DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION | 3 Months Ended |
Mar. 31, 2017shares | |
Document and Entity Information [Abstract] | |
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 | Mar. 31, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 58,405,698 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 2,541,129 | $ 2,506,538 |
Cost of merchandise sold | 1,521,937 | 1,461,485 |
Gross profit | 1,019,192 | 1,045,053 |
Warehousing, marketing and administrative expenses | 723,704 | 727,961 |
Operating earnings | 295,488 | 317,092 |
Other income (expense): | ||
Interest income | 193 | 165 |
Interest expense | (16,979) | (13,725) |
Loss from equity method investment | (8,374) | (6,388) |
Other non-operating income | 345 | 440 |
Total other expense, net | (24,815) | (19,508) |
Earnings before income taxes | 270,673 | 297,584 |
Income taxes | 87,820 | 105,940 |
Net earnings | 182,853 | 191,644 |
Less: Net earnings attributable to noncontrolling interest | 8,109 | 4,931 |
Net earnings attributable to W.W. Grainger, Inc. | $ 174,744 | $ 186,713 |
Earnings per share: | ||
Basic (in dollars per share) | $ 2.95 | $ 3 |
Diluted (in dollars per share) | $ 2.93 | $ 2.98 |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 58,720,066 | 61,668,682 |
Diluted (in shares) | 59,202,882 | 62,099,801 |
Cash dividends paid per share (in dollars per share) | $ 1.22 | $ 1.17 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 182,853 | $ 191,644 |
Other comprehensive earnings: | ||
Foreign currency translation adjustments | 29,303 | 51,490 |
Postretirement benefit plan reclassification, net of tax benefit of $879 and $631, respectively | (1,398) | (1,009) |
Other | (12) | 304 |
Comprehensive earnings, net of tax | 210,746 | 242,429 |
Less: Comprehensive earnings attributable to noncontrolling interest | ||
Net earnings | 8,109 | 4,931 |
Foreign currency translation adjustments | 5,532 | 5,704 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 197,105 | $ 231,794 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICAL) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Postretirement benefit plan reclassification, tax benefit | $ 879 | $ 631 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 238,801 | $ 274,146 |
Accounts receivable (less allowances for doubtful accounts of $28,208 and $26,690, respectively) | 1,325,218 | 1,223,096 |
Inventories – net | 1,388,091 | 1,406,470 |
Prepaid expenses and other assets | 110,427 | 81,766 |
Prepaid income taxes | 33,646 | 34,751 |
Total current assets | 3,096,183 | 3,020,229 |
PROPERTY, BUILDINGS AND EQUIPMENT | 3,396,242 | 3,411,502 |
Less: Accumulated depreciation and amortization | 1,985,930 | 1,990,611 |
Property, buildings and equipment – net | 1,410,312 | 1,420,891 |
DEFERRED INCOME TAXES | 79,664 | 64,775 |
GOODWILL | 533,012 | 527,150 |
INTANGIBLES - NET | 587,418 | 586,126 |
OTHER ASSETS | 75,960 | 75,136 |
TOTAL ASSETS | 5,782,549 | 5,694,307 |
CURRENT LIABILITIES | ||
Short-term debt | 421,555 | 386,140 |
Current maturities of long-term debt | 20,069 | 19,966 |
Trade accounts payable | 672,471 | 650,092 |
Accrued compensation and benefits | 145,037 | 212,525 |
Accrued contributions to employees’ profit sharing plans | 23,181 | 54,948 |
Accrued expenses | 317,243 | 290,207 |
Income taxes payable | 88,874 | 15,059 |
Total current liabilities | 1,688,430 | 1,628,937 |
LONG-TERM DEBT (less current maturities) | 1,847,717 | 1,840,946 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 133,984 | 126,101 |
EMPLOYMENT-RELATED AND OTHER NON-CURRENT LIABILITIES | 195,895 | 192,555 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; 109,659,219 shares issued | 54,830 | 54,830 |
Additional contributed capital | 1,031,926 | 1,030,256 |
Retained earnings | 7,216,018 | 7,113,559 |
Accumulated other comprehensive losses | (249,933) | (272,294) |
Treasury stock, at cost – 51,253,521 and 50,854,905 shares, respectively | (6,258,039) | (6,128,416) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,794,802 | 1,797,935 |
Noncontrolling interest | 121,721 | 107,833 |
Total shareholders' equity | 1,916,523 | 1,905,768 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 5,782,549 | $ 5,694,307 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 28,208 | $ 26,690 |
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued | 0 | 0 |
Cumulative preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.5 | $ 0.5 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost | 51,253,521 | 50,854,905 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net earnings | $ 182,853 | $ 191,644 |
Provision for losses on accounts receivable | 3,918 | 3,454 |
Deferred income taxes and tax uncertainties | (7,632) | 21,035 |
Depreciation and amortization | 62,249 | 56,294 |
Gains from sales of assets and write-offs | (10,966) | (7,465) |
Stock-based compensation | 6,757 | 7,456 |
Losses from equity method investment | 8,374 | 6,388 |
Change in operating assets and liabilities – net of business acquisitions: | ||
Accounts receivable | (95,419) | (84,435) |
Inventories | 27,826 | 10,831 |
Prepaid expenses and other assets | (25,943) | 4,370 |
Trade accounts payable | 18,051 | 30,827 |
Other current liabilities | (64,171) | (104,552) |
Current income taxes payable | 73,227 | 32,757 |
Accrued employment-related benefits cost | 1,520 | 323 |
Other – net | 302 | (8,290) |
Net cash provided by operating activities | 180,946 | 160,637 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to property, buildings and equipment | (78,768) | (51,797) |
Proceeds from sales of assets | 48,306 | 13,817 |
Equity method investment | (7,067) | (7,199) |
Other – net | 0 | (206) |
Net cash used in investing activities | (37,529) | (45,385) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net increase in commercial paper | 34,946 | 214,645 |
Borrowings under lines of credit | 9,883 | 12,028 |
Payments against lines of credit | (9,167) | (11,060) |
Proceeds from issuance of long-term debt | 3,917 | 245 |
Payments of long-term debt | (6,235) | (125,014) |
Proceeds from stock options exercised | 26,345 | 5,206 |
Excess tax benefits from stock-based compensation | 0 | 17,287 |
Payment for employee taxes withheld from stock awards | (11,625) | (6,906) |
Purchase of treasury stock | (159,146) | (172,047) |
Cash dividends paid | (72,118) | (72,632) |
Net cash used in financing activities | (183,200) | (138,248) |
Exchange rate effect on cash and cash equivalents | 4,438 | 12,766 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (35,345) | (10,230) |
Cash and cash equivalents at beginning of year | 274,146 | 290,136 |
Cash and cash equivalents at end of period | $ 238,801 | $ 279,906 |
BACKGROUND AND BASIS OF PRESENT
BACKGROUND AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
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 (MRO) supplies, and other related products and services used by businesses and institutions. W.W. Grainger, Inc.’s operations are primarily in the United States (U.S.) 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, 2016 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, 2016 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 | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Board (ASU) 2015-11, Simplifying the Measurement of Inventory , which simplifies the subsequent measurement of inventory by replacing the lower of cost or market test with a lower of cost or net realizable value (NRV) test. NRV is calculated as the estimated selling price less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2016, and prospective adoption is required. As of January 1, 2017, the Company adopted the ASU and it did not have a material impact on the Company's Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities . This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under fair value options and the presentation and disclosure requirements for financial instruments. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2017. Certain provisions of the new guidance can be adopted early. The Company is evaluating the impact of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of this ASU. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting . This ASU eliminates the requirement to retroactively adjust the investment, results of operations and retained earnings when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The amendment requires that the investor add the cost of acquiring the additional interest to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The effective date of the standard is for fiscal years and interim periods within those years beginning after December 15, 2016. The amendment should be applied prospectively and early application is permitted. As of January 1, 2017, the Company adopted the ASU and it did not have a material impact on the Company's Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Stock Based Compensation: Improvements to Employee Share-Based Payment Accounting . This ASU simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholdings requirements, as well as classification in the statement of cash flows. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2016. As of January 1, 2017, the Company adopted the ASU and it resulted in the following: Topic Method of Adoption Impact on Consolidated Financial Statements Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense Prospective The Company recognized $7.6 million of excess tax benefits in income taxes in the three months ended March 31, 2017, contributing to the lower effective tax rate for the quarter. Excess tax benefits on the statement of cash flows are classified as an operating activity Prospective The Company recognized $7.6 million of excess tax benefits in the three months ended March 31, 2017 as an operating activity. Prior to the adoption of the ASU 2016-09, the excess tax benefit in the three months ended March 31, 2016 was $17.3 million recognized as a financing activity. Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as a financing activity Retrospective The Company reclassified $6.9 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows in the three months ended March 31, 2016. Accounting for forfeitures and tax withholding elections Prospective The company has not changed its accounting policy for forfeitures. There is no significant impact on Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory. This ASU eliminates the existing exception in U.S. GAAP that prohibits the recognition of income tax consequences for most intra-entity asset transfers. The effective date of this ASU is fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption and early adoption is permitted. As of January 1, 2017, the Company elected to early adopt the ASU and it had no impact on the opening balance of retained earnings as of the date of adoption. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and early adoption is permitted. The Company is evaluating the impact of this ASU. In February 2017, the FASB issued ASU 2017-05, Other Income - Gain and Losses from the Derecognition of Nonfinancial Assets . The FASB issued this ASU to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets , and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The amendments in this ASU are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company is evaluating the impact of this ASU. In March 2017, the FASB issued ASU 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The FASB issued this ASU primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU should be applied retrospectively for the presentation of the net periodic postretirement cost components in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the impact of this ASU. REVENUE RECOGNITION STANDARDS In July 2015, FASB announced a one-year delay in the effective date of ASU 2014-09, Revenue from Contracts with Customers. This ASU will now be effective for interim and annual periods beginning after December 15, 2017. The standard will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The standard permits adoption as early as the original effective date, which was for interim and annual periods beginning after December 15, 2016. In March 2016, the FASB issued ASU 2016-08, Revenue from Contract with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . This ASU is meant to reduce the potential for diversity in practice arising from inconsistent application of principal versus agent guidance as well as reduce the cost and complexity during the transition and on an ongoing basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing . This ASU is meant to clarify the identification of performance obligations and the licensing implementation guidelines, while retaining the related principles of those areas. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. This ASU includes technical corrections and improvements to Topic 606 and other Topics amended by Update 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. The effective dates of ASU 2016-08, ASU 2016-10 and ASU 2016-20 are consistent with ASU 2014-09. The Company has elected not to early adopt these ASUs. The standard permits the use of either the full retrospective or the modified retrospective adoption method. The Company is planning to elect the modified retrospective method and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity as of January 1, 2018. These ASUs require expanded qualitative and quantitative disclosures of revenue and cash flows emerging from contracts with customers. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. Based on initial reviews, the standard is not expected to have a material impact on the Company's Consolidated Financial Statements. |
DIVIDEND
DIVIDEND | 3 Months Ended |
Mar. 31, 2017 | |
Dividends [Abstract] | |
DIVIDEND | DIVIDEND On April 26, 2017 , the Company’s Board of Directors declared a quarterly dividend of $1.28 per share, payable June 1, 2017 , to shareholders of record on May 8, 2017 . |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Grainger had approximately $1.1 billion of goodwill and intangible assets as of March 31, 2017 and December 31, 2016, respectively, or 19% and 20% of total assets. Goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. To detect these events, Grainger periodically performs qualitative assessments of factors such as a reporting units' historical and current performance, overall economic factors and assumptions regarding future performance, to determine if it is more likely than not that the goodwill and intangible assets might be impaired and whether it is necessary to perform the two-step quantitative goodwill impairment test. As previously reported, Grainger completed the annual goodwill and intangible assets impairment testing during the fourth quarter of 2016. The estimated fair values substantially exceeded the carrying values for all of the Company’s reporting units, except for Fabory, which resulted in a $47 million goodwill impairment charge per the two-step quantitative goodwill impairment test. Grainger monitors the operating performance of its reporting units and the quarterly assessment did not indicate the presence of goodwill impairment triggering events as of March 31, 2017. Changes in assumptions regarding future performance, unfavorable economic environment and changes in market conditions or other factors may have a significant impact on reporting units' cash flows in the future and Grainger may be required to recognize an impairment for goodwill. |
RESTRUCTURING RESERVES
RESTRUCTURING RESERVES | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING RESERVES | RESTRUCTURING RESERVES The Company recorded severance costs of approximately $4 million and $16 million in the three months ended March 31, 2017 and March 31, 2016, respectively, and is included in Warehousing, marketing and administrative expenses. The reserve balance as of March 31, 2017 and December 31, 2016 was approximately $19 million and $23 million , respectively, and is included in Accrued compensation and benefits. The majority of the reserve is expected to be paid through 2017. |
SHORT-TERM AND LONG-TERM DEBT
SHORT-TERM AND LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
SHORT-TERM AND LONG-TERM DEBT | SHORT-TERM AND LONG-TERM DEBT The following summarizes information concerning short-term debt (in thousands of dollars): March 31, 2017 December 31, 2016 Outstanding lines of credit $ 16,861 $ 16,392 Outstanding commercial paper 404,694 369,748 $ 421,555 $ 386,140 The increase in commercial paper from December 31, 2016 was used to fund general working capital needs and share repurchase. Long-term debt consisted of the following (in thousands of dollars): March 31, 2017 December 31, 2016 4.60% senior notes due 2045 $ 1,000,000 $ 1,000,000 3.75% senior notes due 2046 400,000 400,000 British pound term loan and revolving credit facility 185,666 187,506 Euro term loan and revolving credit facility 122,463 120,900 Canadian dollar revolving credit facility 105,176 100,521 Other 73,309 71,109 1,886,614 1,880,036 Less current maturities (20,069 ) (19,966 ) Debt issuance costs and discounts (18,828 ) (19,124 ) $ 1,847,717 $ 1,840,946 The estimated fair value of the Company’s 3.75% Senior Notes due 2046 ( 3.75% Notes) and 4.60% Senior Notes due 2045 ( 4.60% Notes) was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The fair value of the 3.75% Notes was approximately $380 million and $371 million as of March 31, 2017 and December 31, 2016, respectively. The fair value of the 4.60% Notes was approximately $1.1 billion as of March 31, 2017 and December 31, 2016, respectively. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
EMPLOYEE BENEFITS - POSTRETIREM
EMPLOYEE BENEFITS - POSTRETIREMENT | 3 Months Ended |
Mar. 31, 2017 | |
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 U.S. employees hired prior to January 1, 2013, and their dependents should they elect to maintain such coverage upon retirement. Covered employees become eligible for participation when they qualify for retirement while working for the Company. Participation in the plan is voluntary and requires participants to make contributions toward the cost of the plan, as determined by the Company. The net periodic 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 March 31, 2017 2016 Service cost $ 1,897 $ 2,059 Interest cost 2,149 2,464 Expected return on assets (2,857 ) (2,528 ) Amortization of unrecognized losses (655 ) 32 Amortization of prior service credits (1,622 ) (1,672 ) Net periodic benefit costs $ (1,088 ) $ 355 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 zero minimum funding requirements and the Company intends to follow its practice of funding the maximum deductible contribution under the IRC. The Company did not make a contribution to the trust during the three months ended March 31, 2017 . |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments: the U.S. and Canada. The U.S. operating segment reflects the results of the Company's U.S. business. The Canada operating segment primarily reflects the results for Acklands – Grainger Inc. (Acklands-Grainger), the Company’s Canadian business. Other businesses include MonotaRO in Japan, Zoro in the U.S. and operations in Europe, Asia and Latin America. These businesses individually do not meet the definition of a reportable segment. Operating segments generate revenue almost exclusively through the distribution of MRO supplies, as service revenues account for approximately 1% of total revenues for each operating segment. Following is a summary of segment results (in thousands of dollars): Three Months Ended March 31, 2017 United States Canada Other Businesses Total Total net sales $ 1,953,444 $ 186,141 $ 497,407 $ 2,636,992 Intersegment net sales (95,073 ) (12 ) (778 ) (95,863 ) Net sales to external customers $ 1,858,371 $ 186,129 $ 496,629 $ 2,541,129 Segment operating earnings $ 312,470 $ (16,729 ) $ 31,507 $ 327,248 Three Months Ended March 31, 2016 United States Canada Other Businesses Total Total net sales $ 1,966,267 $ 178,771 $ 445,333 $ 2,590,371 Intersegment net sales (82,499 ) (36 ) (1,298 ) (83,833 ) Net sales to external customers $ 1,883,768 $ 178,735 $ 444,035 $ 2,506,538 Segment operating earnings $ 331,857 $ (12,347 ) $ 21,783 $ 341,293 United States Canada Other Businesses Total Segment assets: March 31, 2017 $ 2,311,281 $ 287,552 $ 535,343 $ 3,134,176 December 31, 2016 $ 2,275,009 $ 286,035 $ 494,067 $ 3,055,111 Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars): Three Months Ended March 31, 2017 2016 Operating earnings: Total operating earnings for operating segments $ 327,248 $ 341,293 Unallocated expenses and eliminations (31,760 ) (24,201 ) Total consolidated operating earnings $ 295,488 $ 317,092 March 31, 2017 Dec 31, 2016 Assets: Total assets for operating segments $ 3,134,176 $ 3,055,111 Other current and non-current assets 2,484,117 2,464,656 Unallocated assets 164,256 174,540 Total consolidated assets $ 5,782,549 $ 5,694,307 Assets for reportable segments include net accounts receivable and first-in, first-out inventory which are reported to the Company's Chief Operating Decision Maker. Other current and non-current assets include all other asset balances for the reportable 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. Intersegment net sales for the U.S. segment increased by $12 million for the three months of 2017 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. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017 2016 Net earnings attributable to W.W. Grainger, Inc. as reported $ 174,744 $ 186,713 Distributed earnings available to participating securities (546 ) (626 ) Undistributed earnings available to participating securities (932 ) (1,121 ) Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders 173,266 184,966 Undistributed earnings allocated to participating securities 932 1,121 Undistributed earnings reallocated to participating securities (924 ) (1,114 ) Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders $ 173,274 $ 184,973 Denominator for basic earnings per share – weighted average shares 58,720,066 61,668,682 Effect of dilutive securities 482,816 431,119 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 59,202,882 62,099,801 Earnings per share two-class method Basic $ 2.95 $ 3.00 Diluted $ 2.93 $ 2.98 |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 3 Months Ended |
Mar. 31, 2017 | |
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. |
NEW ACCOUNTING STANDARDS (Polic
NEW ACCOUNTING STANDARDS (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
New Accounting Standards | In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Board (ASU) 2015-11, Simplifying the Measurement of Inventory , which simplifies the subsequent measurement of inventory by replacing the lower of cost or market test with a lower of cost or net realizable value (NRV) test. NRV is calculated as the estimated selling price less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2016, and prospective adoption is required. As of January 1, 2017, the Company adopted the ASU and it did not have a material impact on the Company's Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities . This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under fair value options and the presentation and disclosure requirements for financial instruments. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2017. Certain provisions of the new guidance can be adopted early. The Company is evaluating the impact of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of this ASU. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting . This ASU eliminates the requirement to retroactively adjust the investment, results of operations and retained earnings when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The amendment requires that the investor add the cost of acquiring the additional interest to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The effective date of the standard is for fiscal years and interim periods within those years beginning after December 15, 2016. The amendment should be applied prospectively and early application is permitted. As of January 1, 2017, the Company adopted the ASU and it did not have a material impact on the Company's Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Stock Based Compensation: Improvements to Employee Share-Based Payment Accounting . This ASU simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures and statutory tax withholdings requirements, as well as classification in the statement of cash flows. The effective date for the standard is for fiscal years and interim periods within those years beginning after December 15, 2016. As of January 1, 2017, the Company adopted the ASU and it resulted in the following: Topic Method of Adoption Impact on Consolidated Financial Statements Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense Prospective The Company recognized $7.6 million of excess tax benefits in income taxes in the three months ended March 31, 2017, contributing to the lower effective tax rate for the quarter. Excess tax benefits on the statement of cash flows are classified as an operating activity Prospective The Company recognized $7.6 million of excess tax benefits in the three months ended March 31, 2017 as an operating activity. Prior to the adoption of the ASU 2016-09, the excess tax benefit in the three months ended March 31, 2016 was $17.3 million recognized as a financing activity. Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as a financing activity Retrospective The Company reclassified $6.9 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows in the three months ended March 31, 2016. Accounting for forfeitures and tax withholding elections Prospective The company has not changed its accounting policy for forfeitures. There is no significant impact on Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory. This ASU eliminates the existing exception in U.S. GAAP that prohibits the recognition of income tax consequences for most intra-entity asset transfers. The effective date of this ASU is fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption and early adoption is permitted. As of January 1, 2017, the Company elected to early adopt the ASU and it had no impact on the opening balance of retained earnings as of the date of adoption. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment. The effective date of the amendment to the standard is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and early adoption is permitted. The Company is evaluating the impact of this ASU. In February 2017, the FASB issued ASU 2017-05, Other Income - Gain and Losses from the Derecognition of Nonfinancial Assets . The FASB issued this ASU to clarify the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets , and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The amendments in this ASU are effective at the same time as the amendments in ASU 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company is evaluating the impact of this ASU. In March 2017, the FASB issued ASU 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The FASB issued this ASU primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in this ASU are effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU should be applied retrospectively for the presentation of the net periodic postretirement cost components in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the impact of this ASU. REVENUE RECOGNITION STANDARDS In July 2015, FASB announced a one-year delay in the effective date of ASU 2014-09, Revenue from Contracts with Customers. This ASU will now be effective for interim and annual periods beginning after December 15, 2017. The standard will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The standard permits adoption as early as the original effective date, which was for interim and annual periods beginning after December 15, 2016. In March 2016, the FASB issued ASU 2016-08, Revenue from Contract with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . This ASU is meant to reduce the potential for diversity in practice arising from inconsistent application of principal versus agent guidance as well as reduce the cost and complexity during the transition and on an ongoing basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing . This ASU is meant to clarify the identification of performance obligations and the licensing implementation guidelines, while retaining the related principles of those areas. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. This ASU includes technical corrections and improvements to Topic 606 and other Topics amended by Update 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. The effective dates of ASU 2016-08, ASU 2016-10 and ASU 2016-20 are consistent with ASU 2014-09. The Company has elected not to early adopt these ASUs. The standard permits the use of either the full retrospective or the modified retrospective adoption method. The Company is planning to elect the modified retrospective method and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity as of January 1, 2018. These ASUs require expanded qualitative and quantitative disclosures of revenue and cash flows emerging from contracts with customers. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. Based on initial reviews, the standard is not expected to have a material impact on the Company's Consolidated Financial Statements. |
Goodwill | Goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. To detect these events, Grainger periodically performs qualitative assessments of factors such as a reporting units' historical and current performance, overall economic factors and assumptions regarding future performance, to determine if it is more likely than not that the goodwill and intangible assets might be impaired and whether it is necessary to perform the two-step quantitative goodwill impairment test. As previously reported, Grainger completed the annual goodwill and intangible assets impairment testing during the fourth quarter of 2016. The estimated fair values substantially exceeded the carrying values for all of the Company’s reporting units, except for Fabory, which resulted in a $47 million goodwill impairment charge per the two-step quantitative goodwill impairment test. Grainger monitors the operating performance of its reporting units and the quarterly assessment did not indicate the presence of goodwill impairment triggering events as of March 31, 2017. Changes in assumptions regarding future performance, unfavorable economic environment and changes in market conditions or other factors may have a significant impact on reporting units' cash flows in the future and Grainger may be required to recognize an impairment for goodwill. |
NEW ACCOUNTING STANDARDS (Table
NEW ACCOUNTING STANDARDS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Impact of ASU 2016-09 Adoption on Consolidated Financial Statements | As of January 1, 2017, the Company adopted the ASU and it resulted in the following: Topic Method of Adoption Impact on Consolidated Financial Statements Recognize all excess tax benefits and tax deficiencies as income tax benefit or expense Prospective The Company recognized $7.6 million of excess tax benefits in income taxes in the three months ended March 31, 2017, contributing to the lower effective tax rate for the quarter. Excess tax benefits on the statement of cash flows are classified as an operating activity Prospective The Company recognized $7.6 million of excess tax benefits in the three months ended March 31, 2017 as an operating activity. Prior to the adoption of the ASU 2016-09, the excess tax benefit in the three months ended March 31, 2016 was $17.3 million recognized as a financing activity. Employee taxes paid when an employer withholds shares for tax-withholding purposes on the statement of cash flows are classified as a financing activity Retrospective The Company reclassified $6.9 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities on the Consolidated Statements of Cash Flows in the three months ended March 31, 2016. Accounting for forfeitures and tax withholding elections Prospective The company has not changed its accounting policy for forfeitures. There is no significant impact on Consolidated Financial Statements. |
SHORT-TERM AND LONG-TERM DEBT (
SHORT-TERM AND LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term Debt Instruments | The following summarizes information concerning short-term debt (in thousands of dollars): March 31, 2017 December 31, 2016 Outstanding lines of credit $ 16,861 $ 16,392 Outstanding commercial paper 404,694 369,748 $ 421,555 $ 386,140 |
Schedule of Long-Term Debt Instruments | Long-term debt consisted of the following (in thousands of dollars): March 31, 2017 December 31, 2016 4.60% senior notes due 2045 $ 1,000,000 $ 1,000,000 3.75% senior notes due 2046 400,000 400,000 British pound term loan and revolving credit facility 185,666 187,506 Euro term loan and revolving credit facility 122,463 120,900 Canadian dollar revolving credit facility 105,176 100,521 Other 73,309 71,109 1,886,614 1,880,036 Less current maturities (20,069 ) (19,966 ) Debt issuance costs and discounts (18,828 ) (19,124 ) $ 1,847,717 $ 1,840,946 |
EMPLOYEE BENEFITS - POSTRETIR21
EMPLOYEE BENEFITS - POSTRETIREMENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Schedule of 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 March 31, 2017 2016 Service cost $ 1,897 $ 2,059 Interest cost 2,149 2,464 Expected return on assets (2,857 ) (2,528 ) Amortization of unrecognized losses (655 ) 32 Amortization of prior service credits (1,622 ) (1,672 ) Net periodic benefit costs $ (1,088 ) $ 355 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in thousands of dollars): Three Months Ended March 31, 2017 United States Canada Other Businesses Total Total net sales $ 1,953,444 $ 186,141 $ 497,407 $ 2,636,992 Intersegment net sales (95,073 ) (12 ) (778 ) (95,863 ) Net sales to external customers $ 1,858,371 $ 186,129 $ 496,629 $ 2,541,129 Segment operating earnings $ 312,470 $ (16,729 ) $ 31,507 $ 327,248 Three Months Ended March 31, 2016 United States Canada Other Businesses Total Total net sales $ 1,966,267 $ 178,771 $ 445,333 $ 2,590,371 Intersegment net sales (82,499 ) (36 ) (1,298 ) (83,833 ) Net sales to external customers $ 1,883,768 $ 178,735 $ 444,035 $ 2,506,538 Segment operating earnings $ 331,857 $ (12,347 ) $ 21,783 $ 341,293 United States Canada Other Businesses Total Segment assets: March 31, 2017 $ 2,311,281 $ 287,552 $ 535,343 $ 3,134,176 December 31, 2016 $ 2,275,009 $ 286,035 $ 494,067 $ 3,055,111 |
Schedule of Reconciliation of Operating Earnings from Segment to Consolidated | Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars): Three Months Ended March 31, 2017 2016 Operating earnings: Total operating earnings for operating segments $ 327,248 $ 341,293 Unallocated expenses and eliminations (31,760 ) (24,201 ) Total consolidated operating earnings $ 295,488 $ 317,092 |
Schedule of Reconciliation of Assets from Segment to Consolidated | March 31, 2017 Dec 31, 2016 Assets: Total assets for operating segments $ 3,134,176 $ 3,055,111 Other current and non-current assets 2,484,117 2,464,656 Unallocated assets 164,256 174,540 Total consolidated assets $ 5,782,549 $ 5,694,307 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of 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 March 31, 2017 2016 Net earnings attributable to W.W. Grainger, Inc. as reported $ 174,744 $ 186,713 Distributed earnings available to participating securities (546 ) (626 ) Undistributed earnings available to participating securities (932 ) (1,121 ) Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders 173,266 184,966 Undistributed earnings allocated to participating securities 932 1,121 Undistributed earnings reallocated to participating securities (924 ) (1,114 ) Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders $ 173,274 $ 184,973 Denominator for basic earnings per share – weighted average shares 58,720,066 61,668,682 Effect of dilutive securities 482,816 431,119 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 59,202,882 62,099,801 Earnings per share two-class method Basic $ 2.95 $ 3.00 Diluted $ 2.93 $ 2.98 |
NEW ACCOUNTING STANDARDS (Detai
NEW ACCOUNTING STANDARDS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effective income tax rate reconciliation, stock based compensation, excess tax benefit | $ 7,600 | |
Net cash provided by operating activities | 180,946 | $ 160,637 |
Excess tax benefits from stock-based compensation | 0 | 17,287 |
Net cash used in financing activities | 183,200 | 138,248 |
ASU 2016-09, excess tax benefit component [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | $ 7,600 | |
ASU 2016-09, tax withholding component [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by operating activities | 6,900 | |
Net cash used in financing activities | $ 6,900 |
DIVIDEND - Narrative (Details)
DIVIDEND - Narrative (Details) | Apr. 26, 2017$ / shares |
Subsequent event | |
Subsequent Event [Line Items] | |
Dividend declared (in dollars per share) | $ 1.28 |
GOODWILL AND OTHER INTANGIBLE26
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2016 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill and intangible assets | $ 1,100 | $ 1,100 |
Goodwill and intangible assets, percent of total assets | 20.00% | 19.00% |
Fabory [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill impairment charge | $ 47 |
RESTRUCTURING RESERVES - Narrat
RESTRUCTURING RESERVES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Accrued compensation and benefits [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring reserve | $ 19 | $ 23 | |
Warehousing, marketing and administrative expense [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Severance costs | $ 4 | $ 16 |
SHORT-TERM AND LONG-TERM DEBT -
SHORT-TERM AND LONG-TERM DEBT - Schedule of Short-Term Debt Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Outstanding short-term debt | $ 421,555 | $ 386,140 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Outstanding short-term debt | 16,861 | 16,392 |
Commercial Paper [Member] | ||
Short-term Debt [Line Items] | ||
Outstanding short-term debt | $ 404,694 | $ 369,748 |
SHORT-TERM AND LONG-TERM DEBT29
SHORT-TERM AND LONG-TERM DEBT - Schedule of Long-Term Debt Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,886,614 | $ 1,880,036 |
Other | 73,309 | 71,109 |
Less current maturities | (20,069) | (19,966) |
Debt issuance costs and discounts | (18,828) | (19,124) |
Long-term debt, excluding current maturities | 1,847,717 | 1,840,946 |
British pound denominated term loan and revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 185,666 | 187,506 |
Euro denominated term loan and revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 122,463 | 120,900 |
Canadian dollar revolving credit facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 105,176 | 100,521 |
Senior Notes, 4.60% due 2045 [Member] | Senior notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,000,000 | $ 1,000,000 |
Stated interest rate | 4.60% | 4.60% |
Senior Notes, 3.75% due 2046 [Member] | Senior notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 400,000 | $ 400,000 |
Stated interest rate | 3.75% | 3.75% |
SHORT-TERM AND LONG-TERM DEBT30
SHORT-TERM AND LONG-TERM DEBT - Narrative (Details) - Senior Notes [Member] - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Senior Notes, 3.75% due 2046 [Member] | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.75% | 3.75% |
Debt, fair value | $ 380 | $ 371 |
Senior Notes, 4.60% due 2045 [Member] | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.60% | 4.60% |
Debt, fair value | $ 1,100 | $ 1,100 |
EMPLOYEE BENEFITS - POSTRETIR31
EMPLOYEE BENEFITS - POSTRETIREMENT - Schedule of Net Periodic Benefit Costs Charged to Operating Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||
Service cost | $ 1,897 | $ 2,059 |
Interest cost | 2,149 | 2,464 |
Expected return on assets | (2,857) | (2,528) |
Amortization of unrecognized losses | (655) | 32 |
Amortization of prior service credits | (1,622) | (1,672) |
Net periodic benefit costs | $ (1,088) | $ 355 |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 2 |
Service revenues, percent of total revenues | 1.00% |
United States [Member] | |
Segment Reporting Information [Line Items] | |
Intersegment sales increase | $ | $ 12 |
SEGMENT INFORMATION - Summary o
SEGMENT INFORMATION - Summary of Segment Results (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Summarized Information | |||
Net sales to external customers | $ 2,541,129 | $ 2,506,538 | |
Total consolidated operating earnings | 295,488 | 317,092 | |
Total assets | 5,782,549 | $ 5,694,307 | |
United States [Member] | |||
Summarized Information | |||
Net sales to external customers | 1,858,371 | 1,883,768 | |
Total assets | 2,311,281 | 2,275,009 | |
Canada [Member] | |||
Summarized Information | |||
Net sales to external customers | 186,129 | 178,735 | |
Total assets | 287,552 | 286,035 | |
Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | 496,629 | 444,035 | |
Total assets | 535,343 | 494,067 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | |||
Summarized Information | |||
Net sales to external customers | 2,636,992 | 2,590,371 | |
Total consolidated operating earnings | 327,248 | 341,293 | |
Total assets | 3,134,176 | $ 3,055,111 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | United States [Member] | |||
Summarized Information | |||
Net sales to external customers | 1,953,444 | 1,966,267 | |
Total consolidated operating earnings | 312,470 | 331,857 | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | Canada [Member] | |||
Summarized Information | |||
Net sales to external customers | 186,141 | 178,771 | |
Total consolidated operating earnings | (16,729) | (12,347) | |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | 497,407 | 445,333 | |
Total consolidated operating earnings | 31,507 | 21,783 | |
Intersegment Eliminations [Member] | |||
Summarized Information | |||
Net sales to external customers | (95,863) | (83,833) | |
Intersegment Eliminations [Member] | United States [Member] | |||
Summarized Information | |||
Net sales to external customers | (95,073) | (82,499) | |
Intersegment Eliminations [Member] | Canada [Member] | |||
Summarized Information | |||
Net sales to external customers | (12) | (36) | |
Intersegment Eliminations [Member] | Other Businesses [Member] | |||
Summarized Information | |||
Net sales to external customers | $ (778) | $ (1,298) |
SEGMENT INFORMATION - Schedule
SEGMENT INFORMATION - Schedule of Reconciliation of Operating Earnings from Segment to Consolidated (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Total consolidated operating earnings | $ 295,488 | $ 317,092 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated operating earnings | 327,248 | 341,293 |
Eliminations and Unallocated in Consolidation [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated operating earnings | $ (31,760) | $ (24,201) |
SEGMENT INFORMATION - Schedul35
SEGMENT INFORMATION - Schedule of Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
Total consolidated assets | $ 5,782,549 | $ 5,694,307 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | 3,134,176 | 3,055,111 |
Segment Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | 2,484,117 | 2,464,656 |
Eliminations and Unallocated in Consolidation [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | $ 164,256 | $ 174,540 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Computation of Basic and Diluted Earnings per Share under Two-Class Method (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net earnings attributable to W.W. Grainger, Inc. as reported | $ 174,744 | $ 186,713 |
Distributed earnings available to participating securities | (546) | (626) |
Undistributed earnings available to participating securities | (932) | (1,121) |
Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders | 173,266 | 184,966 |
Undistributed earnings allocated to participating securities | 932 | 1,121 |
Undistributed earnings reallocated to participating securities | (924) | (1,114) |
Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders | $ 173,274 | $ 184,973 |
Denominator for basic earnings per share - weighted average shares (in shares) | 58,720,066 | 61,668,682 |
Effect of dilutive securities (in shares) | 482,816 | 431,119 |
Denominator for diluted earnings per share - weighted average shares adjusted for dilutive securities (in shares) | 59,202,882 | 62,099,801 |
Basic (in dollars per share) | $ 2.95 | $ 3 |
Diluted (in dollars per share) | $ 2.93 | $ 2.98 |