DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 31, 2019 | Jun. 30, 2018 | |
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-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 55,679,223 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 16,101,319,439 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Net sales | $ 11,221 | $ 10,425 | $ 10,137 |
Cost of goods sold | 6,873 | 6,327 | 6,022 |
Gross profit | 4,348 | 4,098 | 4,115 |
Selling, general and administrative expenses | 3,190 | 3,063 | 3,002 |
Operating earnings | 1,158 | 1,035 | 1,113 |
Other income (expense): | |||
Interest income | 6 | 3 | 1 |
Interest expense | (88) | (89) | (76) |
Loss from equity method investment | (19) | (37) | (31) |
Other, net | 24 | 24 | 12 |
Total other expense | (77) | (99) | (94) |
Earnings before income taxes | 1,081 | 936 | 1,019 |
Income taxes | 258 | 313 | 386 |
Net earnings | 823 | 623 | 633 |
Less: Net earnings attributable to noncontrolling interest | 41 | 37 | 27 |
Net earnings attributable to W.W. Grainger, Inc. | $ 782 | $ 586 | $ 606 |
Earnings per share: | |||
Basic (in dollars per share) | $ 13.82 | $ 10.07 | $ 9.94 |
Diluted (in dollars per share) | $ 13.73 | $ 10.02 | $ 9.87 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 56,142,604 | 57,674,977 | 60,430,892 |
Diluted (in shares) | 56,534,185 | 57,983,167 | 60,839,930 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 823 | $ 623 | $ 633 |
Other comprehensive (losses) earnings: | |||
Foreign currency translation adjustments, net of reclassification (see Note 7 and Note 14) | (41) | 93 | (39) |
Postretirement benefit plan re-measurement, net of tax expense $29 (see Note 10 and Note 14) | 0 | 47 | 0 |
Postretirement benefit plan reclassification, net of tax benefit of $3, $1 and $7 | (7) | 2 | (12) |
Total other comprehensive (losses) earnings | (48) | 142 | (51) |
Comprehensive earnings, net of tax | 775 | 765 | 582 |
Less: Comprehensive earnings attributable to noncontrolling interest | |||
Net earnings | 41 | 37 | 27 |
Foreign currency translation adjustments | 3 | 4 | 1 |
Comprehensive earnings attributable to noncontrolling interest | 44 | 41 | 28 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 731 | $ 724 | $ 554 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Postretirement benefit plan remeasurement, net of tax expense | $ 0 | $ 29 | |
Postretirement benefit plan reclassification, net of tax benefit | $ 3 | $ 1 | $ 7 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 538 | $ 327 |
Accounts receivable – net | 1,385 | 1,325 |
Inventories – net | 1,541 | 1,429 |
Prepaid expenses and other assets | 83 | 87 |
Prepaid income taxes | 10 | 38 |
Total current assets | 3,557 | 3,206 |
PROPERTY, BUILDINGS AND EQUIPMENT – NET | 1,352 | 1,392 |
DEFERRED INCOME TAXES | 12 | 22 |
GOODWILL | 424 | 544 |
INTANGIBLES – NET | 460 | 569 |
OTHER ASSETS | 68 | 71 |
TOTAL ASSETS | 5,873 | 5,804 |
CURRENT LIABILITIES | ||
Short-term debt | 49 | 56 |
Current maturities of long-term debt | 81 | 39 |
Trade accounts payable | 678 | 731 |
Accrued compensation and benefits | 262 | 254 |
Accrued contributions to employees’ profit-sharing plans | 133 | 93 |
Accrued expenses | 269 | 314 |
Income taxes payable | 29 | 20 |
Total current liabilities | 1,501 | 1,507 |
LONG-TERM DEBT (less current maturities) | 2,090 | 2,248 |
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 103 | 111 |
EMPLOYMENT-RELATED AND OTHER NON-CURRENT LIABILITIES | 86 | 110 |
SHAREHOLDERS' EQUITY | ||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; issued 109,659,219 shares | 55 | 55 |
Additional contributed capital | 1,134 | 1,041 |
Retained earnings | 7,869 | 7,405 |
Accumulated other comprehensive losses | (171) | (135) |
Treasury stock, at cost – 53,796,859 and 53,330,356 shares, respectively | (6,966) | (6,676) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,921 | 1,690 |
Noncontrolling interest | 172 | 138 |
Total shareholders' equity | 2,093 | 1,828 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 5,873 | $ 5,804 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized (in shares) | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued (in shares) | 0 | 0 |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost (in shares) | 53,796,859 | 53,330,356 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net earnings | $ 823 | $ 623 | $ 633 |
Provision for losses on accounts receivable | 7 | 16 | 16 |
Deferred income taxes and tax uncertainties | 7 | (5) | (6) |
Depreciation and amortization | 257 | 264 | 249 |
Impairment of goodwill, intangible and other assets | 156 | 28 | 52 |
Net (gains) losses from sales of assets and business divestitures | (25) | (9) | (19) |
Stock-based compensation | 47 | 33 | 36 |
Losses from equity method investment | 19 | 37 | 31 |
Change in assets and liabilities – net of business acquisitions and divestitures: | |||
Accounts receivable | (79) | (103) | (46) |
Inventories | (129) | (5) | (4) |
Prepaid expenses and other assets | (2) | (5) | 19 |
Trade accounts payable | (51) | 72 | 73 |
Accrued liabilities | 18 | 113 | (4) |
Income taxes payable | 36 | 4 | (4) |
Employment-related and other liabilities | (35) | (6) | 8 |
Other – net | 8 | 0 | (10) |
Net cash provided by operating activities | 1,057 | 1,057 | 1,024 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Additions to property, buildings and equipment and intangibles | (239) | (237) | (284) |
Proceeds from sales of assets and business divestitures | 86 | 120 | 55 |
Equity method investment | (13) | (35) | (34) |
Other – net | 0 | 6 | 1 |
Net cash used in investing activities | (166) | (146) | (262) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net (decrease) increase in commercial paper | 0 | (370) | 40 |
Borrowings under lines of credit | 26 | 74 | 36 |
Payments against lines of credit | (31) | (43) | (37) |
Proceeds from issuance of long-term debt | 0 | 401 | 516 |
Payments of long-term debt | (96) | (39) | (263) |
Proceeds from stock options exercised | 181 | 47 | 34 |
Payments for employee taxes withheld from stock awards | (12) | (28) | (21) |
Excess tax benefits from stock-based compensation | 0 | 0 | 12 |
Purchase of treasury stock | (425) | (605) | (790) |
Cash dividends paid | (316) | (304) | (303) |
Other – net | 3 | 0 | 0 |
Net cash used in financing activities | (670) | (867) | (776) |
Exchange rate effect on cash and cash equivalents | (10) | 9 | (2) |
NET CHANGE IN CASH AND CASH EQUIVALENTS: | 211 | 53 | (16) |
Cash and cash equivalents at beginning of year | 327 | 274 | 290 |
Cash and cash equivalents at end of year | 538 | 327 | 274 |
Supplemental cash flow information: | |||
Cash payments for interest (net of amounts capitalized) | 86 | 78 | 63 |
Cash payments for income taxes | $ 229 | $ 335 | $ 360 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] |
Beginning balance at Dec. 31, 2015 | $ 55 | $ 1,000 | $ 6,802 | $ (221) | $ (5,370) | $ 86 | |
Stock based compensation | 29 | 42 | |||||
Purchase of treasury stock | 0 | 0 | 0 | 0 | (800) | 0 | |
Net earnings attributable to W.W. Grainger, Inc. | $ 606 | 0 | 0 | 606 | 0 | 0 | |
Net earnings | 27 | 27 | |||||
Other comprehensive (losses) earnings | (51) | 0 | 0 | 0 | (52) | 0 | 1 |
Capital contribution | 3 | ||||||
Cash dividends paid | 0 | 1 | (295) | 0 | 0 | (9) | |
Ending balance at Dec. 31, 2016 | 55 | 1,030 | 7,113 | (273) | (6,128) | 108 | |
Stock based compensation | 10 | 60 | |||||
Purchase of treasury stock | 0 | 0 | 0 | 0 | (608) | 0 | |
Net earnings attributable to W.W. Grainger, Inc. | 586 | 0 | 0 | 586 | 0 | 0 | |
Net earnings | 37 | 37 | |||||
Other comprehensive (losses) earnings | 142 | 0 | 0 | 0 | 138 | 0 | 4 |
Cash dividends paid | 0 | 1 | (294) | 0 | 0 | (11) | |
Ending balance at Dec. 31, 2017 | 1,828 | 55 | 1,041 | 7,405 | (135) | (6,676) | 138 |
Stock based compensation | 92 | 122 | |||||
Purchase of treasury stock | 0 | 0 | 0 | 0 | (412) | 0 | |
Net earnings attributable to W.W. Grainger, Inc. | 782 | 0 | 0 | 782 | 0 | 0 | |
Net earnings | 41 | 41 | |||||
Other comprehensive (losses) earnings | (48) | 0 | 0 | 0 | (51) | 0 | 3 |
Capital contribution | 4 | ||||||
Reclassification due to the adoption of ASU 2018-02 | (15) | 15 | |||||
Cash dividends paid | 0 | 1 | (303) | 0 | 0 | (14) | |
Ending balance at Dec. 31, 2018 | $ 2,093 | $ 55 | $ 1,134 | $ 7,869 | $ (171) | $ (6,966) | $ 172 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share (in dollars per share) | $ 5.36 | $ 5.06 | $ 4.83 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES COMPANY BACKGROUND W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services. W.W. Grainger, Inc.'s operations are primarily in the United States (U.S.), Canada, Europe, Japan and Mexico. In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries. PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the Company and its subsidiaries over which the Company exercises control. All significant intercompany transactions are eliminated from the consolidated financial statements. The Company has a controlling ownership interest in MonotaRO Co., Ltd. (MonotaRO), the endless assortment (single channel) business in Japan, with the residual representing the noncontrolling interest. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent liabilities. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION The U.S. dollar is the reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Net exchange gains or losses resulting from the translation of financial statements of foreign operations are recorded as a separate component of other comprehensive earnings. See Note 14 to the Consolidated Financial Statements (Financial Statements). Foreign currency transaction gains and losses are included in the Consolidated Statement of Earnings. RECLASSIFICATIONS Certain amounts in the 2017 and 2016 financial statements, as previously reported, have been reclassified to conform to the 2018 presentation. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which became effective January 1, 2018. See Note 10 to the Financial Statements. REVENUE RECOGNITION The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The Company's sales arrangements generally have standard payment terms that do not exceed a year. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby the Company’s performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations. The Company’s performance obligations for services are satisfied when the services are rendered within the arranged service period. Total service revenue is not material and accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2018. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2018 and 2017. The Company’s revenue is reported as Net sales and is measured at the determinable transaction price, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. The Company considers shipping and handling as activities to fulfill its performance obligation. Billings for freight are accounted for as Net sales and shipping and handling costs are accounted for in Cost of goods sold. The Company offers customers rights to return product and sales incentives, which primarily consist of volume rebates. The Company’s terms for product returns and sales incentives generally do not exceed a year. The Company estimates sales returns and volume rebate accruals throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $29 million and $28 million as of December 31, 2018 and 2017, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $62 million and $55 million as of December 31, 2018 and 2017, respectively, and are reported as part of Accrued expenses. COST OF GOODS SOLD (COGS) COGS includes products and product-related costs, vendor consideration, shipping and handling costs and service costs. The Company receives rebates and allowances from its vendors to promote their products, which are recorded as a reduction to COGS unless the considerations are directly identifiable to specific costs incurred to promote vendor products. Rebates earned from vendors that are based on product purchases are capitalized into inventory as part of product purchase price. These rebates are credited to COGS based on sales. Vendor rebates that are earned based on products sold are credited directly to COGS. ADVERTISING Advertising costs are generally expensed in the year the related advertisement is first presented. Catalog expense is amortized equally to expense over the life of the catalog, generally one year, beginning in the month of its distribution. Advertising expense, which includes digital marketing costs and catalog amortization, was $ 241 million , $ 187 million and $ 180 million for 2018, 2017 and 2016 , respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) Included in this category are purchasing, supply chain and branch operations, information services and marketing and selling expenses, as well as other types of general and administrative costs. STOCK INCENTIVE PLANS The Company measures all share-based payments using fair-value-based methods and records compensation expense related to these payments over the vesting period net of estimated forfeitures. See Note 12 to the Financial Statements. INCOME TAXES Income taxes are recognized during the year in which transactions enter into the determination of financial statement income, with deferred taxes being provided for temporary differences between financial and tax reporting. The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters. See Note 15 to the Financial Statements. OTHER COMPREHENSIVE EARNINGS (LOSSES) The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. See Note 14 to the Financial Statements. CASH AND CASH EQUIVALENTS The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. CONCENTRATION OF CREDIT RISK The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. The Company has a broad customer base representing many diverse industries doing business in North America, Europe and Asia. Consequently, no significant concentration of credit risk is considered to exist. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are stated at their estimated net realizable value. The Company establishes reserves for customer accounts that are potentially uncollectible. The method used to estimate the allowances is based on several factors, including the age of the receivables and the historical ratio of actual write-offs to the age of the receivables. These analyses also take into consideration economic conditions that may have an impact on a specific industry, group of customers or a specific customer. When it is determined that customer accounts cannot be collected, the receivable balances are charged to the allowance for doubtful accounts. See Note 5 to the Financial Statements. INVENTORIES Inventories are valued at the lower of cost or net realizable value. Cost is determined primarily by the last-in, first-out (LIFO) method, which accounts for approximately 66% of total inventory. Grainger uses LIFO method to better match inventory cost and revenue. For the remaining inventory, cost is determined by the first-in, first-out (FIFO) method. Grainger regularly reviews inventory to evaluate continued demand and identify any obsolete or excess quantities. Grainger records provisions for the difference between excess and obsolete inventory cost and its estimated realizable value. See Note 6 of the Financial Statements. PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment are valued at cost. For financial statement purposes, depreciation and amortization are recorded in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on the declining-balance and sum-of-the-years-digits depreciation methods. The Company's international businesses record depreciation expense primarily on a straight-line basis. The principal estimated useful lives for determining depreciation are as follows: Buildings, structures and improvements 10 to 30 years Furniture, fixtures, machinery and equipment 3 to 10 years Depreciation expense was $162 million , $170 million and $166 million for the years ended December 31, 2018, 2017 and 2016 , respectively. Improvements to leased property are amortized over the initial terms of the respective leases or the estimated service lives of the improvements, whichever is shorter. The Company capitalized interest costs of $10 million , $2 million and $2 million for the years ended December 31, 2018, 2017 and 2016 , respectively. LONG-LIVED ASSETS The carrying value of long-lived assets, primarily property, buildings and equipment and amortizable intangibles, is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows resulting from use of the asset, including disposition, are less than the carrying value of the asset. Impairment is measured as the amount by which the asset's carrying amount exceeds the fair value. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized, but rather tested for impairment on an annual basis and more often if circumstances require. Impairment losses are recognized whenever the carrying value of a reporting unit exceeds its fair value. See Note 4 to the Financial Statements. The Company recognizes an acquired intangible apart from goodwill whenever the intangible arises from contractual or other legal rights, or whenever it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their estimated useful lives (approximately 7 to 22 years) unless the estimated useful life is determined to be indefinite. The straight-line method of amortization is used as it has been determined to approximate the use pattern of the asset. The Company also maintains intangible assets with indefinite lives that are not amortized. These intangibles are tested for impairment on an annual basis and more often if circumstances require. An impairment loss is recognized whenever the estimated fair value of the asset is less than its carrying value. See Note 4 to the Financial Statements. The Company capitalizes certain costs related to the purchase and development of internal-use software. Amortization of capitalized software is on a straight-line basis over three or five years. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these financial instruments. See Note 9 to the Financial Statements for fair value of long-term debt. CONTINGENCIES The Company accrues for costs relating to litigation claims and other contingent matters, when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. NEW ACCOUNTING STANDARDS In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This ASU allows a reclassification from AOCE to Retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company has evaluated the provisions of this standard and elected to early implement and reclassify $15 million of income tax effects related to the change in the U.S. federal corporate income tax rate from AOCE to Retained earnings. See Note 14 to the Financial Statements. In August 2018, the FASB issued ASU 2018-14, Retirement Benefits - Defined Benefit Plans - Changes to the Disclosure Requirements for Defined Benefit Plans . This ASU removes disclosures that are no longer considered cost-beneficial, clarifies specific requirements of the disclosure and adds disclosure requirements identified as relevant to improve the effectiveness of the disclosures. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020, and early adoption is permitted. The Company elected to early adopt this ASU and the related disclosure changes are reflected in Note 10 to the Financial Statements. In September 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other Internal Use Software (Subtopic 350-40) Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company elected to early adopt during the fourth quarter of 2018 prospectively, with no material impact to the Company's Consolidated Financial Statements. LEASE ACCOUNTING STANDARDS In February 2016, the FASB issued ASU 2016-02, Leases as modified subsequently by ASUs 2018-01, 2018-10, 2018-11 and 2018-20 (Topic 842) . The core principle of the ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements, including balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months, among other changes. The effective date of these ASUs is for fiscal years and interim periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019, utilizing the modified retrospective transition method that allows for a cumulative-effect adjustment in the period of adoption, and does not plan to restate prior periods. Additionally, the Company elected certain practical expedients permitted under the transition guidance. Upon adoption, the Company's rights of use assets and corresponding lease liabilities are estimated at approximately $210 million to $230 million before considering deferred taxes. These amounts represent 4% and 6% of the Company’s Total assets and Total liabilities, respectively. Grainger does not expect a material impact to the Company’s Consolidated Statements of Earnings, Comprehensive Earnings or Cash Flows. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2018 | |
REVENUE [Abstract] | |
REVENUE | REVENUE Company revenue is primarily comprised of MRO product sales and related activities, such as freight and services. Grainger serves a large number of customers in diverse industries, which are subject to different economic and market specific factors. The Company's presentation of revenue by industry most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue and cash flows are affected by economic and market specific factors. The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Twelve Months Ended December 31, 2018 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 18 % Light Manufacturing 13 % 6 % 11 % Transportation 6 % 7 % 5 % Commercial 16 % 10 % 13 % Retail/Wholesale 8 % 4 % 7 % Contractors 10 % 11 % 8 % Natural Resources 3 % 32 % 4 % Other (1) 7 % 4 % 20 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 6 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe, Asia and Mexico and account for approximately 22% of revenue for the twelve months ended December 31, 2018. |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, BUILDINGS AND EQUIPMENT | PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment consisted of the following (in millions of dollars): As of December 31, 2018 December 31, 2017 Land $ 318 $ 349 Building, structures and improvements 1,338 1,343 Furniture, fixtures, machinery and equipment 1,785 1,753 Property, buildings and equipment $ 3,441 $ 3,445 Less: Accumulated depreciation and amortization 2,089 2,053 Property, buildings and equipment, net $ 1,352 $ 1,392 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The balances and changes in the carrying amount of Goodwill by segment are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2017 $ 202 $ 122 $ 203 $ 527 Divestiture (3 ) — — (3 ) Impairment (7 ) — — (7 ) Translation — 8 19 27 Balance at December 31, 2017 192 130 222 544 Impairment — — (105 ) (105 ) Translation — (10 ) (5 ) (15 ) Balance at December 31, 2018 $ 192 $ 120 $ 112 $ 424 Cumulative goodwill impairment charges, January 1, 2018 $ 24 $ 32 $ 71 $ 127 Impairment — — 105 105 Cumulative goodwill impairment charges, December 31, 2018 $ 24 $ 32 $ 176 $ 232 The balances and changes in Intangible assets - net are as follows (in millions of dollars): As of December 31, 2018 2017 Weighted average life Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer lists and relationships 14.3 years $ 410 $ 204 $ 206 $ 430 $ 196 $ 234 Trademarks, trade names and other 14.5 years 24 15 9 26 16 10 Non-amortized trade names and other 99 — 99 137 — 137 Capitalized software 4.2 years 657 511 146 633 445 188 Total intangible assets 8.2 years $ 1,190 $ 730 $ 460 $ 1,226 $ 657 $ 569 Amortization expense recognized on intangible assets was $ 92 million , $ 89 million and $ 82 million for the years ended December 31, 2018 , 2017 and 2016 , respectively, and is included in SG&A on the Consolidated Statement of Earnings. Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2019 $ 84 2020 66 2021 50 2022 26 2023 20 Thereafter 115 Grainger tests reporting units’ goodwill and intangible assets for impairment annually during the fourth quarter and more frequently if impairment indicators exist. Grainger periodically performs qualitative assessments of significant events and circumstances, such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors to determine the existence of impairment indicators and assess if it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible assets is less than its carrying value and if a quantitative impairment test is necessary. In the quantitative test, Grainger compares the carrying value of the reporting unit or an indefinite-lived intangible asset with its fair value. Any excess of the carrying value over fair value is recorded as an impairment charge. The fair value of reporting units is calculated primarily using the discounted cash flow (DCF) method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values. Estimates of market-participant risk-adjusted weighted average cost of capital are used as a basis for determining the discount rates to apply to the reporting units’ future expected cash flows and terminal value. Grainger’s indefinite-lived intangibles are primarily trade names. The fair value of trade names is calculated primarily using the relief from royalty method, which estimates the expected royalty savings attributable to the ownership of the trade name asset. The key assumptions when valuing a trade name are the revenue base, the royalty rate and the discount rate. During the quarter ended September 30, 2018, the Company identified impairment indicators at the Cromwell reporting unit. In the quantitative goodwill impairment test performed in 2017, the fair value of the Cromwell reporting unit exceeded its carrying value by 15% . However, its operating performance deteriorated during 2018 and the Company lowered its short-term forecasts and long-term outlook projections. These factors, combined with sustained economic uncertainty in the U.K. market and higher interest rates, led the Company to conclude that it was more likely than not that the carrying value of Cromwell’s goodwill and intangible assets may not be recoverable. Accordingly, a quantitative test was performed during the quarter ended September 30, 2018. The Company considered the impact of the prolonged softness and uncertainty in the U.K. market due to Brexit and other unfavorable structural economic conditions, as well as Cromwell’s underperformance compared to expectations, prior year quantitative test assumptions and future performance projections. The revised outlook and uncertainty beyond 2018 were factored into lower revenues, earnings and cash flow projections which, combined with an increase in the discount rate, resulted in the calculated fair value of the Cromwell reporting unit below its carrying value. Accordingly, the Company recorded a full goodwill impairment charge of $105 million with no tax benefit due to the nondeductibility of goodwill for tax purposes. The revised revenue and gross margin projections also resulted in the reduction of royalty rate and value attributable to the Cromwell trade name for which the Company recorded a $34 million impairment charge during the same period. The impairment charges related to Cromwell goodwill and trade name were recorded in other businesses in SG&A. The Company also performed an impairment test on Cromwell’s intangible assets subject to amortization and long-lived assets using the undiscounted cash flows method and no impairment charge was required. Grainger performed its annual impairment testing in the fourth quarter. The testing included a qualitative assessment of all other reporting units' goodwill and intangible assets. The Company concluded that it was not more likely than not that the fair value of the reporting unit of indefinite-lived intangible assets is less than its carrying value. The risk of potential failure of future impairment tests is highly dependent upon a number of assumptions. Changes in assumptions regarding discount rate and future performance, as well as the ability to execute on growth initiatives and productivity improvements, may have a significant impact on future cash flows. Likewise, unfavorable economic environment and changes in market conditions or other factors may result in future impairments of the goodwill and intangible assets. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS [Abstract] | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | ALLOWANCE FOR DOUBTFUL ACCOUNTS The following table shows the activity in the allowance for doubtful accounts (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (29 ) $ (27 ) Provision for uncollectible accounts (7 ) (16 ) Write-off of uncollectible accounts, net of recoveries 10 17 Foreign currency and other 1 (3 ) Balance at end of period $ (25 ) $ (29 ) |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories primarily consist of merchandise purchased for resale. Inventories would have been $394 million and $ 382 million higher than reported at December 31, 2018 and December 31, 2017, respectively, if the FIFO method of inventory accounting had been used for all the Company inventories. Net earnings would have increased by $ 8 million, and decreased by $ 1 million and $ 3 million for the years ended December 31, 2018, 2017 and 2016, respectively , using the FIFO method of accounting. Inventory values using the FIFO method of accounting approximate replacement cost. The following table shows the activity in the reserves for excess and obsolete inventory (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (193 ) $ (191 ) Provision for excess and obsolete inventory (20 ) (25 ) Disposal of unsaleable inventory 55 29 Other 4 (6 ) Balance at end of period $ (154 ) $ (193 ) |
RESTRUCTURING RESERVES
RESTRUCTURING RESERVES | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING RESERVES | RESTRUCTURING RESERVES During 2018, Grainger substantially completed initiatives to reduce costs in the U.S. business and at the Company level (unallocated expense) and streamline and focus on profitability in the Canada business and other businesses. Restructuring costs, net of gains, for the years ended December 31, 2018, 2017 and 2016 are as follows (in millions of dollars): For the Year Ended December 31, 2018 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ (1 ) $ 15 $ (6 ) $ 8 Canada — 24 11 35 Other businesses 1 1 4 6 Unallocated expense — — (2 ) (2 ) Total $ — $ 40 $ 7 $ 47 For the Year Ended December 31, 2017 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ 1 $ 32 $ (22 ) $ 11 Canada 8 15 16 39 Other businesses 4 12 39 55 Unallocated expense — — 11 11 Total $ 13 $ 59 $ 44 $ 116 For the Year Ended December 31, 2016 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ 3 $ 21 $ (9 ) $ 15 Canada 2 13 1 16 Unallocated expense — — 9 9 Total $ 5 $ 34 $ 1 $ 40 Other charges (gains) for all three years primarily include asset impairments, write-down losses and other exit-related costs. The charges in the U.S. and Canada businesses are partially offset by gains from the sales of assets in those segments. Included in other charges (gains) is also approximately $18 million of accumulated foreign currency translations losses reclassified from Accumulated other comprehensive losses to earnings primarily related to the wind-down of Colombia during 2017. Restructuring reserves are primarily recorded as part of Accrued compensation and benefits and Accrued expenses. The following summarizes the restructuring and related reserve activity for the years ended December 31, 2018 and 2017 (in millions of dollars): Current liabilities Current assets write-downs Property, buildings and equipment write-downs and disposals Involuntary employee termination costs Lease termination costs Other costs Total Reserves as of January 1, 2017 $ — $ — $ 24 $ 3 $ 1 $ 28 Restructuring costs, net of (gains) 14 — 59 6 37 116 Cash (paid) received (1 ) 24 (34 ) (4 ) (8 ) (23 ) Non-cash, translation and others $ — $ (23 ) $ 1 $ — $ (17 ) $ (39 ) Reserves as of December 31, 2017 $ 13 $ 1 $ 50 $ 5 $ 13 $ 82 Restructuring costs, net of (gains) 4 (10 ) 40 12 1 47 Cash (paid) received (1 ) 44 (57 ) (4 ) (1 ) (19 ) Non-cash, translation and others (16 ) (35 ) (2 ) (2 ) (8 ) (63 ) Reserves as of December 31, 2018 $ — $ — $ 31 $ 11 $ 5 $ 47 The cumulative amounts incurred to date and expected (excluding results of sales of real estate) in connection with the Company's restructuring actions for active programs are as follows (in millions of dollars): Cumulative amount incurred to date Additional amount expected United States $ 70 $ 3 Canada 93 — Other businesses 67 — Unallocated expense 18 — Total $ 248 $ 3 |
SHORT-TERM DEBT
SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Short-term Debt [Abstract] | |
SHORT-TERM DEBT | SHORT-TERM DEBT Short-term debt consisted of the following (in millions of dollars): As of December 31, 2018 2017 Lines of Credit Outstanding at December 31 $ 49 $ 56 Maximum month-end balance during the year $ 138 $ 56 Weighted average interest rate during the year 2.29 % 2.41 % Weighted average interest rate at December 31 2.35 % 2.01 % Commercial Paper Outstanding at December 31 $ — $ — Maximum month-end balance during the year $ 90 $ 455 Weighted average interest rate during the year 1.80 % 0.83 % Lines of Credit The Company's U.S. business has a five -year $750 million unsecured revolving line of credit, maturing in 2022. There were no borrowings outstanding under the line of credit as of December 31, 2018 and 2017. The primary purpose of this credit facility is to provide support to the Company's commercial paper program and for general corporate purposes. Foreign subsidiaries utilize lines of credit for working capital purposes and other operating needs. These foreign lines of credit in aggregate were $49 million and $56 million as of December 31, 2018 and 2017, respectively. Commercial Paper The Company issues commercial paper from time to time for general working capital needs. At December 31, 2018, there was no ne outstanding. The Company's short-term debt instruments include affirmative and negative covenants that are usual and customary for companies with similar credit ratings and do not contain any financial performance covenants. The Company was in compliance with all debt covenants as of December 31, 2018 . |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Long-term debt consisted of the following (in millions of dollars): As of December 31, 2018 2017 Carrying Value Fair Value Carrying Value Fair Value 4.60% senior notes due 2045 $ 1,000 1,026 $ 1,000 $ 1,089 3.75% senior notes due 2046 400 357 400 384 4.20% senior notes due 2047 400 383 400 411 British pound term loan 174 174 195 195 Euro term loan 126 126 132 132 Canadian dollar revolving credit facility 44 44 99 99 Other 49 49 84 84 Subtotal 2,193 2,159 2,310 2,394 Less current maturities (81 ) (81 ) (39 ) (39 ) Debt issuance costs and discounts, net of amortization (22 ) (22 ) (23 ) (23 ) Long-term debt (less current maturities) $ 2,090 $ 2,056 $ 2,248 $ 2,332 Senior Notes In May 2017 , the Company issued $400 million of unsecured 4.20% Senior Notes that mature on May 15, 2047. A portion of the proceeds from this bond issuance was used to pay outstanding commercial paper during 2017. The 4.20% Notes require no principal payments until the maturity date and interest is payable semi-annually on May 15 and November 15 . In May 2016 , the Company issued $400 million of unsecured 3.75% Senior Notes that mature on May 15, 2046. The 3.75% Notes require no principal payments until the maturity date and interest is payable semi-annually on May 15 and November 15 . In June 2015 , the Company issued $1 billion of unsecured 4.60% Senior Notes that mature on June 15, 2045 . The 4.60% Notes require no principal payments until the maturity date and interest is payable semi-annually on June 15 and December 15 . The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20 - 25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. Costs and discounts of approximately $24 million associated with the issuance of the Senior Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Notes. British Pound Term Loan In August 2015 , the Company entered into an unsecured credit facilities agreement providing for a five -year term loan of £160 million and revolving credit facility of up to £20 million (see Note 8 to the Financial Statements). Under the agreement, the principal amount of the term loan will be repaid semiannually in installments of £4 million beginning February 2016 through February 2020 with the remaining outstanding amount due August 2020. At the election of the Company, the term loan bears interest at the LIBOR Rate plus a margin of 75 basis points , as defined within the term loan agreement. At December 31, 2018, the Company had elected a one-month LIBOR interest period. The weighted average interest rate was 1.34% and 1.04% for the years ended December 31, 2018 and 2017, respectively. Euro Term Loan On August 31, 2016 , the Company entered into an agreement for a five -year term loan of €110 million and a revolving credit facility of up to €20 million (see Note 8 to the Financial Statements). The proceeds from the term loan were used to pay in full €102.5 million of a term loan that matured in August 2016 . Under the agreement, no principal amount of the loan will be required to be paid until the loan becomes due on August 31, 2021 , at which time the loan will be required to be paid in full. The Company, at its option, may prepay this term loan in whole or in part at the end of any interest period without penalty. The loan bears interest at the EURIBOR plus a margin of 45 basis points , as defined within the term loan agreement. If EURIBOR is less than zero, then EURIBOR will be deemed to be zero. The interest rate at both December 31, 2018 and 2017 was 0.45% . Canadian Dollar Revolving Credit Facility In September 2014 , the Company entered into an unsecured revolving credit facility with a maximum availability of C$175 million . The loan bears interest at the Canadian Dollar Offered Rate (CDOR) plus a margin of 80 basis points , as defined within the loan agreement. The weighted average interest rate during the year on this outstanding amount was 2.50% . No principal payments are required on the credit facility until the maturity date. The facility matures in 2019 and accordingly, the amount outstanding is included in Current maturities of long-term debt as of December 31, 2018. The estimated fair value of the Company’s senior notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. The scheduled aggregate principal payments related to long-term debt, excluding debt issuance costs, are due as follows (in millions of dollars): Year Payment Amount 2019 $ 81 2020 182 2021 126 2022 4 2023 — Thereafter 1,800 Total $ 2,193 The Company's long-term debt instruments include affirmative and negative covenants that are usual and customary for companies with similar credit ratings and do not contain any financial performance covenant. The Company was in compliance with all debt covenants as of December 31, 2018 . |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2018 | |
EMPLOYEE BENEFITS [Abstract] | |
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS The Company provides various retirement benefits to eligible employees, including contributions to defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and other benefits. Eligibility requirements and benefit levels vary depending on employee location. Various foreign benefit plans cover employees in accordance with local legal requirements. Defined Contribution Plans A majority of the Company's U.S. employees are covered by a noncontributory profit-sharing plan. The plan aligns Company contributions to Company performance and includes two components, a variable annual contribution based on a rate of return on invested capital and an automatic contribution equal to 3% of total eligible compensation. In addition, employees covered by the plan are also able to make personal contributions. The total Company contribution will be maintained at a minimum of 8% and a maximum of 18% of total eligible compensation paid to eligible employees. The total profit-sharing plan expense was $ 164 million , $ 120 million and $ 84 million for 2018, 2017 and 2016 , respectively. The Company sponsors additional defined contribution plans available to certain U.S. and foreign employees for which contributions are made by the Company and participating employees. The expense associated with these defined contribution plans totaled $ 13 million , $ 18 million , and $ 12 million for 2018, 2017 and 2016 , respectively. Defined Benefit Plans and Other Retirement Plans The Company sponsors defined benefit plans available to certain foreign employees. The cost of these programs is not significant to the Company. In certain countries, pension contributions are made to government-sponsored social security pension plans in accordance with local legal requirements. For these plans, the Company has no continuing obligations other than the payment of contributions. Postretirement Healthcare Benefits Plans The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its U.S. employees hired prior to January 1, 2013, and their dependents should they elect to maintain such coverage upon retirement. Covered employees become eligible for participation when they qualify for retirement while working for the Company. Participation in the plan is voluntary and requires participants to make contributions toward the cost of the plan, as determined by the Company. During the third quarter of 2017, the Company implemented plan design changes effective January 1, 2018, for the post-65 age group. This plan change moved all post-65 Medicare eligible retirees to healthcare exchanges and provided them a subsidy to purchase insurance. The amount of the subsidy is based on years of service. As a result of the plan change, the plan obligation was remeasured as of August 31, 2017. The remeasurement resulted in a decrease in the postretirement benefit obligation of $76 million and a corresponding unrecognized gain recorded in Other comprehensive earnings net of tax of $29 million . The net periodic costs, as previously reported in the 2017 and 2016 Financial Statements, have been reclassified to conform to the 2018 presentation in accordance with ASU 2017-07. The net periodic benefits costs were valued with a measurement date of January 1 for each year and August 31, 2017 remeasurement date and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 SG&A Service cost $ 6 $ 7 $ 8 Other income (expense) Interest cost 7 8 10 Expected return on assets (13 ) (12 ) (10 ) Amortization of prior service credit (10 ) (7 ) (7 ) Amortization of unrecognized gains (3 ) (2 ) — Net periodic (benefits) costs $ (13 ) $ (6 ) $ 1 Reconciliations of the beginning and ending balances of the postretirement benefit obligation, which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit obligation follow (in millions of dollars): 2018 2017 Benefit obligation at beginning of year $ 208 $ 265 Service cost 6 7 Interest cost 7 8 Plan participants' contributions 3 3 Actuarial (gains) (26 ) (34 ) Plan amendment — (34 ) Benefits paid (9 ) (9 ) Prescription drug rebates 1 2 Benefit obligation at end of year 190 208 Plan assets available for benefits at beginning of year 189 164 Actual (losses) returns on plan assets (8 ) 29 Plan participants' contributions 3 3 Benefits paid (9 ) (8 ) Prescription drug rebates 1 1 Plan assets available for benefits at end of year 176 189 Noncurrent postretirement benefit obligation $ 14 $ 19 The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2018 2017 Prior service credit $ 71 $ 80 Unrecognized gains 37 37 Deferred tax (liability) (26 ) (44 ) Net accumulated gains $ 82 $ 73 The Company has elected to amortize the amount of net unrecognized gains over a period equal to the average remaining service period for active plan participants expected to retire and receive benefits of approximately 12.9 years for 2018 . The postretirement benefit obligation was determined by applying the terms of the plan and actuarial models. These models include various actuarial assumptions, including discount rates, long-term rates of return on plan assets, healthcare cost trend rate and cost-sharing between the Company and the retirees. The Company evaluates its actuarial assumptions on an annual basis and considers changes in these long-term factors based upon market conditions and historical experience. The following assumptions were used to determine net periodic benefit costs at January 1 of each year (excluding the August 31, 2017 remeasurement date): For the Years Ended December 31, 2018 2017 2016 Discount rate 3.44 % 4.00 % 4.20 % Long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 6.65 % Initial healthcare cost trend rate Pre age 65 6.56 % 6.81 % 7.00 % Post age 65 NA 9.36 % 7.00 % Catastrophic drug benefit 12.50 % NA NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % NA NA The following assumptions were used to determine benefit obligations at December 31: 2018 2017 2016 Discount rate 4.08 % 3.44 % 4.00 % Expected long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.31 % 6.56 % 6.81 % Post age 65 N/A NA 9.36 % Catastrophic drug benefit 11.50 % 12.50 % N/A Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % N/A The discount rate assumptions reflect the rates available on high-quality fixed income debt instruments as of December 31, the measurement date of each year. These rates have been selected due to their similarity to the duration of the projected cash flows of the postretirement healthcare benefit plan. As of December 31, 2018 , the Company increased the discount rate from 3.44% to 4.08% to reflect the increase in the market interest rates at December 31, 2018 . As of December 31, 2018, the Company changed the mortality improvement table used to project mortality rates into the future from Mortality Table RPH-2014 with Mortality Improvement Scale MP 2016 to Mortality Table RPH-2014 with Mortality Improvement Scale MP 2018, which was published by the Society of Actuaries and reflects the most recent updates to life expectancies. RPH-2014 Table is a headcount weighted table, which is also more appropriate for a postretirement healthcare benefit plan. The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. As of December 31, 2016, Grainger adopted a new healthcare trend rate to include a pre and post age 65 trend rates. Post age 65, prescription drug costs, primarily specialty drugs, are expected to increase the cost of healthcare more significantly than medical expenses. The alternative trend rates allow for a better estimate of expected costs for this plan. As of December 31, 2018 , the initial healthcare cost trend rate was 6.31% for pre age 65. The healthcare costs trend rates decline each year until reaching the ultimate trend rate of 4.50% . The plan amendment adopted in 2017 moves all post age 65 Medicare eligible retirees to an exchange and provides a subsidy to those retirees to purchase insurance. The amount of the subsidy is based on years of service and is indexed at 2.50% for grandfathered employees. The Company has established a Group Benefit Trust (Trust) to fund the plan obligations and process benefit payments. All assets of the Trust are invested in equity funds designed to track to either the Standard & Poor's 500 Index (S&P 500) or the Total International Composite Index. The Total International Composite Index tracks non-U.S. stocks within developed and emerging market economies. This investment strategy reflects the long-term nature of the plan obligation and seeks to take advantage of the earnings potential of equity securities in the global markets and intends to reach a balanced allocation between U.S. and non-U.S. equities. The plan's assets are stated at fair value, which represents the net asset value of shares held by the plan in the registered investment companies at the quoted market prices (level 1 input). The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2018 2017 Registered investment companies: Fidelity Spartan U.S. Equity Index Fund $ 80 $ 83 Vanguard 500 Index Fund 93 104 Vanguard Total International Stock 26 30 Plan Assets 199 217 Trust liabilities (23 ) (28 ) Plan assets available for benefits $ 176 $ 189 The Company uses the long-term historical return on the plan assets and the historical performance of the S&P 500 and the Total International Composite Index to develop its expected return on plan assets. The after-tax expected long-term rates of return on plan assets of 7.13% at December 31, 2018 is based on the historical average of long-term rates of return and an estimated tax rate. The required use of an expected long-term rate of return on plan assets may result in recognition of income that is greater or lower than the actual return on plan assets in any given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns and, therefore, result in a pattern of income recognition that more closely matches the pattern of the services provided by the employees. The Company's investment policies include periodic reviews by management and trustees at least annually concerning: (1) the allocation of assets among various asset classes (e.g., domestic stocks, international stocks, short-term bonds, long-term bonds, etc.); (2) the investment performance of the assets, including performance comparisons with appropriate benchmarks; (3) investment guidelines and other matters of investment policy and (4) the hiring, dismissal or retention of investment managers. The funding of the Trust is an estimated amount that 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. The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future employee service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2019 $ 8 2020 9 2021 10 2022 11 2023 12 2024-2028 66 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases certain land, buildings, equipment and vehicles under noncancelable operating leases that expire at various dates through 2036 . Many of the building leases obligate the Company to pay real estate taxes, insurance and certain maintenance costs and contain multiple renewal provisions, exercisable at the Company's option. Leases that contain predetermined fixed escalations of the minimum rentals are recognized in rental expense on a straight-line basis over the lease term. Cash or rent abatements received upon entering into certain operating leases are also recognized on a straight-line basis over the lease term. At December 31, 2018 the approximate future minimum lease payments for operating leases were as follows (in millions of dollars): Year Future Minimum Lease Payments 2019 $ 65 2020 49 2021 36 2022 27 2023 18 Thereafter 38 Total minimum payments required 233 Less amounts representing sublease income (11 ) $ 222 In the fourth quarter of 2018, Grainger consolidated three office locations into one main location in the Chicago area, which increased the future minimum lease payments by $48 million and sublease income by $6 million . The new lease has a 10-year term. Rent expense was $76 million , $76 million and $81 million for 2018 , 2017 and 2016 , respectively. These amounts are net of sublease income of $3 million , $2 million and $2 million for 2018 , 2017 and 2016 . Capital leases as of December 31, 2018 are not considered material. Capital lease obligations are reported in Long-term debt. Effective January 1, 2019, the Company implemented ASU 2016-02, Leases and subsequent modifications ASUs 2018-01, 2018-10, 2018-11 and 2018-20. See Note 1 to the Financial Statements for more information. |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2018 | |
STOCK INCENTIVE PLANS [Abstract] | |
STOCK INCENTIVE PLANS | STOCK INCENTIVE PLANS The Company maintains stock incentive plans under which the Company may grant a variety of incentive awards to employees and executives, which include restricted stock units (RSUs), non-qualified stock options, performance shares and deferred stock units. As of December 31, 2018 , there were 2.5 million shares available for grant under the plans. When awards are exercised or settled, shares of the Company’s treasury stock are issued. Pretax stock-based compensation expense, included in SG&A was $ 47 million , $ 33 million and $ 36 million in 2018, 2017 and 2016 , respectively and was primarily comprised of Restricted Stock Units (RSUs) and option grants. Related income tax benefits recognized in earnings were $26 million , $ 26 million and $12 million in 2018, 2017 and 2016 , respectively. Restricted Stock Units The Company awards RSUs to certain employees and executives. RSUs granted vest generally over periods from three to seven years from issuance, although accelerated vesting is provided in certain instances. Holders of RSUs are entitled to receive nonforfeitable cash payments equivalent to cash dividends and other distributions paid with respect to common stock. RSUs are settled by the issuance of the Company's common stock on a one -for-one basis. Compensation expense related to RSUs is based upon the closing market price on the last trading day preceding the date of award and is charged to earnings on a straight-line basis over the vesting period. The following table summarizes RSU activity (in millions, except for share and per share amounts): 2018 2017 2016 Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Beginning nonvested units 352,919 $ 226.31 373,403 $ 221.77 432,783 $ 213.45 Issued 141,775 $ 284.98 129,378 $ 222.53 113,909 $ 230.36 Canceled (56,393 ) $ 245.08 (47,488 ) $ 229.36 (62,869 ) $ 229.70 Vested (94,487 ) $ 233.75 (102,374 ) $ 203.51 (110,420 ) $ 193.51 Ending nonvested units 343,814 $ 245.38 352,919 $ 226.31 373,403 $ 221.77 Fair value of shares vested $22 $21 $21 At December 31, 2018 there was $ 51 million of total unrecognized compensation expense related to nonvested RSUs that the Company expects to recognize over a weighted average period of 3.0 years. Stock Options The Company issues stock option grants to certain employees and executives. Option awards are granted with an exercise price equal to the closing market price of the Company's stock on the day of the grant. The options generally vest over three years, although accelerated vesting is provided in certain circumstances. Awards generally expire 10 years from the grant date. Transactions involving stock options are summarized as follows: Shares Subject to Option Weighted Average Price Per Share Options Exercisable Outstanding at January 1, 2016 2,226,286 $ 169.96 1,411,460 Granted 294,874 $ 234.25 Exercised (317,110 ) $ 108.28 Canceled or expired (80,014 ) $ 210.01 Outstanding at December 31, 2016 2,124,036 $ 186.59 1,346,707 Granted 306,206 $ 230.97 Exercised (409,269 ) $ 115.35 Canceled or expired (87,260 ) $ 222.00 Outstanding at December 31, 2017 1,933,713 $ 207.10 1,375,844 Granted 204,250 $ 276.64 Exercised (931,929 ) $ 193.68 Canceled or expired (72,931 ) $ 226.48 Outstanding at December 31, 2018 1,133,103 $ 229.42 581,534 At December 31, 2018 there was $ 9 million of total unrecognized compensation expense related to nonvested option awards, which the Company expects to recognize over a weighted average period of 1.9 years. The following table summarizes information about stock options (in millions of dollars): For the years ended December 31, 2018 2017 2016 Fair value of options exercised $ 38 $ 11 $ 8 Total intrinsic value of options exercised 102 47 36 Fair value of options vested 8 24 15 Settlements of options exercised 180 47 35 Information about stock options outstanding and exercisable as of December 31, 2018 , is as follows: Options Outstanding Options Exercisable Weighted Average Weighted Average Range of Exercise Prices Number Remaining Contractual Life Exercise Price Intrinsic Value (millions) Number Remaining Contractual Life Exercise Price Intrinsic Value (millions) $72.14 - $204.01 184,435 2.23 years $ 152.28 $ 24 183,292 2.19 years $ 152.17 $ 24 $223.68 - $276.64 948,668 7.37 years $ 244.42 36 398,242 6.10 years $ 238.88 17 1,133,103 6.54 years $ 229.42 $ 60 581,534 4.87 years $ 211.55 $ 41 The Company uses a binomial lattice option pricing model for the valuation of stock options. The weighted average fair value of options granted in 2018, 2017 and 2016 was $ 67.31 , $ 45.09 and $ 44.94 , respectively. The fair value of options granted in 2018, 2017 and 2016 used the following assumptions: For the years ended December 31, 2018 2017 2016 Risk-free interest rate 2.6% 2.0% 1.4% Expected life 6 years 6 years 6 years Expected volatility 27.5% 23.9% 24.5% Expected dividend yield 1.9% 2.1% 2.0% The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term approximately equal to the expected term of the options being valued. The expected life selected for options granted during each year presented represents the period of time that the options are expected to be outstanding based on historical data of option holder exercise and termination behavior. Expected volatility is based upon implied and historical volatility of the Company's closing stock price over a period equal to the expected life of each option grant. Historical Company information is the primary basis for selection of expected dividend yield assumptions. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2018 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK The Company had no shares of preferred stock outstanding as of December 31, 2018 and 2017 . The activity related to outstanding common stock and common stock held in treasury was as follows: 2018 2017 2016 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 56,328,863 53,330,356 58,804,314 50,854,905 62,028,708 47,630,511 Exercise of stock options 930,258 (930,258 ) 407,542 (407,542 ) 315,171 (315,171 ) Settlement of restricted stock units, net of 39,075, 36,585 and 41,128 shares retained, respectively 80,988 (80,988 ) 103,331 (103,331 ) 78,310 (78,310 ) Settlement of performance share units, net of 1,027, 9,334 and 6,765 shares retained, respectively 1,911 (1,911 ) 13,978 (13,978 ) 11,806 (11,806 ) Purchase of treasury shares (1,479,660 ) 1,479,660 (3,000,302 ) 3,000,302 (3,629,681 ) 3,629,681 Balance at end of period 55,862,360 53,796,859 56,328,863 53,330,356 58,804,314 50,854,905 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) The components of AOCE consisted of the following (in millions of dollars): Foreign Currency Translation and Other Defined Postretirement Benefit Plan Other Employment-related Benefit Plans Total Foreign Currency Translation Attributable to Noncontrolling Interests AOCE Attributable to W.W. Grainger, Inc. Balance at January 1, 2016, net of tax $ (277 ) $ 35 $ (3 ) $ (245 ) $ (24 ) $ (221 ) Other comprehensive earnings (loss) before reclassifications, net of tax (39 ) (6 ) (2 ) (47 ) 1 (48 ) Amounts reclassified to Net earnings — (4 ) — (4 ) — (4 ) Net current period activity $ (39 ) $ (10 ) $ (2 ) $ (51 ) $ 1 $ (52 ) Balance at December 31, 2016, net of tax $ (316 ) $ 25 $ (5 ) $ (296 ) $ (23 ) $ (273 ) Other comprehensive earnings (loss) before reclassifications, net of tax 75 86 1 162 4 158 Amounts reclassified to Net earnings 18 (38 ) — (20 ) — (20 ) Net current period activity $ 93 $ 48 $ 1 $ 142 $ 4 $ 138 Balance at December 31, 2017, net of tax $ (223 ) $ 73 $ (4 ) $ (154 ) $ (19 ) $ (135 ) Other comprehensive earnings (loss) before reclassifications, net of tax (43 ) 4 (1 ) (40 ) 3 (43 ) Amounts reclassified to Net earnings 2 (10 ) — (8 ) — (8 ) Amounts reclassified to Retained earnings — 15 — 15 — 15 Net current period activity (41 ) 9 (1 ) (33 ) 3 (36 ) Balance at December 31, 2018, net of tax $ (264 ) $ 82 $ (5 ) $ (187 ) $ (16 ) $ (171 ) |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Current income tax expense: U.S. Federal $ 166 $ 248 $ 311 U.S. State 32 29 38 Foreign 47 22 25 Total current 245 299 374 Deferred income tax expense 13 14 12 Total income tax expense $ 258 $ 313 $ 386 Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 U.S. $ 1,163 $ 971 $ 1,074 Foreign (82 ) (35 ) (55 ) $ 1,081 $ 936 $ 1,019 The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2018 and 2017 were as follows (in millions of dollars): As of December 31, 2018 2017 Deferred tax assets: Inventory $ 4 $ 14 Accrued expenses 35 44 Accrued employment-related benefits 49 63 Foreign operating loss carryforwards 64 72 Tax credit carryforward 22 20 Other 7 8 Deferred tax assets 181 221 Less valuation allowance (72 ) (84 ) Deferred tax assets, net of valuation allowance $ 109 $ 137 Deferred tax liabilities: Property, buildings and equipment (29 ) (33 ) Intangibles (105 ) (119 ) Software (15 ) (20 ) Prepaids (6 ) (6 ) Other (8 ) (4 ) Deferred tax liabilities (163 ) (182 ) Net deferred tax liability $ (54 ) $ (45 ) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 12 $ 22 Noncurrent liabilities (foreign) (66 ) (67 ) Net deferred tax liability $ (54 ) $ (45 ) At December 31, 2018 the Company had $ 269 million of net operating loss (NOLs) carryforwards related primarily to foreign operations. Some of the operating loss carryforwards may expire at various dates through 2038. The Company has recorded a valuation allowance, which represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and deferred tax assets that may not be realized. The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (84 ) $ (73 ) Increases primarily related to foreign NOLs (3 ) (13 ) Releases related to foreign NOLs 16 8 Other changes, net — 5 Increase related to U.S. foreign tax credits (1 ) (11 ) Balance at end of period $ (72 ) $ (84 ) A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Federal income tax $ 227 $ 327 $ 357 State income taxes, net of federal income tax benefit 32 20 26 Clean energy credit (20 ) (38 ) (29 ) Foreign rate difference 20 10 21 Goodwill impairment 20 — — U.S. tax legislation impact (see note below) — (3 ) — Excess tax benefits from stock-based compensation (15 ) (14 ) — Other - net (6 ) 11 11 Income tax expense $ 258 $ 313 $ 386 Effective tax rate 23.9 % 33.5 % 37.9 % Clean Energy Credit In 2015 and 2016, the Company acquired noncontrolling interests in limited liability companies established to produce refined coal. The production and sale of refined coal that results in required emission reductions is eligible for tax credits under Section 45 of the Internal Revenue Code. The Company received tax credits in proportion to its equity interest. During the second half of 2018, the Company concluded its investments and will not have future benefits from these interests. U.S. Tax Legislation On December 22, 2017 , the Tax Cuts and Jobs Act (the Tax Act) was signed into law, which significantly revised the U.S. corporate income tax system by lowering federal corporate income tax rates from 35% to 21% effective January 1, 2018, allowing accelerated expensing of qualified capital investments for a specific period, limiting net interest expense deductions and transitioning U.S. international taxation from a worldwide to a territorial tax system that required a one-time transition tax on unremitted earnings of certain foreign subsidiaries that were previously tax deferred, among other changes. During 2018, the Company completed the accounting for the impact from the Tax Act. The Company determined that there was no material change from its estimate recorded on December 31, 2017. Accounting for Income Taxes on Global Intangible Low-Taxed Income (GILTI) The Company recognizes the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period. Foreign Undistributed Earnings Estimated gross undistributed earnings of foreign subsidiaries at December 31, 2018, amounted to $545 million . The Company considers these undistributed earnings permanently reinvested in its foreign operations and is not recording a deferred tax liability for any foreign withholding taxes on such amounts. The Company's permanent reinvestment assertion has not changed following the enactment of the Tax Act. If at some future date the Company ceases to be permanently reinvested in its foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference in its investments in its foreign subsidiaries. Tax Uncertainties The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Balance at beginning of year $ 45 $ 59 $ 61 Additions for tax positions related to the current year 4 4 14 Additions for tax positions of prior years 3 5 13 Reductions for tax positions of prior years (5 ) (13 ) (15 ) Reductions due to statute lapse (9 ) (5 ) (1 ) Settlements, audit payments, refunds - net (1 ) (5 ) (13 ) Balance at end of year $ 37 $ 45 $ 59 The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in this amount are $ 13 million and $ 21 million at December 31, 2018 and 2017, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Any changes in the timing of deductibility of these items would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authorities to an earlier period. Excluding the timing items, the remaining amounts would affect the annual tax rate. In 2018 , the changes to tax positions related generally to the impact of expiring statutes, conclusion of audits and audit settlements. The Company regularly undergoes examination of its federal income tax returns by the Internal Revenue Service. The statute of limitations expired for the Company's 2014 federal tax return. The tax years 2015 through 2018 are open. The Company is also subject to audit by state, local and foreign taxing authorities. Tax years 2009-2018 remain subject to state and local audits and 2007-2018 remain subject to foreign audits. The amount of liability associated with the Company's tax uncertainties may change within the next 12 months due to the pending audit activity, expiring statutes or tax payments. A reasonable estimate of such change cannot be made. The Company recognizes interest expense and penalties related to its tax uncertainties in the provision for income taxes. For the years ended December 31, 2018, 2017 and 2016 , the Company recognized an expense of approximately $1 million for each year. Total accrued interest and penalties related to tax uncertainties as of December 31, 2018, 2017 and 2016 , were approximately $ 4 million , $ 5 million and $ 4 million , respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Certain stock incentive plans grant stock awards that contain nonforfeitable rights to dividends meet the criteria of a participating security. Under the two-class method, earnings are allocated between common stock and participating securities. The presentation of basic and diluted earnings per share is required only for each class of common stock and not for participating securities. As such, the Company presents basic and diluted earnings per share for its one class of common stock. The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. The Company’s reported net earnings are reduced by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders for purposes of calculating earnings per share. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock or the two-class method. The Company has determined the two-class method to be the more dilutive. As such, the earnings allocated to common stock shareholders in the basic earnings per share calculation is adjusted for the reallocation of undistributed earnings to participating securities to arrive at the earnings allocated to common stock shareholders for calculating the diluted earnings per share. The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in millions of dollars, except for share and per share amounts): For the Years Ended December 31, 2018 2017 2016 Net earnings attributable to W.W. Grainger, Inc. as reported $ 782 $ 586 $ 606 Distributed earnings available to participating securities (2 ) (2 ) (2 ) Undistributed earnings available to participating securities (4 ) (3 ) (3 ) Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders 776 581 601 Undistributed earnings allocated to participating securities 4 3 3 Undistributed earnings reallocated to participating securities (4 ) (3 ) (3 ) Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders $ 776 $ 581 $ 601 Denominator for basic earnings per share – weighted average shares 56,142,604 57,674,977 60,430,892 Effect of dilutive securities 391,581 308,190 409,038 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 56,534,185 57,983,167 60,839,930 Earnings per share two-class method Basic $ 13.82 $ 10.07 $ 9.94 Diluted $ 13.73 $ 10.02 $ 9.87 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Grainger’s two reportable segments are the U.S. and Canada. The U.S. reportable segment reflects the results of Grainger's U.S. businesses. The Canada reportable segment reflects the results for Acklands-Grainger, Inc. and its subsidiaries. Other businesses include the endless assortment (single-channel online businesses), Zoro Tools, Inc. (Zoro) in the U.S. and MonotaRO Co. (MonotaRO) in Japan, and smaller high-tough, high-service businesses in Europe, Asia and Mexico. These businesses individually do not meet the criteria of a reportable segment. Operating segments generate revenue almost exclusively through the distribution of MRO supplies, as service revenues account for approximately 1% of total revenues for each operating segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment transfer prices are established at external selling prices, less costs not incurred due to a related party sale. The segment results include certain centrally incurred costs for shared services that are charged to the segments based upon the relative level of service used by each operating segment. Following is a summary of segment results (in millions of dollars): 2018 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,588 $ 653 $ 9,241 $ 2,441 $ 11,682 Intersegment net sales (457 ) — (457 ) (4 ) (461 ) Net sales to external customers 8,131 653 8,784 2,437 11,221 Segment operating earnings 1,338 (49 ) 1,289 8 1,297 2017 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,960 $ 753 $ 8,713 $ 2,120 $ 10,833 Intersegment net sales (404 ) — (404 ) (4 ) (408 ) Net sales to external customers 7,556 753 8,309 2,116 10,425 Segment operating earnings 1,200 (77 ) 1,123 56 1,179 2016 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,870 $ 734 $ 8,604 $ 1,885 $ 10,489 Intersegment net sales (348 ) — (348 ) (4 ) (352 ) Net sales to external customers 7,522 734 8,256 1,881 10,137 Segment operating earnings 1,269 (65 ) 1,204 40 1,244 Following are reconciliations of the segment information with the consolidated totals per the Financial Statements (in millions of dollars): 2018 2017 2016 Operating earnings: Total operating earnings for reportable segments $ 1,289 $ 1,123 $ 1,204 Other businesses 8 56 40 Unallocated expenses (139 ) (144 ) (131 ) Total consolidated operating earnings $ 1,158 $ 1,035 $ 1,113 Assets: United States $ 2,496 $ 2,310 $ 2,275 Canada 188 279 286 Assets for reportable segments $ 2,684 $ 2,589 $ 2,561 Other current and noncurrent assets 2,879 3,033 2,959 Unallocated assets 310 182 174 Total consolidated assets $ 5,873 $ 5,804 $ 5,694 Depreciation and amortization: United States $ 166 $ 169 $ 159 Canada 19 19 18 Depreciation and amortization for reportable segments $ 185 $ 188 $ 177 Other businesses and unallocated 49 53 46 Total consolidated depreciation and amortization $ 234 $ 241 $ 223 Additions to long-lived assets United States $ 200 $ 187 $ 154 Canada 7 8 12 Additions to long-lived assets for reportable segments $ 207 $ 195 $ 166 Other businesses and unallocated 39 67 106 Total consolidated additions to long-lived assets $ 246 $ 262 $ 272 2018 2017 2016 Revenue by geographic location: United States $ 8,613 $ 7,948 $ 7,834 Canada 658 761 740 Other foreign countries 1,950 1,716 1,563 $ 11,221 $ 10,425 $ 10,137 Long-lived segment assets by geographic location: United States $ 1,140 $ 1,098 $ 1,135 Canada 136 199 211 Other foreign countries 202 247 210 $ 1,478 $ 1,544 $ 1,556 Revenues are attributed to countries based on the ship-to location of the customer. Segment and total consolidated operating earnings for the twelve months ended December 31, 2017 were restated for the implementation of ASU 2017-07. See Note 1 to the Financial Statements. Unallocated expenses and eliminations primarily relate to the Company's headquarters support services and intercompany eliminations, which are not part of any reportable segment. Unallocated expenses include supply chain, product management and procurement, finance, communications, human resources, information systems, legal and compliance, internal audit and real estate. These services are provided in varying degrees to all businesses. The Company is a broad-line distributor of MRO products and services. Products are regularly added and deleted from the Company's inventory. Accordingly, it would be impractical to provide sales information by product category due to the way the business is managed. 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 assets of the reportable segments. Unallocated assets are primarily comprised of non-operating cash and cash equivalents, property, buildings and equipment, net, and certain prepaid expenses related to the Company's headquarters support services. Depreciation and amortization presented above includes depreciation of long-lived assets and amortization of capitalized software. |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 12 Months Ended |
Dec. 31, 2018 | |
CONTINGENCIES AND LEGAL MATTERS [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS From time to time the Company is involved in various legal and administrative proceedings that are incidental to its business, including claims related to product liability, general negligence, contract disputes, environmental issues, unclaimed property, wage and hour laws, intellectual property, employment practices, regulatory compliance or other matters and actions brought by employees, consumers, competitors, suppliers 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 contract administration or 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. From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as a defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products manufactured by third parties purportedly distributed by the Company. While several lawsuits have been dismissed in the past based on the lack of product identification, if a specific product distributed by the Company is identified in any pending or future lawsuits, the Company will seek to exercise indemnification remedies against the product manufacturer to the extent available. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope and coverage and the costs of defense, of lawsuits involving claims of exposure to asbestos. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in these lawsuits. While the Company is unable to predict the outcome of these proceedings, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position or results of operations. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) A summary of selected quarterly information for 2018 and 2017 is as follows (in millions of dollars, except for per share amounts): 2018 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,766 $ 2,861 $ 2,831 $ 2,763 $ 11,221 COGS 1,674 1,750 1,752 1,697 6,873 Gross profit 1,092 1,111 1,079 1,066 4,348 SG&A 757 767 890 776 3,190 Operating earnings 335 344 189 290 1,158 Net earnings attributable to W.W. Grainger, Inc. 232 237 104 209 782 Earnings per share - basic 4.09 4.19 1.84 3.71 13.82 Earnings per share - diluted $ 4.07 $ 4.16 $ 1.82 $ 3.68 $ 13.73 2017 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,541 $ 2,615 $ 2,636 $ 2,633 $ 10,425 COGS 1,522 1,575 1,619 1,611 6,327 Gross profit 1,019 1,040 1,017 1,022 4,098 SG&A 726 811 740 786 3,063 Operating earnings 293 229 277 236 1,035 Net earnings attributable to W.W. Grainger, Inc. 175 98 162 151 586 Earnings per share - basic 2.95 1.68 2.80 2.64 10.07 Earnings per share - diluted $ 2.93 $ 1.67 $ 2.79 $ 2.63 $ 10.02 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
PRINCIPLES OF CONSOLIDATION | PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of the Company and its subsidiaries over which the Company exercises control. All significant intercompany transactions are eliminated from the consolidated financial statements. |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent liabilities. Actual results could differ from those estimates. |
FOREIGN CURRENCY TRANSLATION | FOREIGN CURRENCY TRANSLATION The U.S. dollar is the reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Net exchange gains or losses resulting from the translation of financial statements of foreign operations are recorded as a separate component of other comprehensive earnings. See Note 14 to the Consolidated Financial Statements (Financial Statements). Foreign currency transaction gains and losses are included in the Consolidated Statement of Earnings. |
RECLASSIFICATIONS | RECLASSIFICATIONS Certain amounts in the 2017 and 2016 financial statements, as previously reported, have been reclassified to conform to the 2018 presentation. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which became effective January 1, 2018. See Note 10 to the Financial Statements. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The Company's sales arrangements generally have standard payment terms that do not exceed a year. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby the Company’s performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations. The Company’s performance obligations for services are satisfied when the services are rendered within the arranged service period. Total service revenue is not material and accounted for approximately 1% of total Company revenue for the twelve months ended December 31, 2018. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2018 and 2017. The Company’s revenue is reported as Net sales and is measured at the determinable transaction price, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. The Company considers shipping and handling as activities to fulfill its performance obligation. Billings for freight are accounted for as Net sales and shipping and handling costs are accounted for in Cost of goods sold. The Company offers customers rights to return product and sales incentives, which primarily consist of volume rebates. The Company’s terms for product returns and sales incentives generally do not exceed a year. The Company estimates sales returns and volume rebate accruals throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $29 million and $28 million as of December 31, 2018 and 2017, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $62 million and $55 million as of December 31, 2018 and 2017, respectively, and are reported as part of Accrued expenses. |
COST OF GOODS SOLD | COST OF GOODS SOLD (COGS) COGS includes products and product-related costs, vendor consideration, shipping and handling costs and service costs. The Company receives rebates and allowances from its vendors to promote their products, which are recorded as a reduction to COGS unless the considerations are directly identifiable to specific costs incurred to promote vendor products. Rebates earned from vendors that are based on product purchases are capitalized into inventory as part of product purchase price. These rebates are credited to COGS based on sales. Vendor rebates that are earned based on products sold are credited directly to COGS. |
ADVERTISING | ADVERTISING Advertising costs are generally expensed in the year the related advertisement is first presented. Catalog expense is amortized equally to expense over the life of the catalog, generally one year, beginning in the month of its distribution. Advertising expense, which includes digital marketing costs and catalog amortization, was $ 241 million , $ 187 million and $ 180 million for 2018, 2017 and 2016 , respectively. |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) Included in this category are purchasing, supply chain and branch operations, information services and marketing and selling expenses, as well as other types of general and administrative costs. |
STOCK INCENTIVE PLANS | STOCK INCENTIVE PLANS The Company measures all share-based payments using fair-value-based methods and records compensation expense related to these payments over the vesting period net of estimated forfeitures. See Note 12 to the Financial Statements. |
INCOME TAXES | INCOME TAXES Income taxes are recognized during the year in which transactions enter into the determination of financial statement income, with deferred taxes being provided for temporary differences between financial and tax reporting. The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters. See Note 15 to the Financial Statements. |
OTHER COMPREHENSIVE EARNINGS (LOSSES) | OTHER COMPREHENSIVE EARNINGS (LOSSES) The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. See Note 14 to the Financial Statements. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. |
CONCENTRATION OF CREDIT RISK | CONCENTRATION OF CREDIT RISK The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. The Company has a broad customer base representing many diverse industries doing business in North America, Europe and Asia. Consequently, no significant concentration of credit risk is considered to exist. |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are stated at their estimated net realizable value. The Company establishes reserves for customer accounts that are potentially uncollectible. The method used to estimate the allowances is based on several factors, including the age of the receivables and the historical ratio of actual write-offs to the age of the receivables. These analyses also take into consideration economic conditions that may have an impact on a specific industry, group of customers or a specific customer. When it is determined that customer accounts cannot be collected, the receivable balances are charged to the allowance for doubtful accounts. See Note 5 to the Financial Statements. |
INVENTORIES | INVENTORIES Inventories are valued at the lower of cost or net realizable value. Cost is determined primarily by the last-in, first-out (LIFO) method, which accounts for approximately 66% of total inventory. Grainger uses LIFO method to better match inventory cost and revenue. For the remaining inventory, cost is determined by the first-in, first-out (FIFO) method. Grainger regularly reviews inventory to evaluate continued demand and identify any obsolete or excess quantities. Grainger records provisions for the difference between excess and obsolete inventory cost and its estimated realizable value. See Note 6 of the Financial Statements. |
PROPERTY, BUILDINGS AND EQUIPMENT | PROPERTY, BUILDINGS AND EQUIPMENT Property, buildings and equipment are valued at cost. For financial statement purposes, depreciation and amortization are recorded in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on the declining-balance and sum-of-the-years-digits depreciation methods. The Company's international businesses record depreciation expense primarily on a straight-line basis. The principal estimated useful lives for determining depreciation are as follows: Buildings, structures and improvements 10 to 30 years Furniture, fixtures, machinery and equipment 3 to 10 years Depreciation expense was $162 million , $170 million and $166 million for the years ended December 31, 2018, 2017 and 2016 , respectively. Improvements to leased property are amortized over the initial terms of the respective leases or the estimated service lives of the improvements, whichever is shorter. The Company capitalized interest costs of $10 million , $2 million and $2 million for the years ended December 31, 2018, 2017 and 2016 , respectively. |
LONG-LIVED ASSETS | LONG-LIVED ASSETS The carrying value of long-lived assets, primarily property, buildings and equipment and amortizable intangibles, is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows resulting from use of the asset, including disposition, are less than the carrying value of the asset. Impairment is measured as the amount by which the asset's carrying amount exceeds the fair value. |
GOODWILL AND OTHER INTANGIBLES ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized, but rather tested for impairment on an annual basis and more often if circumstances require. Impairment losses are recognized whenever the carrying value of a reporting unit exceeds its fair value. See Note 4 to the Financial Statements. The Company recognizes an acquired intangible apart from goodwill whenever the intangible arises from contractual or other legal rights, or whenever it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their estimated useful lives (approximately 7 to 22 years) unless the estimated useful life is determined to be indefinite. The straight-line method of amortization is used as it has been determined to approximate the use pattern of the asset. The Company also maintains intangible assets with indefinite lives that are not amortized. These intangibles are tested for impairment on an annual basis and more often if circumstances require. An impairment loss is recognized whenever the estimated fair value of the asset is less than its carrying value. See Note 4 to the Financial Statements. |
CAPITALIZED SOFTWARE | The Company capitalizes certain costs related to the purchase and development of internal-use software. Amortization of capitalized software is on a straight-line basis over three or five years. |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these financial instruments. See Note 9 to the Financial Statements for fair value of long-term debt. |
CONTINGENCIES | CONTINGENCIES The Company accrues for costs relating to litigation claims and other contingent matters, when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This ASU allows a reclassification from AOCE to Retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company has evaluated the provisions of this standard and elected to early implement and reclassify $15 million of income tax effects related to the change in the U.S. federal corporate income tax rate from AOCE to Retained earnings. See Note 14 to the Financial Statements. In August 2018, the FASB issued ASU 2018-14, Retirement Benefits - Defined Benefit Plans - Changes to the Disclosure Requirements for Defined Benefit Plans . This ASU removes disclosures that are no longer considered cost-beneficial, clarifies specific requirements of the disclosure and adds disclosure requirements identified as relevant to improve the effectiveness of the disclosures. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2020, and early adoption is permitted. The Company elected to early adopt this ASU and the related disclosure changes are reflected in Note 10 to the Financial Statements. In September 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other Internal Use Software (Subtopic 350-40) Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2019, and early adoption is permitted. The Company elected to early adopt during the fourth quarter of 2018 prospectively, with no material impact to the Company's Consolidated Financial Statements. LEASE ACCOUNTING STANDARDS In February 2016, the FASB issued ASU 2016-02, Leases as modified subsequently by ASUs 2018-01, 2018-10, 2018-11 and 2018-20 (Topic 842) . The core principle of the ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements, including balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months, among other changes. The effective date of these ASUs is for fiscal years and interim periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019, utilizing the modified retrospective transition method that allows for a cumulative-effect adjustment in the period of adoption, and does not plan to restate prior periods. Additionally, the Company elected certain practical expedients permitted under the transition guidance. Upon adoption, the Company's rights of use assets and corresponding lease liabilities are estimated at approximately $210 million to $230 million before considering deferred taxes. These amounts represent 4% and 6% of the Company’s Total assets and Total liabilities, respectively. Grainger does not expect a material impact to the Company’s Consolidated Statements of Earnings, Comprehensive Earnings or Cash Flows. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |
Disaggregation of Revenue | The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Twelve Months Ended December 31, 2018 U.S. Canada Total Company (2) Government 18 % 6 % 14 % Heavy Manufacturing 19 % 20 % 18 % Light Manufacturing 13 % 6 % 11 % Transportation 6 % 7 % 5 % Commercial 16 % 10 % 13 % Retail/Wholesale 8 % 4 % 7 % Contractors 10 % 11 % 8 % Natural Resources 3 % 32 % 4 % Other (1) 7 % 4 % 20 % Total net sales 100 % 100 % 100 % Percent of Total Company Revenue 72 % 6 % 100 % (1) Other category primarily includes revenue from individual customers not aligned to major industry segment, including small businesses and consumers and intersegment net sales. (2) Total Company includes other businesses, which include the Company's endless assortment businesses and operations in Europe, Asia and Mexico and account for approximately 22% of revenue for the twelve months ended December 31, 2018. |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Buildings and Equipment | Property, buildings and equipment consisted of the following (in millions of dollars): As of December 31, 2018 December 31, 2017 Land $ 318 $ 349 Building, structures and improvements 1,338 1,343 Furniture, fixtures, machinery and equipment 1,785 1,753 Property, buildings and equipment $ 3,441 $ 3,445 Less: Accumulated depreciation and amortization 2,089 2,053 Property, buildings and equipment, net $ 1,352 $ 1,392 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
Schedule of Goodwill | The balances and changes in the carrying amount of Goodwill by segment are as follows (in millions of dollars): United States Canada Other businesses Total Balance at January 1, 2017 $ 202 $ 122 $ 203 $ 527 Divestiture (3 ) — — (3 ) Impairment (7 ) — — (7 ) Translation — 8 19 27 Balance at December 31, 2017 192 130 222 544 Impairment — — (105 ) (105 ) Translation — (10 ) (5 ) (15 ) Balance at December 31, 2018 $ 192 $ 120 $ 112 $ 424 Cumulative goodwill impairment charges, January 1, 2018 $ 24 $ 32 $ 71 $ 127 Impairment — — 105 105 Cumulative goodwill impairment charges, December 31, 2018 $ 24 $ 32 $ 176 $ 232 |
Schedule of Finite-Lived Intangible Assets by Major Class | The balances and changes in Intangible assets - net are as follows (in millions of dollars): As of December 31, 2018 2017 Weighted average life Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer lists and relationships 14.3 years $ 410 $ 204 $ 206 $ 430 $ 196 $ 234 Trademarks, trade names and other 14.5 years 24 15 9 26 16 10 Non-amortized trade names and other 99 — 99 137 — 137 Capitalized software 4.2 years 657 511 146 633 445 188 Total intangible assets 8.2 years $ 1,190 $ 730 $ 460 $ 1,226 $ 657 $ 569 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2019 $ 84 2020 66 2021 50 2022 26 2023 20 Thereafter 115 |
ALLOWANCE FOR DOUBTFUL ACCOUN_2
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS [Abstract] | |
Schedule of Allowance for Doubtful Accounts | The following table shows the activity in the allowance for doubtful accounts (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (29 ) $ (27 ) Provision for uncollectible accounts (7 ) (16 ) Write-off of uncollectible accounts, net of recoveries 10 17 Foreign currency and other 1 (3 ) Balance at end of period $ (25 ) $ (29 ) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of activity in reserves for excess and obsolete inventory | The following table shows the activity in the reserves for excess and obsolete inventory (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (193 ) $ (191 ) Provision for excess and obsolete inventory (20 ) (25 ) Disposal of unsaleable inventory 55 29 Other 4 (6 ) Balance at end of period $ (154 ) $ (193 ) |
RESTRUCTURING RESERVES (Tables)
RESTRUCTURING RESERVES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Costs, Cumulative Amounts Incurred to Date and Expected | Restructuring costs, net of gains, for the years ended December 31, 2018, 2017 and 2016 are as follows (in millions of dollars): For the Year Ended December 31, 2018 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ (1 ) $ 15 $ (6 ) $ 8 Canada — 24 11 35 Other businesses 1 1 4 6 Unallocated expense — — (2 ) (2 ) Total $ — $ 40 $ 7 $ 47 For the Year Ended December 31, 2017 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ 1 $ 32 $ (22 ) $ 11 Canada 8 15 16 39 Other businesses 4 12 39 55 Unallocated expense — — 11 11 Total $ 13 $ 59 $ 44 $ 116 For the Year Ended December 31, 2016 COGS SG&A Total Involuntary employee termination costs Other charges (gains) United States $ 3 $ 21 $ (9 ) $ 15 Canada 2 13 1 16 Unallocated expense — — 9 9 Total $ 5 $ 34 $ 1 $ 40 The cumulative amounts incurred to date and expected (excluding results of sales of real estate) in connection with the Company's restructuring actions for active programs are as follows (in millions of dollars): Cumulative amount incurred to date Additional amount expected United States $ 70 $ 3 Canada 93 — Other businesses 67 — Unallocated expense 18 — Total $ 248 $ 3 |
Summary Of Restructuring Reserve Activity | The following summarizes the restructuring and related reserve activity for the years ended December 31, 2018 and 2017 (in millions of dollars): Current liabilities Current assets write-downs Property, buildings and equipment write-downs and disposals Involuntary employee termination costs Lease termination costs Other costs Total Reserves as of January 1, 2017 $ — $ — $ 24 $ 3 $ 1 $ 28 Restructuring costs, net of (gains) 14 — 59 6 37 116 Cash (paid) received (1 ) 24 (34 ) (4 ) (8 ) (23 ) Non-cash, translation and others $ — $ (23 ) $ 1 $ — $ (17 ) $ (39 ) Reserves as of December 31, 2017 $ 13 $ 1 $ 50 $ 5 $ 13 $ 82 Restructuring costs, net of (gains) 4 (10 ) 40 12 1 47 Cash (paid) received (1 ) 44 (57 ) (4 ) (1 ) (19 ) Non-cash, translation and others (16 ) (35 ) (2 ) (2 ) (8 ) (63 ) Reserves as of December 31, 2018 $ — $ — $ 31 $ 11 $ 5 $ 47 |
SHORT-TERM DEBT (Tables)
SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Short-term Debt [Abstract] | |
Schedule of Short-term Debt | Short-term debt consisted of the following (in millions of dollars): As of December 31, 2018 2017 Lines of Credit Outstanding at December 31 $ 49 $ 56 Maximum month-end balance during the year $ 138 $ 56 Weighted average interest rate during the year 2.29 % 2.41 % Weighted average interest rate at December 31 2.35 % 2.01 % Commercial Paper Outstanding at December 31 $ — $ — Maximum month-end balance during the year $ 90 $ 455 Weighted average interest rate during the year 1.80 % 0.83 % |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following (in millions of dollars): As of December 31, 2018 2017 Carrying Value Fair Value Carrying Value Fair Value 4.60% senior notes due 2045 $ 1,000 1,026 $ 1,000 $ 1,089 3.75% senior notes due 2046 400 357 400 384 4.20% senior notes due 2047 400 383 400 411 British pound term loan 174 174 195 195 Euro term loan 126 126 132 132 Canadian dollar revolving credit facility 44 44 99 99 Other 49 49 84 84 Subtotal 2,193 2,159 2,310 2,394 Less current maturities (81 ) (81 ) (39 ) (39 ) Debt issuance costs and discounts, net of amortization (22 ) (22 ) (23 ) (23 ) Long-term debt (less current maturities) $ 2,090 $ 2,056 $ 2,248 $ 2,332 |
Schedule of Maturities of Long-term Debt | The scheduled aggregate principal payments related to long-term debt, excluding debt issuance costs, are due as follows (in millions of dollars): Year Payment Amount 2019 $ 81 2020 182 2021 126 2022 4 2023 — Thereafter 1,800 Total $ 2,193 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EMPLOYEE BENEFITS [Abstract] | |
Schedule of Net Benefit Costs | The net periodic benefits costs were valued with a measurement date of January 1 for each year and August 31, 2017 remeasurement date and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 SG&A Service cost $ 6 $ 7 $ 8 Other income (expense) Interest cost 7 8 10 Expected return on assets (13 ) (12 ) (10 ) Amortization of prior service credit (10 ) (7 ) (7 ) Amortization of unrecognized gains (3 ) (2 ) — Net periodic (benefits) costs $ (13 ) $ (6 ) $ 1 |
Schedule of Accumulated and Projected Benefit Obligations | Reconciliations of the beginning and ending balances of the postretirement benefit obligation, which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit obligation follow (in millions of dollars): 2018 2017 Benefit obligation at beginning of year $ 208 $ 265 Service cost 6 7 Interest cost 7 8 Plan participants' contributions 3 3 Actuarial (gains) (26 ) (34 ) Plan amendment — (34 ) Benefits paid (9 ) (9 ) Prescription drug rebates 1 2 Benefit obligation at end of year 190 208 Plan assets available for benefits at beginning of year 189 164 Actual (losses) returns on plan assets (8 ) 29 Plan participants' contributions 3 3 Benefits paid (9 ) (8 ) Prescription drug rebates 1 1 Plan assets available for benefits at end of year 176 189 Noncurrent postretirement benefit obligation $ 14 $ 19 |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2018 2017 Prior service credit $ 71 $ 80 Unrecognized gains 37 37 Deferred tax (liability) (26 ) (44 ) Net accumulated gains $ 82 $ 73 |
Schedule of Assumptions Used | The following assumptions were used to determine net periodic benefit costs at January 1 of each year (excluding the August 31, 2017 remeasurement date): For the Years Ended December 31, 2018 2017 2016 Discount rate 3.44 % 4.00 % 4.20 % Long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 6.65 % Initial healthcare cost trend rate Pre age 65 6.56 % 6.81 % 7.00 % Post age 65 NA 9.36 % 7.00 % Catastrophic drug benefit 12.50 % NA NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % NA NA The following assumptions were used to determine benefit obligations at December 31: 2018 2017 2016 Discount rate 4.08 % 3.44 % 4.00 % Expected long-term rate of return on plan assets, net of tax 7.13 % 7.13 % 7.13 % Initial healthcare cost trend rate Pre age 65 6.31 % 6.56 % 6.81 % Post age 65 N/A NA 9.36 % Catastrophic drug benefit 11.50 % 12.50 % N/A Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2026 2026 2026 HRA credit inflation index for grandfathered retirees 2.50 % 2.50 % N/A |
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates | |
Schedule of Allocation of Plan Assets | The plan's assets are stated at fair value, which represents the net asset value of shares held by the plan in the registered investment companies at the quoted market prices (level 1 input). The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2018 2017 Registered investment companies: Fidelity Spartan U.S. Equity Index Fund $ 80 $ 83 Vanguard 500 Index Fund 93 104 Vanguard Total International Stock 26 30 Plan Assets 199 217 Trust liabilities (23 ) (28 ) Plan assets available for benefits $ 176 $ 189 |
Schedule of Expected Benefit Payments | The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future employee service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2019 $ 8 2020 9 2021 10 2022 11 2023 12 2024-2028 66 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | At December 31, 2018 the approximate future minimum lease payments for operating leases were as follows (in millions of dollars): Year Future Minimum Lease Payments 2019 $ 65 2020 49 2021 36 2022 27 2023 18 Thereafter 38 Total minimum payments required 233 Less amounts representing sublease income (11 ) $ 222 |
STOCK INCENTIVE PLANS (Tables)
STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
STOCK INCENTIVE PLANS [Abstract] | |
Activity for restricted stock units | The following table summarizes RSU activity (in millions, except for share and per share amounts): 2018 2017 2016 Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Shares Weighted Average Price Per Share Beginning nonvested units 352,919 $ 226.31 373,403 $ 221.77 432,783 $ 213.45 Issued 141,775 $ 284.98 129,378 $ 222.53 113,909 $ 230.36 Canceled (56,393 ) $ 245.08 (47,488 ) $ 229.36 (62,869 ) $ 229.70 Vested (94,487 ) $ 233.75 (102,374 ) $ 203.51 (110,420 ) $ 193.51 Ending nonvested units 343,814 $ 245.38 352,919 $ 226.31 373,403 $ 221.77 Fair value of shares vested $22 $21 $21 |
Disclosure of Share-based Compensation, Stock Options | Transactions involving stock options are summarized as follows: Shares Subject to Option Weighted Average Price Per Share Options Exercisable Outstanding at January 1, 2016 2,226,286 $ 169.96 1,411,460 Granted 294,874 $ 234.25 Exercised (317,110 ) $ 108.28 Canceled or expired (80,014 ) $ 210.01 Outstanding at December 31, 2016 2,124,036 $ 186.59 1,346,707 Granted 306,206 $ 230.97 Exercised (409,269 ) $ 115.35 Canceled or expired (87,260 ) $ 222.00 Outstanding at December 31, 2017 1,933,713 $ 207.10 1,375,844 Granted 204,250 $ 276.64 Exercised (931,929 ) $ 193.68 Canceled or expired (72,931 ) $ 226.48 Outstanding at December 31, 2018 1,133,103 $ 229.42 581,534 |
Information about stock options excercised | The following table summarizes information about stock options (in millions of dollars): For the years ended December 31, 2018 2017 2016 Fair value of options exercised $ 38 $ 11 $ 8 Total intrinsic value of options exercised 102 47 36 Fair value of options vested 8 24 15 Settlements of options exercised 180 47 35 |
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | Information about stock options outstanding and exercisable as of December 31, 2018 , is as follows: Options Outstanding Options Exercisable Weighted Average Weighted Average Range of Exercise Prices Number Remaining Contractual Life Exercise Price Intrinsic Value (millions) Number Remaining Contractual Life Exercise Price Intrinsic Value (millions) $72.14 - $204.01 184,435 2.23 years $ 152.28 $ 24 183,292 2.19 years $ 152.17 $ 24 $223.68 - $276.64 948,668 7.37 years $ 244.42 36 398,242 6.10 years $ 238.88 17 1,133,103 6.54 years $ 229.42 $ 60 581,534 4.87 years $ 211.55 $ 41 |
Assumptions used to determine fair value of options granted | The fair value of options granted in 2018, 2017 and 2016 used the following assumptions: For the years ended December 31, 2018 2017 2016 Risk-free interest rate 2.6% 2.0% 1.4% Expected life 6 years 6 years 6 years Expected volatility 27.5% 23.9% 24.5% Expected dividend yield 1.9% 2.1% 2.0% |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
CAPITAL STOCK [Abstract] | |
Schedule of Capital Stock | The activity related to outstanding common stock and common stock held in treasury was as follows: 2018 2017 2016 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 56,328,863 53,330,356 58,804,314 50,854,905 62,028,708 47,630,511 Exercise of stock options 930,258 (930,258 ) 407,542 (407,542 ) 315,171 (315,171 ) Settlement of restricted stock units, net of 39,075, 36,585 and 41,128 shares retained, respectively 80,988 (80,988 ) 103,331 (103,331 ) 78,310 (78,310 ) Settlement of performance share units, net of 1,027, 9,334 and 6,765 shares retained, respectively 1,911 (1,911 ) 13,978 (13,978 ) 11,806 (11,806 ) Purchase of treasury shares (1,479,660 ) 1,479,660 (3,000,302 ) 3,000,302 (3,629,681 ) 3,629,681 Balance at end of period 55,862,360 53,796,859 56,328,863 53,330,356 58,804,314 50,854,905 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of AOCE | The components of AOCE consisted of the following (in millions of dollars): Foreign Currency Translation and Other Defined Postretirement Benefit Plan Other Employment-related Benefit Plans Total Foreign Currency Translation Attributable to Noncontrolling Interests AOCE Attributable to W.W. Grainger, Inc. Balance at January 1, 2016, net of tax $ (277 ) $ 35 $ (3 ) $ (245 ) $ (24 ) $ (221 ) Other comprehensive earnings (loss) before reclassifications, net of tax (39 ) (6 ) (2 ) (47 ) 1 (48 ) Amounts reclassified to Net earnings — (4 ) — (4 ) — (4 ) Net current period activity $ (39 ) $ (10 ) $ (2 ) $ (51 ) $ 1 $ (52 ) Balance at December 31, 2016, net of tax $ (316 ) $ 25 $ (5 ) $ (296 ) $ (23 ) $ (273 ) Other comprehensive earnings (loss) before reclassifications, net of tax 75 86 1 162 4 158 Amounts reclassified to Net earnings 18 (38 ) — (20 ) — (20 ) Net current period activity $ 93 $ 48 $ 1 $ 142 $ 4 $ 138 Balance at December 31, 2017, net of tax $ (223 ) $ 73 $ (4 ) $ (154 ) $ (19 ) $ (135 ) Other comprehensive earnings (loss) before reclassifications, net of tax (43 ) 4 (1 ) (40 ) 3 (43 ) Amounts reclassified to Net earnings 2 (10 ) — (8 ) — (8 ) Amounts reclassified to Retained earnings — 15 — 15 — 15 Net current period activity (41 ) 9 (1 ) (33 ) 3 (36 ) Balance at December 31, 2018, net of tax $ (264 ) $ 82 $ (5 ) $ (187 ) $ (16 ) $ (171 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Current income tax expense: U.S. Federal $ 166 $ 248 $ 311 U.S. State 32 29 38 Foreign 47 22 25 Total current 245 299 374 Deferred income tax expense 13 14 12 Total income tax expense $ 258 $ 313 $ 386 |
Schedule of Income before Income Tax, Domestic and Foreign | Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 U.S. $ 1,163 $ 971 $ 1,074 Foreign (82 ) (35 ) (55 ) $ 1,081 $ 936 $ 1,019 |
Schedule of Deferred Tax Assets and Liabilities | The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2018 and 2017 were as follows (in millions of dollars): As of December 31, 2018 2017 Deferred tax assets: Inventory $ 4 $ 14 Accrued expenses 35 44 Accrued employment-related benefits 49 63 Foreign operating loss carryforwards 64 72 Tax credit carryforward 22 20 Other 7 8 Deferred tax assets 181 221 Less valuation allowance (72 ) (84 ) Deferred tax assets, net of valuation allowance $ 109 $ 137 Deferred tax liabilities: Property, buildings and equipment (29 ) (33 ) Intangibles (105 ) (119 ) Software (15 ) (20 ) Prepaids (6 ) (6 ) Other (8 ) (4 ) Deferred tax liabilities (163 ) (182 ) Net deferred tax liability $ (54 ) $ (45 ) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 12 $ 22 Noncurrent liabilities (foreign) (66 ) (67 ) Net deferred tax liability $ (54 ) $ (45 ) |
Summary of Valuation Allowance Changes | The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2018 2017 Balance at beginning of period $ (84 ) $ (73 ) Increases primarily related to foreign NOLs (3 ) (13 ) Releases related to foreign NOLs 16 8 Other changes, net — 5 Increase related to U.S. foreign tax credits (1 ) (11 ) Balance at end of period $ (72 ) $ (84 ) |
Reconciliation of Income Tax Statutory Rate | A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Federal income tax $ 227 $ 327 $ 357 State income taxes, net of federal income tax benefit 32 20 26 Clean energy credit (20 ) (38 ) (29 ) Foreign rate difference 20 10 21 Goodwill impairment 20 — — U.S. tax legislation impact (see note below) — (3 ) — Excess tax benefits from stock-based compensation (15 ) (14 ) — Other - net (6 ) 11 11 Income tax expense $ 258 $ 313 $ 386 Effective tax rate 23.9 % 33.5 % 37.9 % |
Reconciliation of Income Tax Contingencies | The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2018 2017 2016 Balance at beginning of year $ 45 $ 59 $ 61 Additions for tax positions related to the current year 4 4 14 Additions for tax positions of prior years 3 5 13 Reductions for tax positions of prior years (5 ) (13 ) (15 ) Reductions due to statute lapse (9 ) (5 ) (1 ) Settlements, audit payments, refunds - net (1 ) (5 ) (13 ) Balance at end of year $ 37 $ 45 $ 59 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in millions of dollars, except for share and per share amounts): For the Years Ended December 31, 2018 2017 2016 Net earnings attributable to W.W. Grainger, Inc. as reported $ 782 $ 586 $ 606 Distributed earnings available to participating securities (2 ) (2 ) (2 ) Undistributed earnings available to participating securities (4 ) (3 ) (3 ) Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders 776 581 601 Undistributed earnings allocated to participating securities 4 3 3 Undistributed earnings reallocated to participating securities (4 ) (3 ) (3 ) Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders $ 776 $ 581 $ 601 Denominator for basic earnings per share – weighted average shares 56,142,604 57,674,977 60,430,892 Effect of dilutive securities 391,581 308,190 409,038 Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities 56,534,185 57,983,167 60,839,930 Earnings per share two-class method Basic $ 13.82 $ 10.07 $ 9.94 Diluted $ 13.73 $ 10.02 $ 9.87 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): 2018 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 8,588 $ 653 $ 9,241 $ 2,441 $ 11,682 Intersegment net sales (457 ) — (457 ) (4 ) (461 ) Net sales to external customers 8,131 653 8,784 2,437 11,221 Segment operating earnings 1,338 (49 ) 1,289 8 1,297 2017 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,960 $ 753 $ 8,713 $ 2,120 $ 10,833 Intersegment net sales (404 ) — (404 ) (4 ) (408 ) Net sales to external customers 7,556 753 8,309 2,116 10,425 Segment operating earnings 1,200 (77 ) 1,123 56 1,179 2016 United States Canada Total Reportable Segments Other businesses Total Total net sales $ 7,870 $ 734 $ 8,604 $ 1,885 $ 10,489 Intersegment net sales (348 ) — (348 ) (4 ) (352 ) Net sales to external customers 7,522 734 8,256 1,881 10,137 Segment operating earnings 1,269 (65 ) 1,204 40 1,244 |
Significant Reconciling Items from Segments to Consolidated | Following are reconciliations of the segment information with the consolidated totals per the Financial Statements (in millions of dollars): 2018 2017 2016 Operating earnings: Total operating earnings for reportable segments $ 1,289 $ 1,123 $ 1,204 Other businesses 8 56 40 Unallocated expenses (139 ) (144 ) (131 ) Total consolidated operating earnings $ 1,158 $ 1,035 $ 1,113 Assets: United States $ 2,496 $ 2,310 $ 2,275 Canada 188 279 286 Assets for reportable segments $ 2,684 $ 2,589 $ 2,561 Other current and noncurrent assets 2,879 3,033 2,959 Unallocated assets 310 182 174 Total consolidated assets $ 5,873 $ 5,804 $ 5,694 Depreciation and amortization: United States $ 166 $ 169 $ 159 Canada 19 19 18 Depreciation and amortization for reportable segments $ 185 $ 188 $ 177 Other businesses and unallocated 49 53 46 Total consolidated depreciation and amortization $ 234 $ 241 $ 223 Additions to long-lived assets United States $ 200 $ 187 $ 154 Canada 7 8 12 Additions to long-lived assets for reportable segments $ 207 $ 195 $ 166 Other businesses and unallocated 39 67 106 Total consolidated additions to long-lived assets $ 246 $ 262 $ 272 2018 2017 2016 Revenue by geographic location: United States $ 8,613 $ 7,948 $ 7,834 Canada 658 761 740 Other foreign countries 1,950 1,716 1,563 $ 11,221 $ 10,425 $ 10,137 Long-lived segment assets by geographic location: United States $ 1,140 $ 1,098 $ 1,135 Canada 136 199 211 Other foreign countries 202 247 210 $ 1,478 $ 1,544 $ 1,556 |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |
Schedule of Quarterly Financial Information | A summary of selected quarterly information for 2018 and 2017 is as follows (in millions of dollars, except for per share amounts): 2018 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,766 $ 2,861 $ 2,831 $ 2,763 $ 11,221 COGS 1,674 1,750 1,752 1,697 6,873 Gross profit 1,092 1,111 1,079 1,066 4,348 SG&A 757 767 890 776 3,190 Operating earnings 335 344 189 290 1,158 Net earnings attributable to W.W. Grainger, Inc. 232 237 104 209 782 Earnings per share - basic 4.09 4.19 1.84 3.71 13.82 Earnings per share - diluted $ 4.07 $ 4.16 $ 1.82 $ 3.68 $ 13.73 2017 Quarter Ended March 31 June 30 September 30 December 31 Total Net sales $ 2,541 $ 2,615 $ 2,636 $ 2,633 $ 10,425 COGS 1,522 1,575 1,619 1,611 6,327 Gross profit 1,019 1,040 1,017 1,022 4,098 SG&A 726 811 740 786 3,063 Operating earnings 293 229 277 236 1,035 Net earnings attributable to W.W. Grainger, Inc. 175 98 162 151 586 Earnings per share - basic 2.95 1.68 2.80 2.64 10.07 Earnings per share - diluted $ 2.93 $ 1.67 $ 2.79 $ 2.63 $ 10.02 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | |
Service fee revenue (approximately) | 1.00% | |||
Accrued sales returns | $ 29 | $ 28 | ||
Accrued sales incentives | 62 | 55 | ||
Advertising expense | $ 241 | 187 | $ 180 | |
Original maturity of cash (days) | 90 days | |||
Percentage of LIFO Inventory | 66.00% | |||
Depreciation | $ 162 | 170 | 166 | |
Capitalized interest costs | $ 10 | $ 2 | $ 2 | |
Minimum [Member] | ||||
Buildings, structures and improvements, estimated useful life | 10 years | |||
Furniture, fixtures, machinery and equipment, estimated useful life | 3 years | |||
Capitalized software amortization period | 3 years | |||
Finite-lived intangible assets, useful life | 7 years | |||
Maximum [Member] | ||||
Buildings, structures and improvements, estimated useful life | 30 years | |||
Furniture, fixtures, machinery and equipment, estimated useful life | 10 years | |||
Capitalized software amortization period | 5 years | |||
Finite-lived intangible assets, useful life | 22 years | |||
AOCE Attributable to W.W. Grainger, Inc. | ||||
Reclassification due to the adoption of ASU 2018-02 | $ 15 | |||
Retained Earnings [Member] | ||||
Reclassification due to the adoption of ASU 2018-02 | $ (15) | |||
Scenario, Forecast [Member] | Accounting Standards Update 2016-02 [Member] | ||||
Operating lease, right-of-use asset, percentage of total assets | 4.00% | |||
Operating lease, liability, percentage of total liabilities | 6.00% | |||
Scenario, Forecast [Member] | Accounting Standards Update 2016-02 [Member] | Minimum [Member] | ||||
Operating Lease, Right-of-Use Asset | $ 210 | |||
Operating lease, liability | 210 | |||
Scenario, Forecast [Member] | Accounting Standards Update 2016-02 [Member] | Maximum [Member] | ||||
Operating Lease, Right-of-Use Asset | 230 | |||
Operating lease, liability | $ 230 |
REVENUE (Details)
REVENUE (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 100.00% |
Government [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 14.00% |
Heavy Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% |
Light Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 11.00% |
Transportation [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 5.00% |
Commercial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 13.00% |
Retail/Wholesale [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% |
Contractors [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% |
Natural Resources [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% |
Other [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 20.00% |
Other businesses | |
Disaggregation of Revenue [Line Items] | |
Percentage Of Company-Wide Revenue | 22.00% |
United States | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 72.00% |
United States | Government [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 18.00% |
United States | Heavy Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 19.00% |
United States | Light Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 13.00% |
United States | Transportation [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% |
United States | Commercial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 16.00% |
United States | Retail/Wholesale [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 8.00% |
United States | Contractors [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% |
United States | Natural Resources [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 3.00% |
United States | Other [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% |
Canada | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 100.00% |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage Of Company-Wide Revenue | 6.00% |
Canada | Government [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% |
Canada | Heavy Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 20.00% |
Canada | Light Manufacturing [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 6.00% |
Canada | Transportation [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 7.00% |
Canada | Commercial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 10.00% |
Canada | Retail/Wholesale [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% |
Canada | Contractors [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 11.00% |
Canada | Natural Resources [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 32.00% |
Canada | Other [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenue From Contract With Customer, Excluding Assessed Tax, Percentage | 4.00% |
PROPERTY, BUILDINGS AND EQUIP_3
PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | $ 3,441 | $ 3,445 |
Less: Accumulated depreciation and amortization | 2,089 | 2,053 |
PROPERTY, BUILDINGS AND EQUIPMENT – NET | 1,352 | 1,392 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 318 | 349 |
Building, structures and improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | 1,338 | 1,343 |
Furniture, fixtures, machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY, BUILDINGS AND EQUIPMENT | $ 1,785 | $ 1,753 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Amortization expense, intangible assets | $ 92 | $ 89 | $ 82 | |
Goodwill, Impairment Loss, Rounded | 105 | |||
Other businesses | ||||
Segment Reporting Information [Line Items] | ||||
Reporting unit, percentage of fair value in excess of carrying amount | 15.00% | |||
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill) | $ 34 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS Balances and Changes in Carrying Amounts of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 544 | $ 527 |
Divestiture | (3) | |
Impairment | (105) | (7) |
Translation | (15) | 27 |
Goodwill, ending balance | 424 | 544 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, January 1, 2018 | 127 | |
Cumulative goodwill impairment charges, December 31, 2018 | 232 | 127 |
United States | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 192 | 202 |
Divestiture | (3) | |
Impairment | 0 | (7) |
Translation | 0 | 0 |
Goodwill, ending balance | 192 | 192 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, January 1, 2018 | 24 | |
Cumulative goodwill impairment charges, December 31, 2018 | 24 | 24 |
Canada | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 130 | 122 |
Divestiture | 0 | |
Impairment | 0 | 0 |
Translation | (10) | 8 |
Goodwill, ending balance | 120 | 130 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, January 1, 2018 | 32 | |
Cumulative goodwill impairment charges, December 31, 2018 | 32 | 32 |
Other businesses | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 222 | 203 |
Divestiture | 0 | |
Impairment | (105) | 0 |
Translation | (5) | 19 |
Goodwill, ending balance | 112 | 222 |
Goodwill, Impaired, Accumulated Impairment Loss [Abstract] | ||
Cumulative goodwill impairment charges, January 1, 2018 | 71 | |
Cumulative goodwill impairment charges, December 31, 2018 | $ 176 | $ 71 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets included in Other assets and intangibles (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total intangible assets, gross | $ 1,190 | $ 1,226 |
Total intangible assets, net | 460 | 569 |
Finite-lived intangible assets, accumulated amortization | 730 | 657 |
Customer lists and relationships [Member] | ||
Finite-lived intangible assets, gross | 410 | 430 |
Finite-lived intangible assets, accumulated amortization | 204 | 196 |
Finite-lived intangible assets, net | 206 | 234 |
Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, gross | 24 | 26 |
Finite-lived intangible assets, accumulated amortization | 15 | 16 |
Finite-lived intangible assets, net | 9 | 10 |
Non-amortized trade names and other [Member] | ||
Indefinite-lived intangible assets, carrying amount | 99 | 137 |
Capitalized software [Member] | ||
Finite-lived intangible assets, gross | 657 | 633 |
Finite-lived intangible assets, accumulated amortization | 511 | 445 |
Finite-lived intangible assets, net | $ 146 | $ 188 |
Weighted average [Member] | ||
Finite-lived intangible assets, useful life | 8 years 2 months | |
Weighted average [Member] | Customer lists and relationships [Member] | ||
Finite-lived intangible assets, useful life | 14 years 3 months 18 days | |
Weighted average [Member] | Trademarks, trade names and other [Member] | ||
Finite-lived intangible assets, useful life | 14 years 6 months | |
Weighted average [Member] | Capitalized software [Member] | ||
Finite-lived intangible assets, useful life | 4 years 2 months 12 days |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS Estimated amortization expense (Details) $ in Millions | Dec. 31, 2018USD ($) |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
2,019 | $ 84 |
2,020 | 66 |
2,021 | 50 |
2,022 | 26 |
2,023 | 20 |
Thereafter | $ 115 |
ALLOWANCE FOR DOUBTFUL ACCOUN_3
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS [Abstract] | |||
Balance at beginning of period | $ (29) | $ (27) | |
Provision for uncollectible accounts | (7) | (16) | $ (16) |
Write-off of uncollectible accounts, net of recoveries | 10 | 17 | |
Business acquisitions, foreign currency and other | 1 | (3) | |
Balance at end of period | $ (25) | $ (29) | $ (27) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |||
Inventory, LIFO Reserve | $ 394 | $ 382 | |
Inventory, LIFO Reserve, Effect on Income, Net | $ 8 | $ (1) | $ (3) |
INVENTORIES - Activity in reser
INVENTORIES - Activity in reserves for excess and obsolete inventory (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | ||
Balance at beginning of period | $ (193) | $ (191) |
Provision for excess and obsolete inventory | (20) | (25) |
Disposal of unsaleable inventory | 55 | 29 |
Other | 4 | (6) |
Balance at end of period | $ (154) | $ (193) |
RESTRUCTURING RESERVES - Schedu
RESTRUCTURING RESERVES - Schedule of Restructuring Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||
COGS | $ 0 | $ 13 | $ 5 |
Involuntary employee termination costs | 40 | 59 | 34 |
Other charges (gains) | 7 | 44 | 1 |
Total | 47 | 116 | 40 |
Segments | United States | |||
Restructuring Cost and Reserve [Line Items] | |||
COGS | (1) | 1 | 3 |
Involuntary employee termination costs | 15 | 32 | 21 |
Other charges (gains) | (6) | (22) | (9) |
Total | 8 | 11 | 15 |
Segments | Canada | |||
Restructuring Cost and Reserve [Line Items] | |||
COGS | 0 | 8 | 2 |
Involuntary employee termination costs | 24 | 15 | 13 |
Other charges (gains) | 11 | 16 | 1 |
Total | 35 | 39 | 16 |
Segments | Other businesses | |||
Restructuring Cost and Reserve [Line Items] | |||
COGS | 1 | 4 | |
Involuntary employee termination costs | 1 | 12 | |
Other charges (gains) | 4 | 39 | |
Total | 6 | 55 | |
Unallocated expense | |||
Restructuring Cost and Reserve [Line Items] | |||
COGS | 0 | 0 | 0 |
Involuntary employee termination costs | 0 | 0 | 0 |
Other charges (gains) | (2) | 11 | 9 |
Total | $ (2) | $ 11 | $ 9 |
RESTRUCTURING RESERVES - Additi
RESTRUCTURING RESERVES - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Restructuring and Related Activities [Abstract] | |
Accumulated foreign currency translations losses reclassified from Accumulated other comprehensive losses | $ 18 |
RESTRUCTURING RESERVES - Summar
RESTRUCTURING RESERVES - Summary Of Restructuring Reserve Activity (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring Reserve | ||
Beginning balance | $ 82 | $ 28 |
Restructuring costs, net of (gains) | 47 | 116 |
Cash (paid) received | (19) | (23) |
Non-cash, translation and others | (63) | (39) |
Ending balance | 47 | 82 |
Current assets write-downs | ||
Restructuring Reserve | ||
Beginning balance | 13 | 0 |
Restructuring costs, net of (gains) | 4 | 14 |
Cash (paid) received | (1) | (1) |
Non-cash, translation and others | (16) | 0 |
Ending balance | 0 | 13 |
Property, buildings and equipment write-downs and disposals | ||
Restructuring Reserve | ||
Beginning balance | 1 | 0 |
Restructuring costs, net of (gains) | (10) | 0 |
Cash (paid) received | 44 | 24 |
Non-cash, translation and others | (35) | (23) |
Ending balance | 0 | 1 |
Involuntary employee termination costs | ||
Restructuring Reserve | ||
Beginning balance | 50 | 24 |
Restructuring costs, net of (gains) | 40 | 59 |
Cash (paid) received | (57) | (34) |
Non-cash, translation and others | (2) | 1 |
Ending balance | 31 | 50 |
Lease termination costs | ||
Restructuring Reserve | ||
Beginning balance | 5 | 3 |
Restructuring costs, net of (gains) | 12 | 6 |
Cash (paid) received | (4) | (4) |
Non-cash, translation and others | (2) | 0 |
Ending balance | 11 | 5 |
Other costs | ||
Restructuring Reserve | ||
Beginning balance | 13 | 1 |
Restructuring costs, net of (gains) | 1 | 37 |
Cash (paid) received | (1) | (8) |
Non-cash, translation and others | (8) | (17) |
Ending balance | $ 5 | $ 13 |
RESTRUCTURING RESERVES - Sche_2
RESTRUCTURING RESERVES - Schedule of Cumulative Amounts Incurred to Date and Expected (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Cumulative amount incurred to date | $ 248 |
Additional amount expected | 3 |
Segments | United States | |
Restructuring Cost and Reserve [Line Items] | |
Cumulative amount incurred to date | 70 |
Additional amount expected | 3 |
Segments | Canada | |
Restructuring Cost and Reserve [Line Items] | |
Cumulative amount incurred to date | 93 |
Additional amount expected | 0 |
Segments | Other businesses | |
Restructuring Cost and Reserve [Line Items] | |
Cumulative amount incurred to date | 67 |
Additional amount expected | 0 |
Unallocated expense | |
Restructuring Cost and Reserve [Line Items] | |
Cumulative amount incurred to date | 18 |
Additional amount expected | $ 0 |
SHORT-TERM DEBT (Details)
SHORT-TERM DEBT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Short-term Debt [Line Items] | ||
Short-term debt, outstanding | $ 49,000,000 | $ 56,000,000 |
Line of credit [Member] | ||
Short-term Debt [Line Items] | ||
Lines of credit | 49,000,000 | 56,000,000 |
Maximum month-end balance during the year | $ 138,000,000 | $ 56,000,000 |
Weighted average interest rate during the year | 2.29% | 2.41% |
Weighted average interest rate at December 31 | 2.35% | 2.01% |
Commercial Paper [Member] | ||
Short-term Debt [Line Items] | ||
Maximum month-end balance during the year | $ 90,000,000 | $ 455,000,000 |
Weighted average interest rate during the year | 1.80% | 0.83% |
Commercial paper | $ 0 | $ 0 |
Short-term debt, outstanding | 0 | |
5-Year Unsecured Revolving Line Of Credit [Member] | Domestic Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 750,000,000 | |
Debt, term | 5 years | |
Line of credit, outstanding | $ 0 | $ 0 |
LONG-TERM DEBT - SCHEDULE OF LO
LONG-TERM DEBT - SCHEDULE OF LONG-TERM DEBT (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | May 31, 2017 | May 31, 2016 | Jun. 30, 2015 |
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 2,193 | $ 2,310 | |||
Long-Term Debt, Gross, Fair Value Disclosure | 2,159 | 2,394 | |||
Other | 49 | 84 | |||
Other Long-Term Debt, Fair Value Disclosure | 49 | 84 | |||
Less current maturities | (81) | (39) | |||
Long-Term Debt, Current Maturities, Fair Value Disclosure | (81) | (39) | |||
Debt issuance costs and discounts, net of amortization | (22) | (23) | |||
Debt Instrument, Unamortized, Discount (Premium) And Debt Issuance Costs, Net, Fair Value | (22) | (23) | |||
Long-term debt (less current maturities and debt issuance costs and discounts) | 2,090 | 2,248 | |||
Long-Term Debt, Excluding Current Maturities, Fair Value Disclosure | 2,056 | 2,332 | |||
British pound term loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 174 | 195 | |||
Long-term Debt, Fair Value | 174 | 195 | |||
Euro term loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 126 | 132 | |||
Long-term Debt, Fair Value | 126 | 132 | |||
Canadian dollar revolving credit facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 44 | 99 | |||
Long-term Debt, Fair Value | 44 | 99 | |||
Unsecured Senior Notes, 4.60% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | 1,000 | 1,000 | |||
Long-term Debt, Fair Value | $ 1,026 | 1,089 | |||
Stated interest rate | 4.60% | 4.60% | |||
Unsecured Senior Notes, 3.75% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 400 | 400 | |||
Long-term Debt, Fair Value | $ 357 | 384 | |||
Stated interest rate | 3.75% | 3.75% | |||
Unsecured Senior Notes, 4.20% [Member] | Senior notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 400 | 400 | |||
Long-term Debt, Fair Value | $ 383 | $ 411 | |||
Stated interest rate | 4.20% | 4.20% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Aug. 31, 2016EUR (€) | Sep. 30, 2014CAD ($) | Aug. 31, 2015GBP (£) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jun. 30, 2015USD ($) |
Debt Instrument [Line Items] | |||||||||
Repayments debt | $ 96,000,000 | $ 39,000,000 | $ 263,000,000 | ||||||
August 2016 Credit Agreement [Member] | Revolving credit facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | € | € 20,000,000 | ||||||||
Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs and discounts | $ 24,000,000 | ||||||||
Senior notes [Member] | Debt redemption, period one [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt redemption percentage | 101.00% | ||||||||
Senior notes [Member] | Debt redemption, period two [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt redemption percentage | 100.00% | ||||||||
Senior notes [Member] | Unsecured Senior Notes, 4.20% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 400,000,000 | ||||||||
Stated interest rate | 4.20% | 4.20% | |||||||
Long-term Debt, Fair Value | $ 383,000,000 | 411,000,000 | |||||||
Senior notes [Member] | Unsecured Senior Notes, 3.75% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 400,000,000 | ||||||||
Stated interest rate | 3.75% | 3.75% | |||||||
Long-term Debt, Fair Value | $ 357,000,000 | 384,000,000 | |||||||
Senior notes [Member] | Unsecured Senior Notes, 4.60% [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | $ 1,000,000,000 | ||||||||
Stated interest rate | 4.60% | 4.60% | |||||||
Long-term Debt, Fair Value | $ 1,026,000,000 | $ 1,089,000,000 | |||||||
Line of credit [Member] | Revolving credit facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | £ | £ 20,000,000 | ||||||||
Term loan [Member] | British pound term loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | £ | £ 160,000,000 | ||||||||
Debt, term | 5 years | ||||||||
Semi annual payments | £ | £ 4,000,000 | ||||||||
Weighted average interest rate | 1.34% | 1.04% | |||||||
Term loan [Member] | August 2016 Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount of debt | € | € 110,000,000 | ||||||||
Debt, term | 5 years | ||||||||
Effective interest rate | 0.45% | 0.45% | |||||||
Revolving credit facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 175,000,000 | ||||||||
Weighted average interest rate | 2.50% | ||||||||
Euro term loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term Debt, Fair Value | $ 126,000,000 | $ 132,000,000 | |||||||
Repayments debt | € | € 102,500,000 | ||||||||
London Interbank Offered Rate (LIBOR) [Member] | Term loan [Member] | British pound term loan [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 0.75% | ||||||||
Euro Interbank Offered Rate (EURIBOR) [Member] | Term loan [Member] | August 2016 Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 0.45% | ||||||||
Canadian Dollar Offered Rate (CDOR) [Member] | Revolving credit facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 0.80% | ||||||||
Minimum [Member] | Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 20.00% | ||||||||
Maximum [Member] | Senior notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis points | 25.00% |
LONG-TERM DEBT - SCHEDULED AGGR
LONG-TERM DEBT - SCHEDULED AGGREGATE PRINCIPAL PAYMENTS (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2,019 | $ 81 | $ 39 |
2,020 | 182 | |
2,021 | 126 | |
2,022 | 4 | |
2,023 | 0 | |
Thereafter | 1,800 | |
Total | $ 2,193 | $ 2,310 |
EMPLOYEE BENEFITS - Defined Con
EMPLOYEE BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing automatic contribution percentage | 3.00% | ||
Profit sharing plan expense | $ 164 | $ 120 | $ 84 |
Defined contribution plans, expense | $ 13 | $ 18 | $ 12 |
Minimum [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing contribution percentage | 8.00% | ||
Maximum [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Profit sharing contribution percentage | 18.00% |
EMPLOYEE BENEFITS - Postretirem
EMPLOYEE BENEFITS - Postretirement Benefits (Details) - USD ($) $ in Millions | Aug. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Profit Sharing Automatic Contribution By Employer, Percentage | 3.00% | |||
Decrease in postretirement benefit obligation | $ 76 | |||
Postretirement benefit plan re-measurement, net of tax | 29 | |||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Plan amendment | $ (76) | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||
HRA credit inflation index for grandfathered retirees | 2.50% | |||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Pension and Other Postretirement Benefits Cost (Reversal of Cost) | $ 164 | $ 120 | $ 84 | |
Defined Contribution Plan, Cost | 13 | 18 | 12 | |
Postretirement Benefits [Member] | ||||
Decrease in postretirement benefit obligation | 34 | |||
Postretirement Benefits | ||||
Service cost | 6 | 7 | 8 | |
Interest cost | 7 | 8 | 10 | |
Expected return on assets | (13) | (12) | (10) | |
Amortization of prior service credits | (10) | (7) | (7) | |
Amortization of unrecognized gains | (3) | (2) | 0 | |
Net periodic (benefits) costs | (13) | (6) | 1 | |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Benefit obligation at beginning of year | 208 | 265 | ||
Service cost | 6 | 7 | 8 | |
Interest cost | 7 | 8 | 10 | |
Plan participants' contributions | 3 | 3 | ||
Actuarial (gains) | (26) | (34) | ||
Plan amendment | (34) | |||
Benefits paid | (9) | (9) | ||
Prescription drug rebates | 1 | 2 | ||
Benefit obligation at end of year | 190 | 208 | $ 265 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Prescription drug rebates | 1 | 2 | ||
Noncurrent postretirement benefit obligation | 14 | 19 | ||
Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax [Abstract] | ||||
Prior service credit | 71 | 80 | ||
Unrecognized gains | 37 | 37 | ||
Deferred tax (liability) | (26) | (44) | ||
Net accumulated gains | $ 82 | $ 73 | ||
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract] | ||||
Net unrecognized gains (losses), amortization period | 12 years 10 months 12 days | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||||
Discount rate | 3.44% | 4.00% | 4.20% | |
Long-term rate of return on plan assets, net of tax | 7.13% | 7.13% | 6.65% | |
Pre age 65 | 6.56% | 6.81% | 7.00% | |
Post age 65 | 9.36% | 7.00% | ||
Catastrophic drug benefit | 12.50% | |||
Ultimate healthcare cost trend rate | 4.50% | 4.50% | 4.50% | |
Year ultimate healthcare cost trend rate reached | 2,026 | 2,026 | 2,026 | |
HRA credit inflation index for grandfathered retirees | 2.50% | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||
Discount rate | 4.08% | 3.44% | 4.00% | |
Expected long-term rate of return on plan assets, net of tax | 7.13% | 7.13% | 7.13% | |
Pre age 65 | 6.31% | 6.56% | 6.81% | |
Post age 65 | 9.36% | |||
Catastrophic drug benefit | 11.50% | 12.50% | ||
Ultimate healthcare cost trend rate | 4.50% | 4.50% | 4.50% | |
Year ultimate healthcare cost trend rate reached | 2,026 | 2,026 | 2,026 | |
HRA credit inflation index for grandfathered retirees | 2.50% | 2.50% | ||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Estimated gross benefit payments, 2019 | $ 8 | |||
Estimated gross benefit payments, 2020 | 9 | |||
Estimated gross benefit payments, 2021 | 10 | |||
Estimated gross benefit payments, 2022 | 11 | |||
Estimated gross benefit payments, 2023 | 12 | |||
Estimated gross benefit payments, 2024-2028 | 66 | |||
Postretirement Benefits [Member] | Plan Assets [Member] | ||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Prescription drug rebates | 1 | $ 1 | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 189 | 164 | ||
Actual (losses) returns on plan assets | (8) | 29 | ||
Plan participants' contributions | 3 | 3 | ||
Benefits paid | (9) | (8) | ||
Prescription drug rebates | 1 | 1 | ||
Plan assets available for benefits at end of year | 176 | 189 | $ 164 | |
Postretirement Benefits [Member] | Fidelity Spartan US Equity Index Fund [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 83 | |||
Plan assets available for benefits at end of year | 80 | 83 | ||
Postretirement Benefits [Member] | Vanguard 500 Index Fund [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 104 | |||
Plan assets available for benefits at end of year | 93 | 104 | ||
Postretirement Benefits [Member] | Vanguard Total International Stock Member | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 30 | |||
Plan assets available for benefits at end of year | 26 | 30 | ||
Postretirement Benefits [Member] | Total Registered Investment Companies [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Trust liabilities | (23) | (28) | ||
Postretirement Benefits [Member] | Total Registered Investment Companies [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Plan assets available for benefits at beginning of year | 217 | |||
Plan assets available for benefits at end of year | $ 199 | $ 217 | ||
Minimum [Member] | ||||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Profit Sharing Contribution Percentage | 8.00% | |||
Maximum [Member] | ||||
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | ||||
Profit Sharing Contribution Percentage | 18.00% |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Leased Assets [Line Items] | ||||
Operating lease expiration date | 2,036 | |||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
2,019 | $ 65 | $ 65 | ||
2,020 | 49 | 49 | ||
2,021 | 36 | 36 | ||
2,022 | 27 | 27 | ||
2,023 | 18 | 18 | ||
Thereafter | 38 | 38 | ||
Total minimum payments required | 233 | 233 | ||
Less amounts representing sublease income | (11) | (11) | ||
Future minimum lease payments, net of income | 222 | 222 | ||
Operating lease, rent expense | 76 | $ 76 | $ 81 | |
Operating lease, sublease income | 3 | $ 2 | $ 2 | |
Chicago Office [Member] | ||||
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||||
Total minimum payments required | 48 | $ 48 | ||
Operating lease, sublease income | $ 6 | |||
Lessee, Operating Lease, Term of Contract | 10 years |
STOCK INCENTIVE PLANS (Details)
STOCK INCENTIVE PLANS (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock available for grant under stock incentive plans (in shares) | 2,500,000 | ||
Pretax stock-based compensation expense | $ 47 | $ 33 | $ 36 |
Income tax benefits recognized in earnings for stock-based compensation expense | $ 26 | $ 26 | $ 12 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at January 1 (in shares) | 1,933,713 | 2,124,036 | 2,226,286 |
Granted (in shares) | 204,250 | 306,206 | 294,874 |
Exercised (in shares) | (931,929) | (409,269) | (317,110) |
Canceled or expired (in shares) | (72,931) | (87,260) | (80,014) |
Outstanding at December 31 (in shares) | 1,133,103 | 1,933,713 | 2,124,036 |
Weighted Average Price Per Share [Abstract] | |||
Outstanding at January 1, weighted average price per share (in dollars per share) | $ 207.10 | $ 186.59 | $ 169.96 |
Granted, weighted average price per share (in dollars per share) | 276.64 | 230.97 | 234.25 |
Exercised, weighted average price per share (in dollars per share) | 193.68 | 115.35 | 108.28 |
Canceled or expired, weighted average price per share (in dollars per share) | 226.48 | 222 | 210.01 |
Outstanding at December 31, weighted average price per share (in dollars per share) | $ 229.42 | $ 207.10 | $ 186.59 |
Options exercisable outstanding at January 1 (in shares) | 1,375,844 | 1,346,707 | 1,411,460 |
Options exercisable outstanding at December 31 (in shares) | 581,534 | 1,375,844 | 1,346,707 |
Stock Options Exercised [Abstract] | |||
Fair value of options exercised | $ 38 | $ 11 | $ 8 |
Total intrinsic value of options exercised | 102 | 47 | 36 |
Fair value of options vested | 8 | 24 | 15 |
Proceeds from stock options exercised | $ 180 | $ 47 | $ 35 |
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Expiration period | 10 years | ||
Stock Options Exercised [Abstract] | |||
Unrecognized compensation | $ 9 | ||
Weighted average period to recognize (in years) | 1 year 10 months 24 days |
STOCK INCENTIVE PLANS - Stock O
STOCK INCENTIVE PLANS - Stock Options Outstanding and Exercisable (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding, number (in shares) | 1,133,103 | 1,933,713 | 2,124,036 | 2,226,286 |
Options outstanding, weighted-average remaining contractual life (in years) | 6 years 6 months 16 days | |||
Options outstanding, weighted-average exercise price (in dollars per share) | $ 229.42 | |||
Options outstanding intrinsic value | $ 60 | |||
Options exercisable (in shares) | 581,534 | |||
Options exercisable, weighted-average remaining contractual life (in years) | 4 years 10 months 13 days | |||
Options exercisable, weighted-average exercise price (in dollars per share) | $ 211.55 | |||
Options exercisable intrinsic value | $ 41 | |||
Range 1 of Exercise Prices [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Exercise price range, lower range limit (in dollars per share) | $ 72.14 | |||
Exercise price range, upper range limit (in dollars per share) | $ 204.01 | |||
Options outstanding, number (in shares) | 184,435 | |||
Options outstanding, weighted-average remaining contractual life (in years) | 2 years 2 months 23 days | |||
Options outstanding, weighted-average exercise price (in dollars per share) | $ 152.28 | |||
Options outstanding intrinsic value | $ 24 | |||
Options exercisable (in shares) | 183,292 | |||
Options exercisable, weighted-average remaining contractual life (in years) | 2 years 2 months 8 days | |||
Options exercisable, weighted-average exercise price (in dollars per share) | $ 152.17 | |||
Options exercisable intrinsic value | $ 24 | |||
Range 2 of Exercise Prices [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Exercise price range, lower range limit (in dollars per share) | $ 223.68 | |||
Exercise price range, upper range limit (in dollars per share) | $ 276.64 | |||
Options outstanding, number (in shares) | 948,668 | |||
Options outstanding, weighted-average remaining contractual life (in years) | 7 years 4 months 13 days | |||
Options outstanding, weighted-average exercise price (in dollars per share) | $ 244.42 | |||
Options outstanding intrinsic value | $ 36 | |||
Options exercisable (in shares) | 398,242 | |||
Options exercisable, weighted-average remaining contractual life (in years) | 6 years 1 month 6 days | |||
Options exercisable, weighted-average exercise price (in dollars per share) | $ 238.88 | |||
Options exercisable intrinsic value | $ 17 |
STOCK INCENTIVE PLANS - Fair Va
STOCK INCENTIVE PLANS - Fair Value of Options (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
STOCK INCENTIVE PLANS [Abstract] | |||
Weighted average fair value of options granted (in dollars per share) | $ 67.31 | $ 45.09 | $ 44.94 |
Risk-free interest rate (in hundredths) | 2.60% | 2.00% | 1.40% |
Expected life (in years) | 6 years | 6 years | 6 years |
Expected volatility (in hundredths) | 27.50% | 23.90% | 24.50% |
Expected dividend yield (in hundredths) | 1.90% | 2.10% | 2.00% |
STOCK INCENTIVE PLANS - Restric
STOCK INCENTIVE PLANS - Restricted Stock Units (Details) - Restricted Stock Units [Member] $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Conversion ratio | 1 | ||
Fair value of shares vested | $ | $ 22 | $ 21 | $ 21 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |||
Outstanding at beginning of period (in shares) | shares | 352,919 | 373,403 | 432,783 |
Issued (in shares) | shares | 141,775 | 129,378 | 113,909 |
Canceled (in shares) | shares | (56,393) | (47,488) | (62,869) |
Vested (in shares) | shares | (94,487) | (102,374) | (110,420) |
Outstanding at end of period (in shares) | shares | 343,814 | 352,919 | 373,403 |
Weighted Average Price Per Share [Abstract] | |||
Outstanding at beginning of period, weighted average price per share (in dollars per share) | $ / shares | $ 226.31 | $ 221.77 | $ 213.45 |
Issued, weighted average price per share (in dollars per share) | $ / shares | 284.98 | 222.53 | 230.36 |
Cancelled, weighted average price per share (in dollars per share) | $ / shares | 245.08 | 229.36 | 229.70 |
Vested, weighted average price per share (in dollars per share) | $ / shares | 233.75 | 203.51 | 193.51 |
Outstanding at end of period, weighted average price per share (in dollars per share) | $ / shares | $ 245.38 | $ 226.31 | $ 221.77 |
Unearned unrecognized compensation | $ | $ 51 | ||
Weighted average period to recognize (in years) | 3 years | ||
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 7 years |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 | |
Balance at beginning of period, treasury stock (in shares) | 53,330,356 | ||
Exercise of stock options (in shares) | 931,929 | 409,269 | 317,110 |
Balance at end of period, treasury stock (in shares) | 53,796,859 | 53,330,356 | |
Shares retained after settlement of restricted stock units (in shares) | 39,075 | 36,585 | 41,128 |
Shares retained after settlement of performance share units (in shares) | 1,027 | 9,334 | 6,765 |
Outstanding Common Stock [Member] | |||
Balance at beginning of period, common stock (in shares) | 56,328,863 | 58,804,314 | 62,028,708 |
Exercise of stock options (in shares) | 930,258 | 407,542 | 315,171 |
Settlement of restricted stock units, net of 39,075, 36,585 and 41,128 shares retained, respectively (in shares) | 80,988 | 103,331 | 78,310 |
Settlement of performance share units, net of 1,027, 9,334 and 6,765 shares retained, respectively (in shares) | 1,911 | 13,978 | 11,806 |
Purchase of treasury shares (in shares) | (1,479,660) | (3,000,302) | (3,629,681) |
Balance at end of period, common stock (in shares) | 55,862,360 | 56,328,863 | 58,804,314 |
Treasury Stock [Member] | |||
Balance at beginning of period, treasury stock (in shares) | 53,330,356 | 50,854,905 | 47,630,511 |
Exercise of stock options (in shares) | (930,258) | (407,542) | (315,171) |
Settlement of restricted stock units, net of 39,075, 36,585 and 41,128 shares retained, respectively (in shares) | (80,988) | (103,331) | (78,310) |
Settlement of performance share units, net of 1,027, 9,334 and 6,765 shares retained, respectively (in shares) | (1,911) | (13,978) | (11,806) |
Purchase of treasury shares (in shares) | 1,479,660 | 3,000,302 | 3,629,681 |
Balance at end of period, treasury stock (in shares) | 53,796,859 | 53,330,356 | 50,854,905 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 1,828 | ||
Net current period activity | (48) | $ 142 | $ (51) |
Ending balance | 2,093 | 1,828 | |
Foreign Currency Translation and Other | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (223) | (316) | (277) |
Other comprehensive earnings (loss) before reclassifications, net of tax | (43) | 75 | (39) |
Amounts reclassified to Net earnings | 2 | 18 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | (41) | 93 | (39) |
Ending balance | (264) | (223) | (316) |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (154) | (296) | (245) |
Other comprehensive earnings (loss) before reclassifications, net of tax | (40) | 162 | (47) |
Amounts reclassified to Net earnings | (8) | (20) | (4) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | (33) | 142 | (51) |
Ending balance | (187) | (154) | (296) |
AOCI Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (19) | (23) | (24) |
Ending balance | (16) | (19) | (23) |
Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Other comprehensive earnings (loss) before reclassifications, net of tax | 3 | 4 | 1 |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | 3 | 4 | 1 |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (135) | (273) | (221) |
Net current period activity | (51) | 138 | (52) |
Ending balance | (171) | (135) | (273) |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (135) | (273) | (221) |
Other comprehensive earnings (loss) before reclassifications, net of tax | (43) | 158 | (48) |
Amounts reclassified to Net earnings | (8) | (20) | (4) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | (36) | 138 | (52) |
Ending balance | (171) | (135) | (273) |
Defined Postretirement Benefit Plan | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | 73 | 25 | 35 |
Other comprehensive earnings (loss) before reclassifications, net of tax | 4 | 86 | (6) |
Amounts reclassified to Net earnings | (10) | (38) | (4) |
Amounts reclassified to Retained earnings | 15 | ||
Net current period activity | 9 | 48 | (10) |
Ending balance | 82 | 73 | 25 |
Other Employment-related Benefit Plans | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member] | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (4) | (5) | (3) |
Other comprehensive earnings (loss) before reclassifications, net of tax | (1) | 1 | (2) |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Amounts reclassified to Retained earnings | 0 | ||
Net current period activity | (1) | 1 | (2) |
Ending balance | $ (5) | $ (4) | $ (5) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current income tax expense: | |||
U.S. Federal | $ 166 | $ 248 | $ 311 |
U.S. State | 32 | 29 | 38 |
Foreign | 47 | 22 | 25 |
Total current | 245 | 299 | 374 |
Deferred income tax expense | 13 | 14 | 12 |
Income tax expense | 258 | 313 | 386 |
Net operating loss carryforwards related primarily from foreign operations | 269 | ||
Undistributed earnings of foreign subsidiaries | 545 | ||
Accrued interest and penalties related to tax uncertainties | 4 | 5 | 4 |
Liability for tax uncertainties | 13 | 21 | |
Interest expense | $ 1 | $ 1 | $ 1 |
INCOME TAXES - Net Earnings Bef
INCOME TAXES - Net Earnings Before Income Taxes by Geographical Area (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net earnings before income taxes by geographical area | |||
U.S. | $ 1,163 | $ 971 | $ 1,074 |
Foreign | (82) | (35) | (55) |
Earnings before income taxes | $ 1,081 | $ 936 | $ 1,019 |
INCOME TAXES - Income Tax Effec
INCOME TAXES - Income Tax Effects of Temporary Differences (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | |||
Inventory | $ 4 | $ 14 | |
Accrued expenses | 35 | 44 | |
Accrued employment-related benefits | 49 | 63 | |
Foreign operating loss carryforwards | 64 | 72 | |
Tax credit carryforward | 22 | 20 | |
Other | 7 | 8 | |
Deferred tax assets | 181 | 221 | |
Less valuation allowance | (72) | (84) | $ (73) |
Deferred tax assets, net of valuation allowance | 109 | 137 | |
Deferred tax liabilities: | |||
Property, buildings and equipment | (29) | (33) | |
Intangibles | (105) | (119) | |
Software | (15) | (20) | |
Prepaids | (6) | (6) | |
Other | (8) | (4) | |
Deferred tax liabilities | (163) | (182) | |
Net deferred tax liability | (54) | (45) | |
The net deferred tax asset (liability) is classified as follows: | |||
Noncurrent assets | 12 | 22 | |
Noncurrent liabilities (foreign) | $ (66) | $ (67) |
INCOME TAXES - Changes in Valua
INCOME TAXES - Changes in Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Balance at beginning of period | $ (84) | $ (73) |
Balance at end of period | (72) | (84) |
Valuation allowance increases primarily related to foreign NOLs [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (3) | (13) |
Valuation allowance releases related to foreign NOLs [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 16 | 8 |
Other valuation allowance changes, net [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 0 | 5 |
Valuation allowance increase related to U.S. foreign tax credits [Member] | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | $ (1) | $ (11) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expense with Federal Income Taxes at the Statutory Rate (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 21.00% | 35.00% | 35.00% |
Reconciliation of income tax expense with federal income taxes at the statutory rate | |||
Federal income tax | $ 227 | $ 327 | $ 357 |
State income taxes, net of federal income tax benefit | 32 | 20 | 26 |
Clean energy credit | (20) | (38) | (29) |
Foreign rate difference | 20 | 10 | 21 |
Goodwill impairment | 20 | 0 | 0 |
U.S. tax legislation impact | 0 | (3) | 0 |
Excess tax benefits from stock-based compensation | (15) | (14) | 0 |
Other - net | (6) | 11 | 11 |
Income tax expense | $ 258 | $ 313 | $ 386 |
Effective tax rate | 23.90% | 33.50% | 37.90% |
INCOME TAXES - Changes in Liabi
INCOME TAXES - Changes in Liability for Tax Uncertainties, Excluding Interest (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in liability for tax uncertainties, excluding interest | |||
Balance at beginning of year | $ 45 | $ 59 | $ 61 |
Additions for tax positions related to the current year | 4 | 4 | 14 |
Additions for tax positions of prior years | 3 | 5 | 13 |
Reductions for tax positions of prior years | (5) | (13) | (15) |
Reductions due to statute lapse | (9) | (5) | (1) |
Settlements, audit payments, refunds - net | (1) | (5) | (13) |
Balance at end of year | $ 37 | $ 45 | $ 59 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||||||||
Net earnings attributable to W.W. Grainger, Inc. as reported | $ 209 | $ 104 | $ 237 | $ 232 | $ 151 | $ 162 | $ 98 | $ 175 | $ 782 | $ 586 | $ 606 |
Distributed earnings available to participating securities, basic | (2) | (2) | (2) | ||||||||
Undistributed earnings available to participating securities, basic | (4) | (3) | (3) | ||||||||
Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders | 776 | 581 | 601 | ||||||||
Undistributed earnings allocated to participating securities, diluted | 4 | 3 | 3 | ||||||||
Undistributed earnings reallocated to participating securities, diluted | (4) | (3) | (3) | ||||||||
Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders | $ 776 | $ 581 | $ 601 | ||||||||
Denominator for basic earnings per share – weighted average shares (in shares) | 56,142,604 | 57,674,977 | 60,430,892 | ||||||||
Effect of dilutive securities (in shares) | 391,581 | 308,190 | 409,038 | ||||||||
Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities (in shares) | 56,534,185 | 57,983,167 | 60,839,930 | ||||||||
Basic (in dollars per share) | $ 3.71 | $ 1.84 | $ 4.19 | $ 4.09 | $ 2.64 | $ 2.80 | $ 1.68 | $ 2.95 | $ 13.82 | $ 10.07 | $ 9.94 |
Diluted (in dollars per share) | $ 3.68 | $ 1.82 | $ 4.16 | $ 4.07 | $ 2.63 | $ 2.79 | $ 1.67 | $ 2.93 | $ 13.73 | $ 10.02 | $ 9.87 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | |||||||||||
Number of reportable segments | segment | 2 | ||||||||||
Service fee revenue | 1.00% | ||||||||||
Summarized Information: | |||||||||||
Net sales | $ 2,763 | $ 2,831 | $ 2,861 | $ 2,766 | $ 2,633 | $ 2,636 | $ 2,615 | $ 2,541 | $ 11,221 | $ 10,425 | $ 10,137 |
Operating earnings | 290 | $ 189 | $ 344 | $ 335 | 236 | $ 277 | $ 229 | $ 293 | 1,158 | 1,035 | 1,113 |
Total assets | 5,873 | 5,804 | 5,873 | 5,804 | 5,694 | ||||||
Long-lived assets | 1,478 | 1,544 | 1,478 | 1,544 | 1,556 | ||||||
Geographical Information | United States | |||||||||||
Summarized Information: | |||||||||||
Net sales | 8,613 | 7,948 | 7,834 | ||||||||
Long-lived assets | 1,140 | 1,098 | 1,140 | 1,098 | 1,135 | ||||||
Geographical Information | Canada | |||||||||||
Summarized Information: | |||||||||||
Net sales | 658 | 761 | 740 | ||||||||
Long-lived assets | 136 | 199 | 136 | 199 | 211 | ||||||
Geographical Information | Other foreign countries | |||||||||||
Summarized Information: | |||||||||||
Net sales | 1,950 | 1,716 | 1,563 | ||||||||
Long-lived assets | 202 | 247 | 202 | 247 | 210 | ||||||
Segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 11,682 | 10,833 | 10,489 | ||||||||
Operating earnings | 1,297 | 1,179 | 1,244 | ||||||||
Total assets | 2,684 | 2,589 | 2,684 | 2,589 | 2,561 | ||||||
Depreciation and amortization | 234 | 241 | 223 | ||||||||
Additions to long-lived assets | 246 | 262 | 272 | ||||||||
Intersegment eliminations [Member] | |||||||||||
Summarized Information: | |||||||||||
Net sales | (461) | (408) | (352) | ||||||||
Segment other current and noncurrent assets [Member] | |||||||||||
Summarized Information: | |||||||||||
Total assets | 2,879 | 3,033 | 2,879 | 3,033 | 2,959 | ||||||
Depreciation and amortization | 49 | 53 | 46 | ||||||||
Additions to long-lived assets | 39 | 67 | 106 | ||||||||
Unallocated in consolidation [Member] | |||||||||||
Summarized Information: | |||||||||||
Operating earnings | (139) | (144) | (131) | ||||||||
Total assets | 310 | 182 | 310 | 182 | 174 | ||||||
United States | |||||||||||
Summarized Information: | |||||||||||
Net sales | 8,131 | 7,556 | 7,522 | ||||||||
United States | Segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 8,588 | 7,960 | 7,870 | ||||||||
Operating earnings | 1,338 | 1,200 | 1,269 | ||||||||
Total assets | 2,496 | 2,310 | 2,496 | 2,310 | 2,275 | ||||||
Depreciation and amortization | 166 | 169 | 159 | ||||||||
Additions to long-lived assets | 200 | 187 | 154 | ||||||||
United States | Intersegment eliminations [Member] | |||||||||||
Summarized Information: | |||||||||||
Net sales | (457) | (404) | (348) | ||||||||
Canada | |||||||||||
Summarized Information: | |||||||||||
Net sales | 653 | 753 | 734 | ||||||||
Canada | Segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 653 | 753 | 734 | ||||||||
Operating earnings | (49) | (77) | (65) | ||||||||
Total assets | $ 188 | $ 279 | 188 | 279 | 286 | ||||||
Depreciation and amortization | 19 | 19 | 18 | ||||||||
Additions to long-lived assets | 7 | 8 | 12 | ||||||||
Canada | Intersegment eliminations [Member] | |||||||||||
Summarized Information: | |||||||||||
Net sales | 0 | 0 | 0 | ||||||||
United States and Canada | |||||||||||
Summarized Information: | |||||||||||
Net sales | 8,784 | 8,309 | 8,256 | ||||||||
Operating earnings | 1,289 | 1,123 | 1,204 | ||||||||
United States and Canada | Segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 9,241 | 8,713 | 8,604 | ||||||||
Operating earnings | 1,289 | 1,123 | 1,204 | ||||||||
Depreciation and amortization | 185 | 188 | 177 | ||||||||
Additions to long-lived assets | 207 | 195 | 166 | ||||||||
United States and Canada | Intersegment eliminations [Member] | |||||||||||
Summarized Information: | |||||||||||
Net sales | (457) | (404) | (348) | ||||||||
Other businesses | |||||||||||
Summarized Information: | |||||||||||
Net sales | 2,437 | 2,116 | 1,881 | ||||||||
Other businesses | Segments | |||||||||||
Summarized Information: | |||||||||||
Net sales | 2,441 | 2,120 | 1,885 | ||||||||
Operating earnings | 8 | 56 | 40 | ||||||||
Other businesses | Intersegment eliminations [Member] | |||||||||||
Summarized Information: | |||||||||||
Net sales | $ (4) | $ (4) | $ (4) |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||
Net sales | $ 2,763 | $ 2,831 | $ 2,861 | $ 2,766 | $ 2,633 | $ 2,636 | $ 2,615 | $ 2,541 | $ 11,221 | $ 10,425 | $ 10,137 |
Cost of goods sold | 1,697 | 1,752 | 1,750 | 1,674 | 1,611 | 1,619 | 1,575 | 1,522 | 6,873 | 6,327 | 6,022 |
Gross profit | 1,066 | 1,079 | 1,111 | 1,092 | 1,022 | 1,017 | 1,040 | 1,019 | 4,348 | 4,098 | 4,115 |
Selling, general and administrative expenses | 776 | 890 | 767 | 757 | 786 | 740 | 811 | 726 | 3,190 | 3,063 | 3,002 |
Operating earnings | 290 | 189 | 344 | 335 | 236 | 277 | 229 | 293 | 1,158 | 1,035 | 1,113 |
Net earnings attributable to W.W. Grainger, Inc. | $ 209 | $ 104 | $ 237 | $ 232 | $ 151 | $ 162 | $ 98 | $ 175 | $ 782 | $ 586 | $ 606 |
Earnings per share - basic (in dollars per share) | $ 3.71 | $ 1.84 | $ 4.19 | $ 4.09 | $ 2.64 | $ 2.80 | $ 1.68 | $ 2.95 | $ 13.82 | $ 10.07 | $ 9.94 |
Earnings per share - diluted (in dollars per share) | $ 3.68 | $ 1.82 | $ 4.16 | $ 4.07 | $ 2.63 | $ 2.79 | $ 1.67 | $ 2.93 | $ 13.73 | $ 10.02 | $ 9.87 |