DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - Jun. 30, 2015 - USD ($) | Total |
Document Information [Line Items] | |
Entity Registrant Name | GRAINGER W W INC |
Entity Central Index Key | 277,135 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2015 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 65,975,137 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Public Float | $ 14,934,345,621 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net sales | $ 2,522,565 | $ 2,506,104 | $ 4,962,226 | $ 4,891,731 |
Cost of merchandise sold | 1,449,133 | 1,425,418 | 2,795,052 | 2,735,074 |
Gross profit | 1,073,432 | 1,080,686 | 2,167,174 | 2,156,657 |
Warehousing, marketing and administrative expenses | 716,715 | 739,935 | 1,459,209 | 1,461,567 |
Operating earnings | 356,717 | 340,751 | 707,965 | 695,090 |
Other income and (expense): | ||||
Interest income | 277 | 413 | 469 | 1,053 |
Interest expense | (4,184) | (2,757) | (5,819) | (5,620) |
Loss from equity method investment | (4,302) | 0 | (4,302) | 0 |
Other non-operating income | 484 | 177 | 726 | 345 |
Other non-operating expense | (306) | (159) | (2,714) | (830) |
Total other expense | (8,031) | (2,326) | (11,640) | (5,052) |
Earnings before income taxes | 348,686 | 338,425 | 696,325 | 690,038 |
Income taxes | 123,451 | 129,348 | 256,944 | 261,906 |
Net earnings | 225,235 | 209,077 | 439,381 | 428,132 |
Less: Net earnings attributable to noncontrolling interest | 4,687 | 3,162 | 7,818 | 5,564 |
Net earnings attributable to W.W. Grainger, Inc. | $ 220,548 | $ 205,915 | $ 431,563 | $ 422,568 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 3.28 | $ 2.97 | $ 6.38 | $ 6.08 |
Diluted (in dollars per share) | $ 3.25 | $ 2.94 | $ 6.32 | $ 6 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 66,652,130 | 68,453,602 | 66,939,110 | 68,576,232 |
Diluted (in shares) | 67,317,131 | 69,341,885 | 67,647,689 | 69,509,125 |
Cash dividends paid per share (in dollars per share) | $ 1.17 | $ 1.08 | $ 2.25 | $ 2.01 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net earnings | $ 225,235 | $ 209,077 | $ 439,381 | $ 428,132 |
Other comprehensive earnings (losses): | ||||
Foreign currency translation adjustments, net of tax benefit of $0, $2,098, $0 and $75, respectively | 9,061 | 23,309 | (66,954) | 8,175 |
Net investment hedge, net of tax (expense) benefit of $0, $(1,987), $0, and $255, respectively | 0 | 3,185 | 0 | (409) |
Net foreign currency translation (loss) | 9,061 | 26,494 | (66,954) | 7,766 |
Reclassification adjustments related to amortization, net of tax benefit (expense) of $512, $(1,687), $1,021 and $(1,051), respectively | (810) | 6,031 | (1,623) | 5,013 |
Derivative instrument change in fair value of cash flow hedge | 245 | (9) | 727 | 23 |
Comprehensive earnings, net of tax | 233,731 | 241,593 | 371,531 | 440,934 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | ||||
Net earnings | 4,687 | 3,162 | 7,818 | 5,564 |
Foreign currency translation adjustments | (1,509) | 1,551 | (1,802) | 3,030 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 230,553 | $ 236,880 | $ 365,515 | $ 432,340 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (UNAUDITED) (PARENTHETICALS) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Foreign currency translation adjustments, tax benefit | $ 0 | $ 2,098,000 | $ 0 | $ 75,000 |
Net investment hedge tax (expense) benefit | 0 | (1,987,000) | 0 | 255,000 |
Tax benefit (expense) from defined postretirement benefit plan reclassification adjustment | $ 512,000 | $ (1,687,000) | $ 1,021,000 | $ (1,051,000) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 819,786 | $ 226,644 |
Accounts receivable (less allowances for doubtful accounts of $20,600 and $22,121, respectively) | 1,197,856 | 1,172,924 |
Inventories - net | 1,302,977 | 1,356,396 |
Prepaid expenses and other assets | 95,008 | 102,669 |
Deferred income taxes | 60,295 | 61,387 |
Prepaid income taxes | 47,824 | 47,529 |
Total current assets | 3,523,746 | 2,967,549 |
PROPERTY, BUILDINGS AND EQUIPMENT | 3,150,247 | 3,115,130 |
Less: Accumulated depreciation and amortization | 1,825,696 | 1,790,784 |
Property, buildings and equipment - net | 1,324,551 | 1,324,346 |
DEFERRED INCOME TAXES | 17,360 | 16,718 |
GOODWILL | 486,612 | 506,905 |
OTHER ASSETS AND INTANGIBLES - NET | 474,640 | 467,531 |
TOTAL ASSETS | 5,826,909 | 5,283,049 |
CURRENT LIABILITIES | ||
Short-term debt | 30,495 | 56,896 |
Current maturities of long-term debt | 26,275 | 23,404 |
Trade accounts payable | 498,416 | 554,088 |
Accrued compensation and benefits | 155,048 | 191,696 |
Accrued contributions to employees' profit sharing plans | 70,130 | 178,076 |
Accrued expenses | 255,910 | 245,300 |
Income taxes payable | 10,828 | 12,256 |
Total current liabilities | 1,047,102 | 1,261,716 |
LONG-TERM DEBT (less current maturities) | 1,348,642 | 403,333 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 95,464 | 95,455 |
EMPLOYMENT-RELATED AND OTHER NON-CURRENT LIABILITIES | 236,263 | 238,444 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock - $5 par value - 12,000,000 shares authorized; none issued nor outstanding | 0 | 0 |
Common Stock - $0.50 par value - 300,000,000 shares authorized; issued 109,659,219 shares | 54,830 | 54,830 |
Additional contributed capital | 975,147 | 948,340 |
Retained earnings | 6,615,081 | 6,335,990 |
Accumulated other comprehensive losses | (162,721) | (96,673) |
Treasury stock, at cost - 43,684,082 and 42,227,178 shares, respectively | (4,461,822) | (4,032,615) |
Total W.W. Grainger, Inc. shareholders' equity | 3,020,515 | 3,209,872 |
Noncontrolling Interest | 78,923 | 74,229 |
Total shareholders' equity | 3,099,438 | 3,284,101 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 5,826,909 | $ 5,283,049 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (PARENTHETICALS) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $ 20,600,000 | $ 22,121,000 |
Cumulative preferred stock, par value | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued | 0 | 0 |
Cumulative preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.5 | $ 0.5 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost | 43,684,082 | 42,227,178 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net earnings | $ 439,381 | $ 428,132 |
Provision for losses on accounts receivable | 4,630 | 4,782 |
Deferred income taxes and tax uncertainties | 1,995 | (9,605) |
Depreciation and amortization | 106,937 | 93,796 |
Stock-based compensation | 27,043 | 28,988 |
(Gains) losses from non-cash charges and sales of assets | (51) | 14,576 |
Losses from equity method investment | 4,302 | 0 |
Change in operating assets and liabilities - net of business acquisitions and divestitures: | ||
Accounts receivable | (50,586) | (98,574) |
Inventories | 26,075 | (13,497) |
Prepaid expenses and other current assets | 6,929 | (4,610) |
Trade accounts payable | (29,144) | 2,852 |
Accrued liabilities | (169,123) | (127,930) |
Current income taxes payable | (847) | 1,601 |
Employment-related and other non-current liabilities | 4,231 | 6,712 |
Other - net | (2,267) | 1,243 |
Net cash provided by operating activities | 369,505 | 328,466 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property, buildings and equipment | (170,873) | (156,210) |
Proceeds from sales of property, buildings and equipment | 10,119 | 5,416 |
Equity method investment | (10,190) | 0 |
Net cash received for business divestitures | 1,114 | 19,199 |
Other - net | (567) | 0 |
Net cash used in investing activities | (170,397) | (131,595) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under lines of credit | 26,842 | 44,686 |
Payments against lines of credit | (46,649) | (64,634) |
Proceeds from issuance of long-term debt and commercial paper borrowings | 995,880 | 54,997 |
Payments of long-term debt and commercial paper | (30,597) | (9,538) |
Proceeds from stock options exercised | 35,549 | 31,816 |
Excess tax benefits from stock-based compensation | 17,106 | 22,177 |
Purchase of treasury stock | (442,595) | (235,847) |
Cash dividends paid | (153,906) | (140,885) |
Net cash provided by (used in) financing activities | 401,630 | (297,228) |
Exchange rate effect on cash and cash equivalents | (7,596) | 1,420 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 593,142 | (98,937) |
Cash and cash equivalents at beginning of period | 226,644 | 430,644 |
Cash and cash equivalents at end of period | $ 819,786 | $ 331,707 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | BACKGROUND AND BASIS OF PRESENTATION W.W. Grainger, Inc. is a broad-line distributor of maintenance, repair and operating supplies, and other related products and services used by businesses and institutions. W.W. Grainger, Inc.’s operations are primarily in the United States and Canada, with a presence in Europe, Asia and Latin America. In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries. The Condensed Consolidated Financial Statements of the Company and the related notes are unaudited and should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). The Condensed Consolidated Balance Sheet as of December 31, 2014 has been derived from the audited consolidated financial statements at that date, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited financial information reflects all adjustments (primarily consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the statements contained herein. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis . This ASU which is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, changes the consolidation analysis required under U.S. GAAP for limited partnerships and other variable interest entities. Early adoption is permitted and the ASU allows for either retrospective or modified retrospective application. This ASU is not expected to have a material impact on the Company's consolidated financial statements. In July 2015, the FASB announced a one-year delay in the effective date of ASU 2014-09, Revenue from Contracts with Customers. The standard will now be effective for interim and annual periods beginning after December 15, 2017. The standard also permits adoption as early as the original effective date, which was for interim and annual periods beginning after December 15, 2016. This ASU is not expected to have a material impact on the Company's consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs . This ASU which is effective for fiscal years and interim periods beginning after December 15, 2015, changes the presentation of debt issuance costs in financial statements as a direct deduction from the related debt liability rather than as an asset. Early adoption is permitted and retrospective application is required. Effective June 30, 2015, the Company has adopted ASU 2015-03 and the Condensed Consolidated Balance Sheet was retroactively restated under the new presentation. The adoption of ASU 2015-03 did not have a material impact to the Company's consolidated financial statements, as existing debt issuance costs were immaterial. In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This ASU which is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, provides guidance to customers about whether a cloud computing arrangement includes a software license. Early adoption is permitted and the ASU allows for either retrospective or prospective application. This ASU is not expected to have a material impact on the Company's consolidated financial statements. |
DIVIDEND
DIVIDEND | 6 Months Ended |
Jun. 30, 2015 | |
Dividends [Abstract] | |
DIVIDEND | DIVIDEND On July 29, 2015, the Company’s Board of Directors declared a quarterly dividend of $1.17 per share, payable September 1, 2015 , to shareholders of record on August 10, 2015 . |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT On June 11, 2015 , the Company issued $1 billion of unsecured 4.60% Senior Notes (the "Notes") that mature on June 15, 2045 . The Notes require no principal payments until the maturity date and interest is payable semi-annually on June 15 and December 15, beginning on December 15, 2015. Prior to December 15, 2044, the Company may redeem the 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 US treasury security with a maturity comparable to the remaining term of the Notes plus 25 basis points, together with accrued and unpaid interest, if any, to the redemption date. On or after December 15, 2044, the Company may redeem the 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 of approximately $10 million associated with the issuance of the Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and will be amortized to interest expense over the term of the Notes. The approximate fair value of the Company's Notes is $1 billion as of June 30, 2015, and approximates the carrying amount. The estimated fair value of the Company’s Notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, and are classified as level 2 inputs within the fair value hierarchy. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company uses derivative instruments to manage a portion of exposures to fluctuations in interest rates and foreign currency exchange rates. The Company does not enter into derivative financial instruments for trading or speculative purposes. The fair values of these instruments are determined by using quoted market forward rates (level 2 inputs) and reflect the present value of the amount that the Company would pay for contracts involving the same notional amounts and maturity dates. These instruments qualify for hedge accounting and the changes in fair value are reported as a component of other comprehensive earnings (losses) net of tax effects. As of June 30, 2015 and December 31, 2014, the fair value of the Company's interest rate swap included on the balance sheet as a liability under Employment-related and other noncurrent liabilities was $1 million and $2 million , respectively. The purpose of the interest rate swap is to partially hedge the future interest expense of the euro-denominated term loan entered into to fund a portion of the Fabory acquisition in 2011. The swap matures in August 2016 . All remaining derivative instruments were immaterial individually and in the aggregate as of June 30, 2015 and December 31, 2014. |
EQUITY METHOD INVESTMENT
EQUITY METHOD INVESTMENT | 6 Months Ended |
Jun. 30, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY METHOD INVESTMENT | EQUITY METHOD INVESTMENT In May 2015, the Company invested in a limited liability company (“LLC”) established to produce refined coal, which is then sold to a utility to produce electricity. The production and sale of refined coal is eligible for renewable energy tax credits under Section 45 of the Internal Revenue Code. Under the terms of the investment, effective control lies with a co-investor who manages the day-to-day operations of the entity. The Company will fund its share of operating expenses of the entity through January 2019 and receive tax credits in proportion to its equity investment. The investment will be accounted for under the equity method of accounting. As of June 30, 2015, the investment balance was $6 million and is included on the balance sheet under Other assets and intangibles-net. During the period, the Company recorded $4 million in equity losses and the tax benefit of energy tax credits is reflected in the Company’s effective tax rate. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 6 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
EMPLOYEE BENEFITS - POSTRETIREMENT | EMPLOYEE BENEFITS - POSTRETIREMENT The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its United States 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 benefit costs charged to operating expenses, which are valued at the measurement date of January 1 and recognized evenly throughout the year, consisted of the following components (in thousands of dollars): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Service cost $ 2,532 $ 2,252 $ 5,064 $ 4,503 Interest cost 2,412 2,637 4,824 5,274 Expected return on assets (2,594 ) (2,060 ) (5,188 ) (4,119 ) Amortization of transition asset — (35 ) — (71 ) Amortization of unrecognized losses 378 195 756 390 Amortization of prior service credits (1,700 ) (1,814 ) (3,400 ) (3,627 ) Net periodic benefit costs $ 1,028 $ 1,175 $ 2,056 $ 2,350 The Company has established a Group Benefit Trust to fund the plan and process benefit payments. The funding of the trust is an estimated amount which is intended to allow the maximum deductible contribution under the Internal Revenue Code of 1986 (IRC), as amended. There are no minimum funding requirements and the Company intends to follow its practice of funding the maximum deductible contribution under the IRC. During the three and six months ended June 30, 2015, the Company contributed $1.7 million and $2.1 million , respectively, to the trust. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments: the United States and Canada. The United States operating segment reflects the results of the Company's U.S. business. The Canada operating segment reflects the results for Acklands – Grainger Inc., the Company’s Canadian business. Other businesses include Zoro, the single channel business in the United States, and operations in Europe, Asia and Latin America. These other businesses individually do not meet the definition of a reportable segment. Operating segments generate revenue almost exclusively through the distribution of maintenance, repair and operating supplies, as service revenues account for less than 1% of total revenues for each operating segment. Following is a summary of segment results (in thousands of dollars): Three Months Ended June 30, 2015 United States Canada Other Businesses Total Total net sales $ 2,030,633 $ 239,466 $ 318,898 $ 2,588,997 Intersegment net sales (65,394 ) (17 ) (1,021 ) (66,432 ) Net sales to external customers $ 1,965,239 $ 239,449 $ 317,877 $ 2,522,565 Segment operating earnings $ 369,533 $ 9,499 $ 15,158 $ 394,190 Three Months Ended June 30, 2014 United States Canada Other Businesses Total Total net sales $ 1,992,955 $ 264,046 $ 298,926 $ 2,555,927 Intersegment net sales (49,358 ) (42 ) (423 ) (49,823 ) Net sales to external customers $ 1,943,597 $ 264,004 $ 298,503 $ 2,506,104 Segment operating earnings $ 365,099 $ 19,212 $ (456 ) $ 383,855 Six Months Ended June 30, 2015 United States Canada Other Businesses Total Total net sales $ 4,002,088 $ 473,996 $ 616,697 $ 5,092,781 Intersegment net sales (128,585 ) (53 ) (1,917 ) (130,555 ) Net sales to external customers $ 3,873,503 $ 473,943 $ 614,780 $ 4,962,226 Segment operating earnings $ 735,622 $ 18,886 $ 24,684 $ 779,192 Six Months Ended June 30, 2014 United States Canada Other Businesses Total Total net sales $ 3,890,265 $ 518,342 $ 573,832 $ 4,982,439 Intersegment net sales (90,225 ) (88 ) (395 ) (90,708 ) Net sales to external customers $ 3,800,040 $ 518,254 $ 573,437 $ 4,891,731 Segment operating earnings $ 718,786 $ 40,508 $ 8,019 $ 767,313 United States Canada Other Businesses Total Segment assets: June 30, 2015 $ 2,188,815 $ 348,508 $ 356,992 $ 2,894,315 December 31, 2014 $ 2,181,521 $ 394,342 $ 345,987 $ 2,921,850 Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Operating earnings: Total operating earnings for operating segments $ 394,190 $ 383,855 $ 779,192 $ 767,313 Unallocated expenses and eliminations (37,473 ) (43,104 ) (71,227 ) (72,223 ) Total consolidated operating earnings $ 356,717 $ 340,751 $ 707,965 $ 695,090 June 30, 2015 Dec 31, 2014 Assets: Total assets for operating segments $ 2,894,315 $ 2,921,850 Other current and non-current assets 2,069,484 2,113,900 Unallocated assets 863,110 247,299 Total consolidated assets $ 5,826,909 $ 5,283,049 Assets for operating segments include net accounts receivable and first-in, first-out inventory which are reported to the Company's Chief Operating Decision Maker. Other current and non-current assets include all other asset balances for the operating segments. Unallocated expenses and unallocated assets primarily relate to the Company headquarter's support services, which are not part of any business segment, as well as intercompany eliminations. Unallocated expenses include payroll and benefits, depreciation and other costs associated with headquarters-related support services. Unallocated assets include non-operating cash and cash equivalents, certain prepaid expenses and property, buildings and equipment-net. Unallocated assets increased by $616 million at June 30, 2015 compared to December 31, 2014, primarily due to increased cash balances from the issuance of $1 billion in long-term debt. Intersegment net sales for the U.S. segment increased by $38 million for the six months of 2015 compared to the prior year, driven by increased sales from the U.S. business to Zoro. The U.S. business' supply chain network is Zoro's primary source of inventory. Other current and non-current assets decreased by $44 million at June 30, 2015 compared to December 31, 2014, primarily due to lower goodwill and intangible balances, as a result of foreign currency translation. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE 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): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net earnings attributable to W.W. Grainger, Inc. as reported $ 220,548 $ 205,915 $ 431,563 $ 422,568 Distributed earnings available to participating securities (742 ) (727 ) (1,510 ) (1,562 ) Undistributed earnings available to participating securities (1,418 ) (1,666 ) (2,879 ) (3,765 ) Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders 218,388 203,522 427,174 417,241 Undistributed earnings allocated to participating securities 1,418 1,666 2,879 3,765 Undistributed earnings reallocated to participating securities (1,404 ) (1,645 ) (2,850 ) (3,716 ) Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders $ 218,402 $ 203,543 $ 427,203 $ 417,290 Denominator for basic earnings per share – weighted average shares 66,652,130 68,453,602 66,939,110 68,576,232 Effect of dilutive securities 665,001 888,283 708,579 932,893 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 67,317,131 69,341,885 67,647,689 69,509,125 Earnings per share two-class method Basic $ 3.28 $ 2.97 $ 6.38 $ 6.08 Diluted $ 3.25 $ 2.94 $ 6.32 $ 6.00 |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS From time to time the Company is involved in various legal and administrative proceedings that are incidental to its business, including claims related to product liability, general negligence, contract disputes, environmental issues, wage and hour laws, intellectual property, employment practices, regulatory compliance or other matters and actions brought by employees, consumers, competitors, suppliers or governmental entities. As a government contractor selling to federal, state and local governmental entities, the Company is also subject to governmental or regulatory inquiries or audits or other proceedings, including those related to pricing compliance. 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On July 30, 2015, the Company announced an agreement to acquire Cromwell Group (Holdings) Limited , together with its subsidiaries, a distributor of MRO products headquartered in Leicester, England , for £310 million GBP, subject to customary adjustments. The transaction is expected to be completed in early September 2015. The acquisition will be funded with debt, both in the United Kingdom and United States. |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Net Periodic Benefit Costs Charged to Operating Expenses | The net periodic benefit costs charged to operating expenses, which are valued at the measurement date of January 1 and recognized evenly throughout the year, consisted of the following components (in thousands of dollars): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Service cost $ 2,532 $ 2,252 $ 5,064 $ 4,503 Interest cost 2,412 2,637 4,824 5,274 Expected return on assets (2,594 ) (2,060 ) (5,188 ) (4,119 ) Amortization of transition asset — (35 ) — (71 ) Amortization of unrecognized losses 378 195 756 390 Amortization of prior service credits (1,700 ) (1,814 ) (3,400 ) (3,627 ) Net periodic benefit costs $ 1,028 $ 1,175 $ 2,056 $ 2,350 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Following is a summary of segment results (in thousands of dollars): Three Months Ended June 30, 2015 United States Canada Other Businesses Total Total net sales $ 2,030,633 $ 239,466 $ 318,898 $ 2,588,997 Intersegment net sales (65,394 ) (17 ) (1,021 ) (66,432 ) Net sales to external customers $ 1,965,239 $ 239,449 $ 317,877 $ 2,522,565 Segment operating earnings $ 369,533 $ 9,499 $ 15,158 $ 394,190 Three Months Ended June 30, 2014 United States Canada Other Businesses Total Total net sales $ 1,992,955 $ 264,046 $ 298,926 $ 2,555,927 Intersegment net sales (49,358 ) (42 ) (423 ) (49,823 ) Net sales to external customers $ 1,943,597 $ 264,004 $ 298,503 $ 2,506,104 Segment operating earnings $ 365,099 $ 19,212 $ (456 ) $ 383,855 Six Months Ended June 30, 2015 United States Canada Other Businesses Total Total net sales $ 4,002,088 $ 473,996 $ 616,697 $ 5,092,781 Intersegment net sales (128,585 ) (53 ) (1,917 ) (130,555 ) Net sales to external customers $ 3,873,503 $ 473,943 $ 614,780 $ 4,962,226 Segment operating earnings $ 735,622 $ 18,886 $ 24,684 $ 779,192 Six Months Ended June 30, 2014 United States Canada Other Businesses Total Total net sales $ 3,890,265 $ 518,342 $ 573,832 $ 4,982,439 Intersegment net sales (90,225 ) (88 ) (395 ) (90,708 ) Net sales to external customers $ 3,800,040 $ 518,254 $ 573,437 $ 4,891,731 Segment operating earnings $ 718,786 $ 40,508 $ 8,019 $ 767,313 United States Canada Other Businesses Total Segment assets: June 30, 2015 $ 2,188,815 $ 348,508 $ 356,992 $ 2,894,315 December 31, 2014 $ 2,181,521 $ 394,342 $ 345,987 $ 2,921,850 |
Reconciliation Of Operating Earnings From Segment To Consolidated | Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Operating earnings: Total operating earnings for operating segments $ 394,190 $ 383,855 $ 779,192 $ 767,313 Unallocated expenses and eliminations (37,473 ) (43,104 ) (71,227 ) (72,223 ) Total consolidated operating earnings $ 356,717 $ 340,751 $ 707,965 $ 695,090 |
Reconciliation of Assets from Segment to Consolidated | June 30, 2015 Dec 31, 2014 Assets: Total assets for operating segments $ 2,894,315 $ 2,921,850 Other current and non-current assets 2,069,484 2,113,900 Unallocated assets 863,110 247,299 Total consolidated assets $ 5,826,909 $ 5,283,049 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings per Share under two-class method | 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): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net earnings attributable to W.W. Grainger, Inc. as reported $ 220,548 $ 205,915 $ 431,563 $ 422,568 Distributed earnings available to participating securities (742 ) (727 ) (1,510 ) (1,562 ) Undistributed earnings available to participating securities (1,418 ) (1,666 ) (2,879 ) (3,765 ) Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders 218,388 203,522 427,174 417,241 Undistributed earnings allocated to participating securities 1,418 1,666 2,879 3,765 Undistributed earnings reallocated to participating securities (1,404 ) (1,645 ) (2,850 ) (3,716 ) Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders $ 218,402 $ 203,543 $ 427,203 $ 417,290 Denominator for basic earnings per share – weighted average shares 66,652,130 68,453,602 66,939,110 68,576,232 Effect of dilutive securities 665,001 888,283 708,579 932,893 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 67,317,131 69,341,885 67,647,689 69,509,125 Earnings per share two-class method Basic $ 3.28 $ 2.97 $ 6.38 $ 6.08 Diluted $ 3.25 $ 2.94 $ 6.32 $ 6.00 |
DIVIDEND (Details)
DIVIDEND (Details) - 1 months ended Jul. 29, 2015 - Subsequent Event [Member] - $ / shares | Total |
Dividends Payable [Line Items] | |
Dividends Payable, Amount Per Share | $ 1.17 |
Dividend payable date to be paid | Sep. 1, 2015 |
Dividends payable record date | Aug. 10, 2015 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - Jun. 30, 2015 - Senior Notes [Member] - USD ($) $ in Millions | Total |
Debt Instrument [Line Items] | |
Debt Instrument, Issuance Date | Jun. 11, 2015 |
Senior Notes | $ 1,000 |
Debt Instrument, Interest Rate, Stated Percentage | 4.60% |
Debt Instrument, Maturity Date | Jun. 15, 2045 |
Debt Instrument, Redemption, Description | Prior to December 15, 2044, the Company may redeem the 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 US treasury security with a maturity comparable to the remaining term of the Notes plus 25 basis points, together with accrued and unpaid interest, if any, to the redemption date. On or after December 15, 2044, the Company may redeem the 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. |
Debt Issuance Cost | $ 10 |
Long-term Debt, Fair Value | $ 1,000 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - Interest Rate Swap [Member] - USD ($) $ in Millions | 1 Months Ended | ||
Oct. 31, 2011 | Jun. 30, 2015 | Dec. 31, 2014 | |
Derivative [Line Items] | |||
Derivative instruments, Liabilities | $ 1 | $ 2 | |
Derivative, Maturity Date | Aug. 31, 2016 |
EQUITY METHOD INVESTMENT (Detai
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Equity Method Investments and Joint Ventures [Abstract] | ||||
Equity Method Investments | $ 6,000 | $ 6,000 | ||
Loss from equity method investment | $ (4,302) | $ 0 | $ (4,302) | $ 0 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||||
Defined Benefit Plan, Contributions by Employer | $ 1,700 | $ 2,100 | ||
Service cost | 2,532 | $ 2,252 | 5,064 | $ 4,503 |
Interest cost | 2,412 | 2,637 | 4,824 | 5,274 |
Expected return on assets | (2,594) | (2,060) | (5,188) | (4,119) |
Amortization of transition asset | 0 | (35) | 0 | (71) |
Amortization of unrecognized losses | 378 | 195 | 756 | 390 |
Amortization of prior service credits | (1,700) | (1,814) | (3,400) | (3,627) |
Net periodic benefit costs | $ 1,028 | $ 1,175 | $ 2,056 | $ 2,350 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Summary of segment results [Line Items] | |||||
Service Fee Revenue (Less than) | 1.00% | ||||
Increase in unallocated assets | $ 616,000 | ||||
Other assets decrease | (44,000) | ||||
Summarized Information | |||||
Net sales | $ 2,522,565 | $ 2,506,104 | 4,962,226 | $ 4,891,731 | |
Operating earnings (expenses) | 356,717 | 340,751 | 707,965 | 695,090 | |
Total assets | 5,826,909 | 5,826,909 | $ 5,283,049 | ||
United States [Member] | |||||
Summary of segment results [Line Items] | |||||
Intersegment Sales Increase | 38,000 | ||||
Summarized Information | |||||
Net sales | 1,965,239 | 1,943,597 | 3,873,503 | 3,800,040 | |
Total assets | 2,188,815 | 2,188,815 | 2,181,521 | ||
Canada [Member] | |||||
Summarized Information | |||||
Net sales | 239,449 | 264,004 | 473,943 | 518,254 | |
Total assets | 348,508 | 348,508 | 394,342 | ||
Other Businesses [Member] | |||||
Summarized Information | |||||
Net sales | 317,877 | 298,503 | 614,780 | 573,437 | |
Total assets | 356,992 | 356,992 | 345,987 | ||
Segment balances before intersegment eliminations and consolidation reconciling items [Member] | |||||
Summarized Information | |||||
Net sales | 2,588,997 | 2,555,927 | 5,092,781 | 4,982,439 | |
Operating earnings (expenses) | 394,190 | 383,855 | 779,192 | 767,313 | |
Total assets | 2,894,315 | 2,894,315 | 2,921,850 | ||
Segment balances before intersegment eliminations and consolidation reconciling items [Member] | United States [Member] | |||||
Summarized Information | |||||
Net sales | 2,030,633 | 1,992,955 | 4,002,088 | 3,890,265 | |
Operating earnings (expenses) | 369,533 | 365,099 | 735,622 | 718,786 | |
Segment balances before intersegment eliminations and consolidation reconciling items [Member] | Canada [Member] | |||||
Summarized Information | |||||
Net sales | 239,466 | 264,046 | 473,996 | 518,342 | |
Operating earnings (expenses) | 9,499 | 19,212 | 18,886 | 40,508 | |
Segment balances before intersegment eliminations and consolidation reconciling items [Member] | Other Businesses [Member] | |||||
Summarized Information | |||||
Net sales | 318,898 | 298,926 | 616,697 | 573,832 | |
Operating earnings (expenses) | 15,158 | (456) | 24,684 | 8,019 | |
Intersegment Eliminations [Member] | |||||
Summarized Information | |||||
Net sales | (66,432) | (49,823) | (130,555) | (90,708) | |
Intersegment Eliminations [Member] | United States [Member] | |||||
Summarized Information | |||||
Net sales | (65,394) | (49,358) | (128,585) | (90,225) | |
Intersegment Eliminations [Member] | Canada [Member] | |||||
Summarized Information | |||||
Net sales | (17) | (42) | (53) | (88) | |
Intersegment Eliminations [Member] | Other Businesses [Member] | |||||
Summarized Information | |||||
Net sales | (1,021) | (423) | (1,917) | (395) | |
Eliminations and Unallocated in Consolidation [Member] | |||||
Summarized Information | |||||
Operating earnings (expenses) | (37,473) | $ (43,104) | (71,227) | $ (72,223) | |
Total assets | 863,110 | 863,110 | 247,299 | ||
Segment other current and non-current assets [Member] | |||||
Summarized Information | |||||
Total assets | 2,069,484 | 2,069,484 | $ 2,113,900 | ||
Senior Notes [Member] | |||||
Summary of segment results [Line Items] | |||||
Senior Notes | $ 1,000,000 | $ 1,000,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net earnings attributable to W.W. Grainger, Inc. as reported | $ 220,548 | $ 205,915 | $ 431,563 | $ 422,568 |
Distributed earnings available to participating securities | (742) | (727) | (1,510) | (1,562) |
Undistributed earnings available to participating securities | (1,418) | (1,666) | (2,879) | (3,765) |
Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders | 218,388 | 203,522 | 427,174 | 417,241 |
Undistributed earnings allocated to participating securities | 1,418 | 1,666 | 2,879 | 3,765 |
Undistributed earnings reallocated to participating securities | (1,404) | (1,645) | (2,850) | (3,716) |
Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders | $ 218,402 | $ 203,543 | $ 427,203 | $ 417,290 |
Denominator for basic earnings per share - weighted average shares (in shares) | 66,652,130 | 68,453,602 | 66,939,110 | 68,576,232 |
Effect of dilutive securities | 665,001 | 888,283 | 708,579 | 932,893 |
Denominator for diluted earnings per share - weighted average shares adjusted for dilutive securities (in shares) | 67,317,131 | 69,341,885 | 67,647,689 | 69,509,125 |
Basic (in dollars per share) | $ 3.28 | $ 2.97 | $ 6.38 | $ 6.08 |
Diluted (in dollars per share) | $ 3.25 | $ 2.94 | $ 6.32 | $ 6 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - 1 months ended Jul. 30, 2015 - Subsequent Event [Member] - GBP (£) £ in Millions | Total |
Subsequent Event [Line Items] | |
Business Acquisition, Name of Entity to be Acquired | Cromwell Group (Holdings) Limited |
Business Acquisition, Description of Entity to be Acquired | a distributor of MRO products headquartered in Leicester, England |
Value of Business to be Acquired | £ 310 |