.As such, the earnings allocated to common stock shareholders in the basic earnings per share calculation is adjusted for the reallocation of undistributed earnings to participating securities as prescribed by the authoritative guidance to arrive at the earnings allocated to common stock shareholders for calculating the diluted earnings per share. The Company had additional outstanding stock options of 2.6 million for the year ended December 31, 2008 that were excluded from the computation of diluted earnings per share because the options exercise price was greater than the average market price of the common stock. The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in thousands of dollars, except for share and per share amounts): For the Years Ended December 31, 2009 2008 2007 Net earnings attributable to W.W. Grainger, Inc. as reported $ 430,466 $ 475,355 $ 420,120 Less: Distributed earnings available to participating securities (2,990 ) (2,560 ) (1,707 ) Less: Undistributed earnings available to participating securities (7,059 ) |
SEGMENT INFORMATION
SEGMENT INFORMATION | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
SEGMENT INFORMATION | Effective January 1, 2009, the Company revised its segment disclosure.The Company has two reportable segments:the United States and Canada.In the first quarter of 2009, the Company integrated the Lab Safety Supply business into the Grainger Industrial Supply business and results are now reported under the United States segment.The Canada segment reflects the results for Acklands Grainger Inc., the Companys Canadian branch-based distribution business.Other Businesses include the following:MonotaRO Co., Ltd. (Japan), Grainger, S.A. de C.V. (Mexico), Grainger Industrial Supply India Private Limited (India), Grainger Caribe Inc. (Puerto Rico), Grainger China LLC (China) and Grainger Panama S.A. (Panama).These businesses generate revenue through the distribution of facilities maintenance products.Prior year segment amounts have been restated in a consistent manner. 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. Following is a summary of segment results (in thousands of dollars): 2009 United States Canada Other Businesses Total Total net sales $ 5,445,390 $ 651,166 $ 165,051 $ 6,261,607 Intersegment net sales (39,057 ) (154 ) (405 ) (39,616 ) Net sales to external customers 5,406,333 651,012 164,646 6,221,991 Segment operating earnings (losses) 735,586 43,742 (11,634 ) 767,694 Segment assets 2,281,731 545,866 333,955 3,161,552 Depreciation and amortization 117,821 10,769 6,593 135,183 Additions to long-lived assets $ 219,393 $ 15,680 $ 134,650 $ 369,723 2008 United States Canada Other Businesses Total Total net sales $ 6,057,828 $ 727,989 $ 111,732 $ 6,897,549 Intersegment net sales (46,992 ) (127 ) (398 ) (47,517 ) Net sales to external customers 6,010,836 727,862 111,334 6,850,032 Segment operating earnings (losses) 840,408 54,263 (11,827 ) 882,844 Segment assets 2,310,484 448,660 133,111 2,892,255 Depreciation and amortization 112,126 10,506 4,574 127,206 Additions to long-lived assets $ 149,675 $ 24,337 $ 32,469 $ 206,481 2007 United States Canada Other Businesses Total Total net sales $ 5,729,327 $ 636,524 $ 93,516 $ 6,459,367 Intersegment net sales (41,160 ) (193 ) (41,353 ) Net sales to external customers 5,688,167 636,524 93,323 6,418,014 Segment operating earnings (losses) 731,553 44,218 (7,495 ) 768,276 Segment assets 2,250,266 5 |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | A summary of selected quarterly information for 2009 and 2008 is as follows (in thousands of dollars, except for per share amounts): 2009 Quarter Ended March 31 June 30 September 30 December 31 Total Netsales $ 1,465,248 $ 1,533,263 $ 1,589,665 $ 1,633,815 $ 6,221,991 Costofmerchandisesold 835,833 908,295 929,720 949,617 3,623,465 Grossprofit 629,415 624,968 659,945 684,198 2,598,526 Warehousing,marketingand administrativeexpenses 470,201 471,039 473,225 518,837 1,933,302 Operatingearnings 159,214 153,929 186,720 165,361 665,224 Netearnings attributable to W.W. Grainger, Inc. 96,378 92,466 144,564 97,058 430,466 Earningspershare-basic 1.27 1.23 1.91 1.29 5.70 Earningspershare-diluted $ 1.25 $ 1.21 $ 1.88 $ 1.27 $ 5.62 2008 Quarter Ended March 31 June 30 September 30 December 31 Total Netsales $ 1,661,046 $ 1,756,856 $ 1,839,475 $ 1,592,655 $ 6,850,032 Costofmerchandisesold 981,112 1,050,979 1,097,127 912,592 4,041,810 Grossprofit 679,934 705,877 742,348 680,063 2,808,222 Warehousing,marketingand administrativeexpenses 494,111 521,042 510,891 499,506 2,025,550 Operatingearnings 185,823 184,835 231,457 180,557 782,672 Netearnings attributable to W.W. Grainger, Inc. 114,238 113,179 140,023 107,915 475,355 Earningspershare-basic 1.44 1.44 1.80 1.39 6.07 Earningspershare-diluted $ 1.41 $ 1.42 $ 1.77 $ 1.37 $ 5.97 |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | The Company has 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 purportedly distributed by the Company. As of February 2, 2010, the Company is named in cases filed on behalf of approximately 1,900 plaintiffs in which there is an allegation of exposure to asbestos and/or silica.The Company has denied, or intends to deny, the allegations in all of the above-described lawsuits. In 2009, lawsuits relating to asbestos and/or silica and involving approximately 470 plaintiffs were dismissed with respect to the Company, typically based on the lack of product identification. If a specific product distributed by the Company is identified in any of these lawsuits, The Company would attempt to exercise indemnification remedies against the product manufacturer. In addition, the Company believes that a substantial number of these claims are covered by insurance.The Company has entered agreements with its major insurance carriers relating to the scope, coverage and costs of defense.While the Company is unable to predict the outcome of these lawsuits, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Companys consolidated financial position or results of operations. The Company is a party to a contract with the United States General Services Administration (the GSA) first entered into in 1999 and subsequently extended in 2004.The GSA contract had been the subject of an audit performed by the GSAs Office of the Inspector General.In December 2007, the Company received a letter from the Commercial Litigation Branch of the Civil Division of the Department of Justice (the DOJ) regarding the GSA contract. The letter suggested that the Company had not complied with its disclosure obligations and the contracts pricing provisions, and had potentially overcharged government customers under the contract. Discussions relating to the Companys compliance with its disclosure obligations and the contracts pricing provisions are ongoing.The timing and outcome of these discussions are uncertain and could include settlement or civil litigation by the DOJ to recover, among other amounts, treble damages and penalties under the False Claims Act.While this matter is not expected to have a material adverse effect on the Companys financial position, an unfavorable resolution could result in significant payments by the Company.The Company continues to believe that it has complied with the GSA contract in all material respects. The Company is a party to a contract with the United States Postal Service (the USPS) entered into in 2003 covering the sale of certain Maintenance Repair and Operating Supplies (the MRO Contract).The Company received a subpoena dated August 29, 2008, from the USPS Office of Inspector General seeking information about the Companys pricing compliance under the MRO Contract.The Company has provided responsive information to the USPS bu |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Jan. 31, 2010
| Jun. 30, 2009
| |
Entity [Text Block] | |||
Entity Registrant Name | GRAINGER W W INC | ||
Entity Central Index Key | 0000277135 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $5,681,567,963 | ||
Entity Common Stock, Shares Outstanding | 72,424,927 |