COVER
COVER - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 11, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Transition Report | false | ||
Entity File Number | 1-5684 | ||
Entity Registrant Name | W.W. Grainger, Inc. | ||
Entity Incorporation, State or Country Code | IL | ||
Entity Tax Identification Number | 36-1150280 | ||
Entity Address, Address Line One | 100 Grainger Parkway | ||
Entity Address, City or Town | Lake Forest, | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60045-5201 | ||
City Area Code | 847 | ||
Local Phone Number | 535-1000 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | GWW | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 20,483,168,550 | ||
Entity Common Stock, Shares Outstanding | 51,107,898 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive proxy statement to be filed in connection with the annual meeting of shareholders to be held on April 27, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (Form 10-K) where indicated. The registrant's definitive 2021 proxy statement will be filed on or about March 17, 2022. | ||
Entity Central Index Key | 0000277135 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Auditor Information [Abstract] | |
Auditor Name | Ernst & Young LLP |
Auditor Location | Chicago, Illinois |
Auditor Firm ID | 42 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Net sales | $ 13,022 | $ 11,797 | $ 11,486 |
Cost of goods sold | 8,302 | 7,559 | 7,089 |
Gross profit | 4,720 | 4,238 | 4,397 |
Selling, general and administrative expenses | 3,173 | 3,219 | 3,135 |
Operating earnings | 1,547 | 1,019 | 1,262 |
Other (income) expense: | |||
Interest expense – net | 87 | 93 | 79 |
Other – net | (25) | (21) | (26) |
Total other expense – net | 62 | 72 | 53 |
Earnings before income taxes | 1,485 | 947 | 1,209 |
Income tax provision | 371 | 192 | 314 |
Net earnings | 1,114 | 755 | 895 |
Less: Net earnings attributable to noncontrolling interest | 71 | 60 | 46 |
Net earnings attributable to W.W. Grainger, Inc. | $ 1,043 | $ 695 | $ 849 |
Earnings per share: | |||
Basic (in dollars per share) | $ 19.94 | $ 12.88 | $ 15.39 |
Diluted (in dollars per share) | $ 19.84 | $ 12.82 | $ 15.32 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 51.9 | 53.5 | 54.7 |
Diluted (in shares) | 52.2 | 53.7 | 54.9 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 1,114 | $ 755 | $ 895 |
Other comprehensive earnings (losses): | |||
Foreign currency translation adjustments – net of reclassification to earnings (see Note 2 and Note 11) | (64) | 83 | 26 |
Postretirement benefit plan gains (losses) – net of tax benefit (expense) of $—, $(7), and $2, respectively (see Note 7 and Note 11) | 0 | 22 | (6) |
Total other comprehensive earnings (losses) | (64) | 105 | 20 |
Comprehensive earnings – net of tax | 1,050 | 860 | 915 |
Less: Comprehensive earnings (losses) attributable to noncontrolling interest | |||
Net earnings | 71 | 60 | 46 |
Foreign currency translation adjustments | (29) | 12 | 3 |
Total comprehensive earnings (losses) attributable to noncontrolling interest | 42 | 72 | 49 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 1,008 | $ 788 | $ 866 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS Parentheticals - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Postretirement benefit plan gains (losses), tax | $ 0 | $ (7) | $ 2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 241 | $ 585 |
Accounts receivable (less allowance for credit losses of $30 and $27, respectively) | 1,754 | 1,474 |
Inventories – net | 1,870 | 1,733 |
Prepaid expenses and other current assets | 146 | 127 |
Total current assets | 4,011 | 3,919 |
Property, buildings and equipment – net | 1,424 | 1,395 |
Goodwill | 384 | 391 |
Intangibles – net | 238 | 228 |
Operating lease right-of-use | 393 | 210 |
Other assets | 142 | 152 |
Total assets | 6,592 | 6,295 |
Current liabilities | ||
Current maturities of long-term debt | 0 | 8 |
Trade accounts payable | 816 | 779 |
Accrued compensation and benefits | 319 | 307 |
Operating lease liability | 66 | 57 |
Accrued expenses | 290 | 248 |
Income taxes payable | 37 | 42 |
Total current liabilities | 1,528 | 1,441 |
Long-term debt (less current maturities) | 2,362 | 2,389 |
Long-term operating lease liability | 334 | 162 |
Deferred income taxes and tax uncertainties | 121 | 110 |
Other non-current liabilities | 87 | 100 |
Shareholders' equity | ||
Cumulative preferred stock – $5 par value – 12,000,000 shares authorized; none issued nor outstanding | 0 | 0 |
Common Stock – $0.50 par value – 300,000,000 shares authorized; issued 109,659,219 shares | 55 | 55 |
Additional contributed capital | 1,270 | 1,239 |
Retained earnings | 9,500 | 8,779 |
Accumulated other comprehensive losses | (96) | (61) |
Treasury stock, at cost – 58,439,014 and 57,134,828 shares, respectively | (8,855) | (8,184) |
Total W.W. Grainger, Inc. shareholders’ equity | 1,874 | 1,828 |
Noncontrolling interest | 286 | 265 |
Total shareholders' equity | 2,160 | 2,093 |
Total liabilities and shareholders' equity | $ 6,592 | $ 6,295 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 30 | $ 27 |
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) | 58,439,014 | 57,134,828 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net earnings | $ 1,114 | $ 755 | $ 895 |
Provision for credit losses | 18 | 22 | 12 |
Deferred income taxes and tax uncertainties | 27 | (5) | 4 |
Depreciation and amortization | 185 | 182 | 229 |
Impairment of goodwill, intangible and long-lived assets | 0 | 187 | 123 |
Net (gains) losses from sales of assets and business divestitures | (6) | 106 | (6) |
Stock-based compensation | 42 | 46 | 40 |
Subtotal | 266 | 538 | 402 |
Change in operating assets and liabilities | |||
Accounts receivable | (324) | (121) | (42) |
Inventories | (152) | (158) | (106) |
Prepaid expenses and other assets | (15) | (23) | (33) |
Trade accounts payable | 54 | 80 | 32 |
Accrued liabilities | 43 | 15 | (84) |
Income taxes – net | (26) | 24 | (3) |
Other non-current liabilities | (23) | 13 | (19) |
Subtotal | (443) | (170) | (255) |
Net cash provided by operating activities | 937 | 1,123 | 1,042 |
Cash flows from investing activities: | |||
Additions to property, buildings, equipment and intangibles | (255) | (197) | (221) |
Proceeds from sale or redemption of assets and business divestitures | 29 | 20 | 17 |
Other – net | 0 | (2) | 2 |
Net cash used in investing activities | (226) | (179) | (202) |
Cash flows from financing activities: | |||
Borrowings under lines of credit | 0 | 12 | 20 |
Payments against lines of credit | 0 | (65) | (15) |
Proceeds from long-term debt | 0 | 1,584 | 0 |
Payments of long-term debt | (8) | (1,370) | (42) |
Proceeds from stock options exercised | 48 | 70 | 49 |
Payments for employee taxes withheld from stock awards | (30) | (18) | (11) |
Purchases of treasury stock | (695) | (601) | (700) |
Cash dividends paid | (357) | (338) | (328) |
Other – net | 3 | 0 | 4 |
Net cash used in financing activities | (1,039) | (726) | (1,023) |
Exchange rate effect on cash and cash equivalents | (16) | 7 | 5 |
Net change in cash and cash equivalents: | (344) | 225 | (178) |
Cash and cash equivalents at beginning of year | 585 | 360 | 538 |
Cash and cash equivalents at end of year | 241 | 585 | 360 |
Supplemental cash flow information: | |||
Cash payments for interest (net of amounts capitalized) | 87 | 94 | 84 |
Cash payments for income taxes | $ 377 | $ 180 | $ 322 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Contributed Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Earnings (Losses) | Treasury Stock | Noncontrolling Interest |
Beginning balance at Dec. 31, 2018 | $ 2,093 | $ 55 | $ 1,134 | $ 7,869 | $ (171) | $ (6,966) | $ 172 | ||
Stock-based compensation | 78 | 45 | 33 | ||||||
Purchases of treasury stock | (700) | (700) | |||||||
Net earnings | 895 | 849 | 46 | ||||||
Other comprehensive earnings (losses) | 20 | 17 | 3 | ||||||
Capital contribution | 2 | 2 | |||||||
Cash dividends paid | (328) | 1 | (313) | (16) | |||||
Ending balance at Dec. 31, 2019 | 2,060 | 55 | 1,182 | 8,405 | (154) | (7,633) | 205 | ||
Stock-based compensation | 98 | 49 | 49 | ||||||
Purchases of treasury stock | (601) | (600) | (1) | ||||||
Net earnings | 755 | 695 | 60 | ||||||
Other comprehensive earnings (losses) | 105 | 93 | 12 | ||||||
Capital contribution | 14 | 7 | 7 | ||||||
Cash dividends paid | (338) | 1 | (321) | (18) | |||||
Ending balance at Dec. 31, 2020 | 2,093 | $ 12 | 55 | 1,239 | 8,779 | $ 12 | (61) | (8,184) | 265 |
Stock-based compensation | 60 | 31 | 28 | 1 | |||||
Purchases of treasury stock | (700) | (699) | (1) | ||||||
Net earnings | 1,114 | 1,043 | 71 | ||||||
Other comprehensive earnings (losses) | (64) | (35) | (29) | ||||||
Capital contribution | 2 | 2 | |||||||
Cash dividends paid | (357) | (334) | (23) | ||||||
Ending balance at Dec. 31, 2021 | $ 2,160 | $ 55 | $ 1,270 | $ 9,500 | $ (96) | $ (8,855) | $ 286 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends paid per share (in dollars per share) | $ 6.39 | $ 5.94 | $ 5.68 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES W.W. Grainger, Inc. is a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with operations primarily in North America (N.A.), Japan and the United Kingdom (U.K.). In this report, the words “Grainger” or “Company” mean W.W. Grainger, Inc. and its subsidiaries, except where the context makes it clear that the reference is only to W.W. Grainger, Inc. itself and not its subsidiaries. Effective January 1, 2021, Grainger's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. On March 8, 2021, the Company provided investors with segment summary historical financial information and segment historical data that is consistent with its new reportable segment structure and reflective of its updated intersegment accounting policies. For further segment information, see Note 14. 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, the endless assortment business in Japan, with the residual representing the noncontrolling interest. The Company reports MonotaRO on a one-month calendar lag allowing for the timely preparation of financial statements. This one-month reporting lag is with the exception of significant transactions or events that occur during the intervening period. During December 2021, MonotaRO entered into a lease for a new Distribution Center (DC), which the Company deemed significant and included in the Consolidated Financial Statements for the year ended December 31, 2021. Reclassifications Certain reclassifications have been made to prior year amounts in the Company's Consolidated Balance Sheets to conform with the current year presentation. Reclassifications were made to separately present operating lease right-of-use assets and current and long-term lease obligations that were previously presented as Other assets, Accrued expenses and Other non-current liabilities, respectively. The reclassifications had no effect on net earnings or cash flows for the years ended December 31, 2021, 2020, or 2019. Use of Estimates The preparation of the Company's Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting reported amounts in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. Foreign Currency Translation The U.S. dollar is the Company's reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Translation gains or losses are recorded as a separate component of other comprehensive earnings (losses). Revenue Recognition The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), the transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations and are satisfied when the services are rendered. Total service revenue is not material and accounted for approximately 1% of the Company's revenue for the years ended December 31, 2021, 2020 and 2019, respectively. The Company’s revenue is measured at the determinable transaction price, net of any variable considerations granted to customers and any taxes collected from customers and subsequently remitted to governmental authorities. Variable considerations include rights to return products and sales incentives, which primarily consist of volume rebates. These variable considerations are estimated throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $34 million and $31 million as of December 31, 2021 and 2020, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $73 million and $58 million as of December 31, 2021 and 2020, respectively, and are reported as part of Accrued expenses. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2021 and 2020. Cost of Goods Sold (COGS) COGS, exclusive of depreciation and amortization, includes the purchase cost of goods sold net of vendor considerations, in-bound shipping costs, outbound shipping and handling costs and service costs. The Company receives vendor considerations, such as rebates to promote their products, which are generally recorded as a reduction to COGS. Rebates earned from vendors that are based on product purchases are capitalized into inventory and rebates earned based on products sold are credited directly to COGS. Selling, General and Administrative Expenses (SG&A) Company SG&A is primarily comprised of depreciation and amortization, compensation and benefit costs, indirect purchasing, supply chain and branch operations, technology, leases, restructuring, impairments, advertising and selling expenses, as well as other types of general and administrative costs. Advertising Advertising costs, which include online marketing, are generally expensed in the year the related advertisement is first presented or when incurred. Total advertising expense was $402 million, $319 million and $316 million for 2021, 2020 and 2019, respectively. Stock Incentive Plans The Company measures all share-based payments using fair-value-based methods and records compensation expense on a straight-line basis over the vesting periods, net of estimated forfeitures. Income Taxes The Company recognizes the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. Also, the Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters . The Company recognizes tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. The Company recognizes interest expense and penalties to its tax uncertainties in the provision for income taxes. Other Comprehensive Earnings (Losses) The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. Cash and Cash Equivalents The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. Concentration of Credit Risk The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. Also, the Company has a broad customer base representing many diverse industries across North America, Japan and U.K. Consequently, no significant concentration of credit risk is considered to exist. Accounts Receivable and Allowance for Credit Losses The Company’s accounts receivable arises primarily from sales on credit to customers and are stated at their estimated net realizable value. The Company establishes allowances for credit losses on customer accounts that are potentially uncollectible. These allowances are determined based on several factors, including the age of the receivables, historical collection trends and economic conditions that may have an impact on a specific industry, group of customers or a specific customer. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. Inventories Company inventories primarily consist of merchandise purchased for resale, and they are valued at the lower of cost or net realizable value. The Company uses the last-in, first-out (LIFO) method to account for approximately 75% of total inventory and the first-in, first-out (FIFO) method for the remaining inventory. The Company regularly reviews inventory to evaluate continued demand and records excess and obsolete provisions representing the difference between excess and obsolete inventories and net realizable value. Estimated net realizable value considers various variables, including product demand, aging and shelf life, market conditions, and liquidation or disposition history and values. If FIFO had been used for all of the Company’s inventories, they would have been $510 million and $446 million higher than reported at December 31, 2021 and December 31, 2020, respectively. Concurrently, net earnings would have increased by $49 million, $15 million and $24 million for the years ended December 31, 2021, 2020 and 2019, respectively. Property, Buildings and Equipment Property, buildings and equipment are stated at cost, less accumulated depreciation. Depreciation is computed over the estimated useful lives of the asset classes using the straight-line method. Useful lives for buildings, structures and improvements range from 10 to 50 years and furniture, fixtures, machinery and equipment from three Historically, Grainger had depreciated certain property, buildings and equipment using both the declining balance and sum-of-the-years’ digits methods as well as certain buildings over estimated useful lives of approximately thirty years. In accordance with its policy, the Company periodically reviews information impacting the pattern of consumption for its capital assets and useful lives to ensure that estimates of depreciation expenses are appropriate. The Company’s investment in its supply chain infrastructure and technology triggered the review of these patterns of consumption. Pursuant to the review and effective January 1, 2020, the method of estimating depreciation for certain assets was changed to the straight-line method and updated useful lives to forty Depreciation expense was $123 million, $116 million and $150 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company capitalized interest costs of $1 million, $4 million and $9 million for the years ended December 31, 2021, 2020 and 2019, respectively. Long-Lived Assets The carrying value of long-lived assets, primarily property, buildings and equipment and amortizable intangibles, is evaluated whenever events or changes in circumstances indicate that the carrying value of the asset group may be impaired. An impairment loss is recognized when estimated undiscounted future cash flows resulting from use of the asset, including disposition, are less than their carrying value. Impairment is measured as the amount by which the asset's carrying amount exceeds the fair value. Leases The Company leases certain properties and buildings (including branches, warehouses, DCs and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company determines if an arrangement contains a lease at inception. Leases with an initial term of more than 12 months are recorded on the balance sheet as right-of-use (ROU) assets representing the right to use the underlying asset for the lease term and the corresponding current and long-term lease liabilities representing the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement or possession date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate, the ROU asset and the lease liability are re-evaluated upon a lease modification. Certain lease agreements include variable lease payments that primarily include payments for non-lease components including pass-through operating expenses such as certain maintenance costs and utilities, and payments for non-components such as real estate taxes and insurance. Lease agreements with fixed lease and non-lease components are generally accounted for as a single lease component for all underlying classes of assets. Certain of the Company’s lease arrangements contain renewal provisions from one The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in SG&A. Goodwill and Other Intangible Assets In a business acquisition, the Company recognizes goodwill as the excess purchase price of an acquired reporting unit over the net amount assigned to assets acquired including intangible assets and liabilities assumed. Acquired intangibles include both assets with indefinite lives and assets that are subject to amortization, which are amortized straight-line over their estimated useful lives. The Company tests goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The Company performs qualitative assessments of significant events and circumstances, such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the current global outbreak of the COVID-19 pandemic to determine the existence of impairment indicators and assess if it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying value that would necessitate a quantitative impairment test. In the quantitative test, Grainger compares the carrying value of the reporting unit or an indefinite-lived intangible asset with its fair value. Any excess of the carrying value over fair value is recorded as an impairment charge, presented as part of SG&A. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values. Estimates of market-participant risk-adjusted weighted average cost of capital are used as a basis for determining the discount rates to apply to the reporting units’ future expected cash flows and terminal value. The Company’s indefinite-lived intangibles are primarily trade names. The fair value of trade names is calculated primarily using the relief-from-royalty method, which estimates the expected royalty savings attributable to the ownership of the trade name asset. The key assumptions when valuing a trade name are the revenue base, the royalty rate, and the discount rate. Additionally, the Company capitalizes certain costs related to the purchase and development of internal-use software, which are presented as intangible assets. Amortization of capitalized software is on a straight-line basis over three Accounting for Derivative Instruments The Company recognizes all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction, type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Company uses statistical methods and qualitative comparisons of critical terms. The extent to which a derivative has been and is expected to continue to be, highly effective at offsetting changes in the fair value or cash flows of the hedged item is assessed and documented periodically. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. For those derivative instruments that are designated and qualify as hedging instruments, the Company classifies them as fair value hedges or cash flow hedges. Contingencies The Company accrues for costs relating to litigation claims and other contingent matters when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. New Accounting Standards Accounting Pronouncements Recently Adopted In October 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance and refining or correcting terminology. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intra-period tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. Accounting Pronouncements Recently Issued In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update provides increased transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity's method of accounting for government assistance and the effect of the assistance on an entity's financial statements. The guidance is effective for annual periods beginning after December 15, 2021 and should be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard and does not expect a material impact on the Financial Statements or related disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied prospectively to contract modifications made and hedging relationships entered or evaluated on or before December 31, 2022. The Company evaluated the impact of this ASU and it does not expect a material impact on the Consolidated Financial Statements. |
BUSINESS DIVESTITURES AND LIQUI
BUSINESS DIVESTITURES AND LIQUIDATIONS | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
BUSINESS DIVESTITURES AND LIQUIDATIONS | BUSINESS DIVESTITURES AND LIQUIDATIONS Consistent with the Company's strategic focus on broad line MRO distribution in key markets, Grainger divested the Fabory business in Europe (Fabory) on June 30, 2020 and the China business (China) on August 21, 2020. Accordingly, the Company's Consolidated Statements of Earnings, Comprehensive Earnings and Cash Flows and related notes include Fabory and China results through the respective dates of divestiture. The proceeds from these divestitures were used to fund general corporate needs. During the second and third quarters of 2020, Grainger recognized a net loss of approximately $109 million and a gain of $5 million in SG&A as a result of the Fabory and China divestitures, respectively, which included net accumulated foreign currency translation losses of $45 million, that were reclassified from Accumulated other comprehensive earnings (losses) (AOCE) to SG&A. During the fourth quarter of 2020, the Company commenced the liquidation of ZTE and recognized $9 million in expense in SG&A associated with the wind down of the business. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE [Abstract] | |
REVENUE | REVENUE Grainger serves a large number of customers in diverse industries, which are subject to different economic and market specific factors. Revenue is primarily comprised of MRO product sales and related activities, such as freight and services. The Company's presentation of revenue by reportable segment and industry most reasonably depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows are affected by economic and market-specific factors. In addition, the segments have unique underlying risks associated with customer purchasing behaviors. In the High-Touch Solutions N.A. segment, more than two-thirds of revenue is derived from customer contracts and in the Endless Assortment segment, a majority of revenue is derived from spot buys. The following table presents the Company's percentage of revenue by reportable segment and by major customer industry: Twelve Months Ended December 31, 2021 2020 2019 High-Touch Solutions N.A. Endless Assortment Total Company (2) High-Touch Solutions N.A. Endless Assortment Total Company (2) High-Touch Solutions N.A. Endless Assortment Total Company (2) Contractors 9 % 16 % 10 % 9 % 15 % 10 % 10 % 16 % 10 % Commercial 9 15 10 8 15 9 10 15 11 Government 18 3 15 20 3 16 17 3 14 Healthcare 7 2 6 9 2 7 7 1 6 Manufacturing 30 29 30 29 29 30 31 31 31 Retail/Wholesale 10 10 10 9 10 9 8 10 8 Transportation 5 3 5 5 3 5 6 3 5 Other (1) 12 22 14 11 23 14 11 21 15 Total net sales 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 78 % 20 % 100 % 78 % 18 % 100 % 79 % 16 % 100 % (1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment. (2) Total Company includes other businesses, which includes the Cromwell business, as well as the Fabory and China businesses in the periods prior to t heir divestitures in the second and third quarter of 2020, respectively. Other businesses account for approximately 2%, 4% a nd 5% of revenue for the twelve months ended December 31, 2021, 2020 and 2019, respectively. |
PROPERTY, BUILDINGS AND EQUIPME
PROPERTY, BUILDINGS AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 December 31, 2020 Land $ 329 $ 329 Building, structures and improvements 1,431 1,330 Furniture, fixtures, machinery and equipment 1,567 1,878 Property, buildings and equipment $ 3,327 $ 3,537 Less: Accumulated depreciation and amortization 1,903 2,142 Property, buildings and equipment, net $ 1,424 $ 1,395 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Grainger completed its annual impairment testing of goodwill and intangible assets during the fourth quarter of 2021 and 2020. Based on the results of that testing, the Company concluded that it was more likely than not that the fair value of the reporting units exceeded their carrying amounts at each respective period. High-Touch Solutions N.A. – Canada Business In the second quarter of 2020, qualitative tests indicated the existence of impairment indicators for the Canada business given the slowdowns in global oil markets and the economic repercussions from the COVID-19 pandemic in Canada. As such, a quantitative test was performed to evaluate whether any impairment of goodwill was necessary. Based on the result of the quantitative test, the Company concluded there was no impairment of goodwill. During the subsequent annual impairment testing of the Canada business goodwill in 2020 and 2021, the Company performed qualitative assessments, which included evaluations of changes in key assumptions, notably projections of revenue growth, factors that could impact the discount rate used in the analysis, and the improvement in operating leverage since the performance of the last quantitative impairment test. As part of this assessment, Grainger compared the current results to the forecasted expectations of the most recent quantitative analysis, along with analyzing macroeconomic conditions, current industry trends and transactions, and other market data of industry peers. The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators, as such, additional quantitative assessments were not required and concluded that it was more likely than not that the fair value of the Canada business reporting unit exceeded its carrying amount. At December 31, 2021, the reporting unit's goodwill balance was $129 million. The Company balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars): High-Touch Solutions N.A. Endless Assortment Other Total Balance at January 1, 2020 $ 318 $ 52 $ 59 $ 429 Acquisition — 15 — 15 Impairment — — (58) (58) Translation 3 3 (1) 5 Balance at December 31, 2020 321 70 — 391 Translation — (7) — (7) Balance at December 31, 2021 $ 321 $ 63 $ — $ 384 The cumulative goodwill impairments as of December 31, 2021, were $137 million and consisted of $32 million within High-Touch Solutions N.A. and $105 million in Other. During the first quarter of 2020, the Company recorded $58 million of impairment charges in SG&A, in connection with the impairment of Fabory's goodwill. The impairment is presented in Other in the table above. The Company divested the Fabory business during the second quarter of 2020. Grainger's current business portfolio had no impairments to goodwill for the twelve months ended December 31, 2021, and December 31, 2020, respectively. The balances and changes in intangible assets, net are as follows (in millions of dollars): As of December 31, 2021 2020 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/impairment Net carrying amount Customer lists and relationships 11.8 years $ 221 $ 176 $ 45 $ 223 $ 171 $ 52 Trademarks, trade names and other 14.1 years 36 24 12 36 22 14 Non-amortized trade names and other Indefinite 25 — 25 28 — 28 Capitalized software 4.4 years 525 369 156 461 327 134 Total intangible assets 6.9 years $ 807 $ 569 $ 238 $ 748 $ 520 $ 228 Amortization expense of intangible assets presented in SG&A, excluding impairment charges was $63 million, $60 million, and $78 million for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2022 $ 54 2023 41 2024 31 2025 24 2026 19 Thereafter 44 Total $ 213 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | DEBT In February 2020, the Company entered into a five-year unsecured credit agreement pursuant to which the Company may obtain loans in various currencies on a revolving basis in an aggregate amount not exceeding the U.S. Dollar equivalent of $1.25 billion ($1.25 billion credit facility), which may be increased from time to time up to $1.875 billion at the request of the Company, subject to approval from lenders and other customary conditions. The $1.25 billion credit facility replaced the Company's former $750 million unsecured revolving credit facility, which originated in October 2017 and was scheduled to mature in October 2022. There were no borrowings outstanding under the line of credit as of December 31, 2021 and 2020. The primary purpose of this credit facility is to support the Company's commercial paper program and for general corporate purposes. The Company issues commercial paper from time to time for general working capital needs. At December 31, 2021 and 2020, there was none outstanding. The Company's 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, 2021. Long-term debt obligations, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of December 31, 2021 2020 Carrying Value Fair Value (4) Carrying Value Fair Value (4) 4.60% senior notes due 2045 (1) 1,000 1,284 $ 1,000 $ 1,343 3.75% senior notes due 2046 (1) 400 459 400 479 4.20% senior notes due 2047 (1) 400 492 400 514 1.85% senior notes due 2025 (2) 500 509 500 526 Japanese Yen term loan (3) 78 78 87 87 Other 7 7 34 34 Subtotal 2,385 2,829 2,421 2,983 Less current maturities — — (8) (8) Debt issuance costs and discounts – net of amortization (23) (23) (24) (24) Long-term debt (less current maturities) $ 2,362 $ 2,806 $ 2,389 $ 2,951 (1) In the years 2015-2017, Grainger issued $1.8 billion in long-term debt (Senior Notes). Debt was issued as follows: • In May 2017, $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually. • In May 2016, $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually. • In June 2015, $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually. The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20-25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. At the time of issuance, costs and discounts of approximately $24 million representing underwriting fees and other expenses, were recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Senior Notes. (2) In February 2020, the Company issued $500 million of unsecured 1.85% Senior Notes (1.85% Notes) and used the proceeds to repay the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility, and to fund general working capital needs. The 1.85% Notes mature in February 2025, they require no principal payments until the maturity date and interest is payable semi-annually on February 15 and August 15, beginning in August 2020. Prior to January 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at a “make-whole” redemption price. This redemption price is calculated by reference to the then-current yield on a U.S. Treasury security with a maturity comparable to the remaining term of the 1.85% Notes plus 10 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the 1.85% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. On or after January 15, 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. At the time of issuance, costs and discounts of approximately $5 million associated with the issuance of the 1.85% Notes, representing underwriting fees and other expenses, were recorded as a contra-liability within Long-term debt and are being amortized to interest expense, net over the term of the 1.85% Notes. In connection with the 1.85% Notes, in February 2020, the Company entered into derivative instrument agreements to manage its risks associated with interest rates on the 1.85% Notes. The carrying value adjustments resulting from the interest rate swaps in both periods are presented within Other in the table above. For further discussion of the Company's hedge accounting policies and derivative instruments, see Notes 1 and 12. (3) In August 2020, MonotaRO Co. LTD., entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024 and bears average interest at 0.05%. (4) 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 required on the Company's indebtedness, based on the maturity dates defined within the debt arrangements, for the succeeding five years, excluding debt issuance costs and the impact of derivatives, are due as follows (in millions of dollars): Year Payment Amount 2022 $ — 2023 39 2024 40 2025 500 2026 5 Thereafter 1,800 Total $ 2,384 |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2021 | |
EMPLOYEE BENEFITS [Abstract] | |
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS The Company provides various retirement benefits to eligible team members, 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 team member location. Various foreign benefit plans cover team members in accordance with local legal requirements. Defined Contribution Plans A majority of the Company's U.S. team members are covered by a retirement savings plan, adopted as of January 1, 2021. The new plan amended and restated the prior noncontributory profit-sharing plan, which previously aligned Company contributions to Company performance and included two components, a variable annual contribution based on the Company's rate of return on invested capital and an automatic contribution equal to 3% of the eligible team member's total eligible compensation. As part of the amendment, beginning in 2021, the profit-sharing contribution was removed, and the Company's automatic contribution increased from 3% to 6% of total eligible participants’ compensation. In addition, team members covered by the plan are also able to make personal contributions. The total retirement savings plan expense was $78 million for 2021. The total profit-sharing plan expense was $99 million and $113 million for 2020 and 2019, respectively. The Company sponsors additional defined contribution plans available to certain U.S. and foreign team members for which contributions are made by the Company and participating team members. The expense associated with these defined contribution plans totaled $16 million, $16 million, and $19 million for 2021, 2020 and 2019, respectively. Postretirement Healthcare Benefits Plans The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its U.S. team members hired prior to January 1, 2013, and their dependents should they elect to maintain such coverage upon retirement. Covered team members become eligible for participation when they qualify for retirement while working for the Company. Participation in the plan is voluntary and requires participants to make contributions toward the cost of the plan, as determined by the Company. The net periodic benefits costs were valued with a measurement date of January 1 for each year and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 SG&A Service cost $ 5 $ 5 $ 4 Other (income) expense Interest cost 3 6 7 Expected return on assets (8) (8) (12) Amortization of prior service credit (9) (10) (10) Amortization of unrecognized gains (8) (5) (4) Net periodic (benefits) costs $ (17) $ (12) $ (15) Reconciliations of the beginning and ending balances of the postretirement benefit asset (obligation), which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit asset (obligation) follow (in millions of dollars): 2021 2020 Benefit obligation at beginning of year $ 167 $ 200 Service cost 5 5 Interest cost 3 6 Plan participants' contributions 3 3 Actuarial (gains)/losses (14) (38) Benefits paid (11) (9) Benefit obligation at end of year $ 153 $ 167 Plan assets available for benefits at beginning of year $ 206 $ 198 Actual returns on plan assets 9 14 Plan participants' contributions 3 3 Benefits paid (11) (9) Plan assets available for benefits at end of year 207 206 Noncurrent postretirement benefit asset (obligation) $ 54 $ 39 The amounts recognized in AOCE consisted of the following (in millions of dollars): As of December 31, 2021 2020 Prior service credit $ 42 $ 51 Unrecognized gains 90 83 Deferred tax (liability) (33) (33) Net accumulated gains $ 99 $ 101 The Company has elected to amortize the amount of net unrecognized gains over a period equal to the average remaining service period for active plan participants expected to retire and receive benefits of approximately 10.5 years for 2021. The postretirement benefit obligation was determined by applying the terms of the plan and actuarial models. These models include various actuarial assumptions, including discount rates, long-term rates of return on plan assets, healthcare cost trend rate and cost-sharing between the Company and the retirees. The Company evaluates its actuarial assumptions on an annual basis and considers changes in these long-term factors based upon market conditions and historical experience. The actuarial gains recognized during the plan year are primarily related to changes in assumptions related to certain retiree coverage elections, health reimbursement arrangement (HRA) subsidy and changes to the discount rate. The following assumptions were used to determine net periodic benefit costs at January 1 of each year: For the Years Ended December 31, 2021 2020 2019 Discount rate 2.17 % 3.01 % 4.08 % Long-term rate of return on plan assets – net of tax 4.04 % 4.04 % 7.13 % Initial healthcare cost trend rate Pre age 65 5.81 % 6.06 % 6.31 % Post age 65 NA NA NA Catastrophic drug benefit NA NA 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 % 2.50 % The following assumptions were used to determine benefit obligations at December 31: 2021 2020 2019 Discount rate 2.57 % 2.17 % 3.01 % Expected long-term rate of return on plan assets – net of tax 4.04 % 4.04 % 4.04 % Initial healthcare cost trend rate Pre age 65 6.50 % 5.81 % 6.06 % Post age 65 NA NA NA Catastrophic drug benefit NA NA NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2030 2026 2026 HRA credit inflation index for grandfathered retirees — % — % 2.50 % The discount rate assumptions reflect the rates available on high-quality fixed-income debt instruments as of December 31, the measurement date of each year. These rates have been selected due to their similarity to the duration of the projected cash flows of the postretirement healthcare benefit plan. As of December 31, 2021, the Company increased the discount rate from 2.17% to 2.57% to reflect the increase in the market interest rates at December 31, 2021. The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. As of December 31, 2021, the initial healthcare cost trend rate was 6.50% for pre age 65. The healthcare costs trend rates decline each year until reaching the ultimate trend rate of 4.50%. The plan amendment adopted in 2017 moves all post age 65 Medicare eligible retirees to an exchange and provides a subsidy to those retirees to purchase insurance. The amount of the subsidy is based on years of service for grandfathered team members. The Company has established a Group Benefit Trust (Trust) to fund the plan obligations and process benefit payments. In 2019, the Company liquidated previously held index funds and temporarily invested all assets of the Trust in money market funds. In 2020, the Company transitioned the Trust assets from money market funds into a liability-driven investment solution which enhances the Trust's after-tax returns and de-risks the Company's exposure by more closely match-funding the underlying liability. This investment strategy reflects the long-term nature of the plan obligation and seeks to reach a balanced allocation between Fixed Income securities and Equities of 65% and 35%, respectively. The plan's assets are stated at fair value, which represents the net asset value of shares held by the plan in the registered investment companies at the quoted market prices (Level 1 input) or at significant other observable inputs (Level 2 input). The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2021 2020 Asset Class: Level 1 Inputs: Mutual Funds: Funds – Municipal/Provincial Bonds $ 12 $ 13 Funds – Corporate Bonds Fund 5 5 Federal Money Market Fund 4 11 Level 2 Inputs: Fixed Income: Corporate Bonds 89 102 Government/Municipal Bonds 14 8 Equity Funds 85 66 Plan Assets 209 205 Less: trust assets/(liabilities) (2) 1 Plan assets available for benefits $ 207 $ 206 Consistent with the new investment strategy, the after-tax expected long-term rates of return on plan assets of 4.04% at December 31, 2021 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 team members. The Company's investment policies include periodic reviews by management and trustees at least annually concerning: (1) the allocation of assets among various asset classes (e.g., domestic stocks, international stocks, short-term bonds, long-term bonds, etc.); (2) the investment performance of the assets, including performance comparisons with appropriate benchmarks; (3) investment guidelines and other matters of investment policy and (4) the hiring, dismissal or retention of investment managers. The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future team member service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2022 $ 8 2023 9 2024 9 2025 10 2026 10 2027-2031 46 Total $ 92 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases certain properties and buildings (including branches, warehouses, DCs and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists mainly of operating leases that expire at various dates through 2036. Information related to operating leases is as follows (in millions of dollars): As of December 31, 2021 2020 ROU Assets Operating lease right-of-use $ 393 $ 210 Operating lease liabilities Operating lease liability 66 57 Long-term operating lease liability 334 162 Total operating lease liabilities $ 400 $ 219 During the first quarter of 2020, the Company recorded impairment charges in SG&A in connection with the impairment of Fabory’s ROU assets for approximately $20 million. The Company divested Fabory during the second quarter of 2020. As of December 31, 2021 2020 Weighted average remaining lease term 7 years 5 years Weighted average incremental borrowing rate 0.81 % 1.95 % Cash paid for operating leases $ 68 $ 69 ROU assets obtained in exchange for operating lease obligations $ 244 $ 74 Rent expense was $74 million for 2021 and $76 million for 2020 and 2019. These amounts are net of sublease income of $2 million for 2021 and 2020 and $3 million for 2019. Remaining maturity of existing lease liabilities as of December 31, 2021 are as follows (in millions of dollars): Year Operating Leases 2022 $ 72 2023 69 2024 53 2025 44 2026 37 Thereafter 140 Total lease payments 415 Less interest (15) Present value of lease liabilities $ 400 As of December 31, 2021 and 2020, the Company's finance leases and service contracts with lease arrangements were not material. Finance leases are reported in Property, buildings and equipment, net, and as a finance lease liability in Accrued Expenses and Other non-current liabilities, respectively. As of December 31, 2021, the Company's future lease obligations that have not yet commenced were $18 million. |
STOCK INCENTIVE PLANS
STOCK INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2021 | |
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 team members and executives, which include restricted stock units (RSUs), performance shares and deferred stock units. As of December 31, 2021, there were 2.1 million shares available for grant under the plans. When awards are exercised or settled, shares of the Company’s treasury stock are issued. Pretax stock-based compensation expense included in SG&A was $42 million, $46 million, and $40 million in 2021, 2020 and 2019, respectively, and was primarily comprised of RSUs. Related income tax benefits recognized in earnings were $21 million, $16 million, and $12 million in 2021, 2020 and 2019, respectively. Restricted Stock Units The Company awards RSUs to certain team members and executives. RSUs vest generally over periods from one The following table summarizes RSU activity (in millions, except for share and per share amounts): 2021 2020 2019 Shares Weighted Shares Weighted Shares Weighted Beginning nonvested units 317,414 $ 259.67 326,124 $ 259.88 343,814 $ 245.38 Issued 105,866 $ 406.17 140,815 $ 252.11 96,823 $ 299.25 Canceled (36,134) $ 274.74 (26,254) $ 257.56 (36,224) $ 253.22 Vested (184,825) $ 276.34 (123,271) $ 252.05 (78,289) $ 247.96 Ending nonvested units 202,321 $ 318.40 317,414 $ 259.67 326,124 $ 259.88 Fair value of shares vested $ 51 $ 31 $ 19 At December 31, 2021, there was $46 million of total unrecognized compensation expense related to nonvested RSUs that the Company expects to recognize over a weighted average period of 2.1 years. |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2021 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | CAPITAL STOCK The Company had no shares of preferred stock outstanding as of December 31, 2021 and 2020. The activity related to outstanding common stock and common stock held in treasury was as follows: 2021 2020 2019 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 52,524,391 57,134,828 53,687,528 55,971,691 55,862,360 53,796,859 Exercise of stock options 188,444 (188,444) 311,374 (311,374) 232,052 (232,052) Settlement of restricted stock units – net of 61,377, 41,019, and 26,107 shares retained, respectively 127,969 (127,969) 82,241 (82,241) 52,182 (52,182) Settlement of performance share units – net of 9,746, 16,830, and 6,737 shares retained, respectively 12,507 (12,507) 28,098 (28,098) 14,027 (14,027) Purchase of treasury shares (1,633,106) 1,633,106 (1,584,850) 1,584,850 (2,473,093) 2,473,093 Balance at end of period 51,220,205 58,439,014 52,524,391 57,134,828 53,687,528 55,971,691 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2019 – net of tax $ (264) $ 82 $ (5) $ (187) $ (16) $ (171) Other comprehensive earnings (loss) before reclassifications – net of tax 25 8 (3) 30 3 27 Amounts reclassified to Net earnings 1 (11) — (10) — (10) Net current period activity $ 26 $ (3) $ (3) $ 20 $ 3 $ 17 Balance at December 31, 2019 – net of tax $ (238) $ 79 $ (8) $ (167) $ (13) $ (154) Other comprehensive earnings (loss) before reclassifications – net of tax 36 33 — 69 12 57 Amounts reclassified to Net earnings 47 (11) — 36 — 36 Net current period activity $ 83 $ 22 $ — $ 105 $ 12 $ 93 Balance at December 31, 2020 – net of tax $ (155) $ 101 $ (8) $ (62) $ (1) $ (61) Other comprehensive earnings (loss) before reclassifications – net of tax (64) 12 2 (50) (29) (21) Amounts reclassified to Net earnings — (14) — (14) — (14) Net current period activity (64) (2) 2 (64) (29) (35) Balance at December 31, 2021 – net of tax $ (219) $ 99 $ (6) $ (126) $ (30) $ (96) |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company maintains various agreements with bank counterparties that permit the Company to enter into "over-the-counter" derivative instrument agreements to manage its risk associated with interest rates and foreign currency fluctuations. In February 2020, the Company entered into certain derivative instrument agreements to manage its risk associated with interest rates of its 1.85% Notes and foreign currency fluctuations in connection with its foreign currency-denominated intercompany borrowings. The Company did not enter into these agreements for trading or speculative purposes. Fair Value Hedges The Company uses fair value hedges primarily to hedge a portion of its fixed-rate long-term debt via interest rate swaps. Changes in the fair value of the interest rate swaps, along with the gain or loss on the hedged item, are recorded in earnings under the same line item, Interest expense, net. The notional amount of the Company’s outstanding fair value hedges as of December 31, 2021 and 2020 was $500 million. Cash Flow Hedges The Company uses cash flow hedges primarily to hedge the exposure to variability in forecasted cash flows from foreign currency-denominated intercompany borrowings via cross-currency swaps. Gains or losses on the cross-currency swaps are reported as a component of AOCE and reclassified into earnings in the same period during which the hedged transaction affects earnings. The notional amount of the Company’s outstanding cash flow hedges as of December 31, 2021 and 2020 was approximately $34 million. The effect of the Company's fair value and cash flow hedges on the Consolidated Statement of Earnings for the twelve months ended December 31, 2021 and 2020 is as follows (in millions of dollars): For the Years Ended December 31, 2021 2020 Total gains or (losses) recognized in earnings by line item in which the effects of fair value and cash flow hedges are recorded: Interest expense – net Fair value hedge: Interest rate contracts: Hedged item $ 20 $ (21) Derivatives designated as hedging instrument $ (20) $ 21 Other – net Cash flow hedge: Foreign exchange contracts: Hedged item $ — $ 2 Amount of gains (losses) reclassified from AOCE into earnings: $ — $ (2) The effect of the Company’s cash flow hedges on AOCE for the twelve months ended December 31, 2021 and 2020 was not material. The fair value and carrying amounts of outstanding derivative instruments in the Consolidated Balance Sheets as of December 31, 2021 and 2020 was as follows (in millions of dollars): As of December 31, 2021 2020 Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 $ 2 Interest rate swaps Other assets $ 1 $ 21 The carrying amount of the liability hedged by the interest rate swaps (Long-term debt), including the cumulative amount of fair value hedging adjustments, as of December 31, 2021 and 2020 amounted to $501 million and $521 million, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 U.S. $ 1,267 $ 1,015 $ 1,226 Foreign 218 (68) (17) Total $ 1,485 $ 947 $ 1,209 Income tax expense consisted of the following (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 Current income tax expense: U.S. Federal $ 221 $ 119 $ 199 U.S. State 46 28 44 Foreign 81 65 58 Total current 348 212 301 Deferred income tax expense (benefit) 23 (20) 13 Total income tax expense $ 371 $ 192 $ 314 The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2021 and 2020 were as follows (in millions of dollars): As of December 31, 2021 2020 Deferred tax assets: Inventory $ — $ 14 Accrued expenses 152 93 Foreign loss carryforwards 59 45 Accrued employment-related benefits 50 37 Tax credit carryforward 27 25 Other 17 8 Deferred tax assets 305 222 Less valuation allowance (70) (53) Deferred tax assets – net of valuation allowance $ 235 $ 169 Deferred tax liabilities: Property, buildings, equipment and other capital assets (217) (145) Intangibles (67) (68) Inventory (9) — Other (8) (10) Deferred tax liabilities (301) (223) Net deferred tax liability $ (66) $ (54) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 14 $ 14 Noncurrent liabilities (foreign) (80) (68) Net deferred tax liability $ (66) $ (54) At December 31, 2021 the Company had $238 million of gross loss carryforwards related to foreign operations. Some of the loss carryforwards may expire at various dates through 2041. 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, 2021 2020 Balance at beginning of period $ (53) $ (72) Increases primarily related to foreign NOLs (8) (16) Releases primarily related to foreign NOLs 2 — Foreign subsidiaries tax impacts due to divestiture 2 39 Tax rate changes (7) (1) Increase related to U.S. foreign tax credits (3) (2) Other changes – net (3) (1) Balance at end of period $ (70) $ (53) 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, 2021 2020 2019 Federal income tax $ 312 $ 199 $ 254 State income taxes – net of federal income tax benefit 41 33 36 Foreign rate difference 26 23 25 Foreign subsidiaries tax impacts due to divestiture — (61) — Change in valuation allowance 7 16 11 Other – net (15) (18) (12) Income tax expense $ 371 $ 192 $ 314 Effective tax rate 25.0 % 20.3 % 26.0 % The changes to the Company's effective tax rate for the year ended December 31, 2021 and 2020 was primarily driven by the absence of tax losses in the Company's investment in Fabory due to the impairment and internal reorganization of the Company's holdings of Fabory in the first quarter of 2020. The Company divested Fabory during the second quarter of 2020. Foreign Undistributed Earnings Estimated gross undistributed earnings of foreign subsidiaries at December 31, 2021, amounted to $544 million . The Company considers these undistributed earnings permanently reinvested in its foreign operations and is not recording a deferred tax liability for any foreign withholding taxes on such amounts. If at some future date the Company ceases to be permanently reinvested in its foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference in its investments in its foreign subsidiaries. Tax Uncertainties The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 Balance at beginning of year $ 39 $ 28 $ 37 Additions for tax positions related to the current year 3 23 3 Additions for tax positions of prior years — — 1 Reductions for tax positions of prior years (1) (2) (1) Reductions due to statute lapse (3) (10) (10) Settlements, audit payments, refunds – net — — (2) Balance at end of year $ 38 $ 39 $ 28 The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in this amount is $4 million at December 31, 2021 and 2020, 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 2021, the changes to tax positions were primarily related to the impact of expiring statutes and current year state and local reserves. In 2020, the changes to tax positions were related generally to the tax losses on the Company’s investment in Fabory along with the impact of expiring statutes, the conclusion of audits and audit settlements. Estimated interest and penalties were not material. The Company regularly undergoes an examination of its federal income tax returns by the Internal Revenue Service. The statute of limitations expired for the Company's 2017 federal tax return while tax years 2018 through 2020 are open. The Company is also subject to audit by state, local and foreign taxing authorities. Tax years 2012-2020 remain subject to state and local audits and 2016-2020 remain subject to foreign audits. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Effective January 1, 2021, Grainger's two reportable segments are High-Touch Solutions N.A. and Endless Assortment. The remaining international high-touch solutions businesses, which includes the Cromwell business, as well as the Fabory and China businesses in the periods prior to their divestitures in the second and third quarter of 2020, respectively, are classified as Other to reconcile to consolidated results. These businesses individually and in the aggregate do not meet the criteria of a reportable segment. Also, effective January 1, 2021, the Company updated its reporting and accounting policies for corporate cost and intersegment sales transactions. Corporate costs are allocated to each reportable segment based on benefits received. Additionally, intersegment sales transactions, which are sales between Grainger businesses in separate reportable segments, are eliminated within the segment to present only the impact of sales to external customers. Service fees for intersegment sales from the High-Touch Solutions N.A. segment to the Endless Assortment segment are included in SG&A. Following is a summary of segment results (in millions of dollars): 2021 2020 (1) 2019 (1) Net sales Operating earnings (losses) Net sales Operating earnings (losses) Net sales Operating earnings (losses) High-Touch Solutions N.A. $ 10,186 1,334 9,221 1,182 9,036 1,278 Endless Assortment 2,576 232 2,178 166 1,836 122 Other 260 (19) 398 (329) 614 (138) Total Company $ 13,022 $ 1,547 $ 11,797 $ 1,019 $ 11,486 $ 1,262 (1) Effective January 1, 2021, segment results for the years ended December 31, 2020 and 2019 were recast to reflect the Company's re-segmentation. 2021 2020 (1) 2019 (1) Depreciation and amortization: High-Touch Solutions N.A. 148 $ 143 $ 186 Endless Assortment 22 17 14 Other 3 9 10 Total consolidated depreciation and amortization $ 173 $ 169 $ 210 (1) Effective January 1, 2021, segment results for the years ended December 31, 2020 and 2019 were recast to reflect the Company's re-segmentation. Depreciation and amortization presented above includes depreciation of long-lived assets and amortization of capitalized software and ROU assets. Long-lived assets consist of property, buildings and equipment. Following is revenue by geographic location (in millions of dollars): 2021 2020 2019 Revenue by geographic location: United States 10,236 9,200 8,865 Japan 1,705 1,436 1,188 Canada 560 494 539 Other foreign countries 521 667 894 $ 13,022 $ 11,797 $ 11,486 |
CONTINGENCIES AND LEGAL MATTERS
CONTINGENCIES AND LEGAL MATTERS | 12 Months Ended |
Dec. 31, 2021 | |
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, including claims related to product liability, safety or compliance; privacy and cybersecurity matters; negligence; contract disputes; environmental issues; unclaimed property; wage and hour laws; intellectual property; advertising and marketing; consumer protection; pricing (including disaster or emergency declaration pricing statutes); employment practices; regulatory compliance, including as to trade and export matters; anti-bribery and corruption; and other matters and actions brought by employees, consumers, competitors, suppliers, customers, governmental entities and other third parties. As previously disclosed, beginning in the fourth quarter of 2019, Grainger, KMCO, LLC (KMCO) and other defendants have been named in several product liability-related lawsuits in the Harris County, Texas District Court relating to an explosion at a KMCO chemical refinery located in Crosby, Harris County, Texas on April 2, 2019. The complaints in which Grainger has been named, which to date encompass 16 lawsuits and approximately 186 plaintiffs, seek recovery of compensatory and other damages and relief in relation to personal injury, including one death and various other alleged injuries. On May 8, 2020, KMCO filed a voluntary petition in the United States Bankruptcy Court for the Southern District of Texas for relief under Chapter 7 of Title 11 of the United States Bankruptcy Court in the case KMCO, LLC, No. 20-60028. As a result of the Chapter 7 proceedings, the claims against KMCO in the Harris County lawsuits were stayed. Effective January 1, 2021, the Bankruptcy Court lifted the stay with respect to KMCO. On December 16, 2020, KMCO, the trustee of its estate and ORG Chemical Holdings, LLC, KMCO’s parent company (ORG), filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, which seeks unspecified damages (the KMCO Case). On April 1, 2021, 24 individual plaintiffs filed a petition in intervention seeking to be added as plaintiffs in the KMCO Case and seeking unspecified damages. On March 24, 2021, Indian Harbor Insurance Company, together with other insurance companies and underwriters, filed a property damage lawsuit relating to the KMCO chemical refinery incident against Grainger and another defendant in the Harris County, Texas District Court, seeking reimbursement of insurance payments made to or on behalf of KMCO and ORG, the insured parties under their respective policies, and other damages. Grainger is investigating each of the various claims against the Company relating to the KMCO chemical refinery incident and intends to contest these matters vigorously. Also, as a government contractor selling to federal, state and local governmental entities, the Company may be subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration, pricing and product compliance. From time to time, the Company has also been named, along with numerous other nonaffiliated companies, as 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, 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 any of these proceedings and other matters, it believes that their ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial condition or results of operations. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
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. The Company has a controlling ownership interest in MonotaRO, the endless assortment business in Japan, with the residual representing the noncontrolling interest. The Company reports MonotaRO on a one-month calendar lag allowing for the timely preparation of financial statements. This one-month reporting lag is with the exception of significant transactions or events that occur during the intervening period. During December 2021, MonotaRO entered into a lease for a new Distribution Center (DC), which the Company deemed significant and included in the Consolidated Financial Statements for the year ended December 31, 2021. Reclassifications Certain reclassifications have been made to prior year amounts in the Company's Consolidated Balance Sheets to conform with the current year presentation. Reclassifications were made to separately present operating lease right-of-use assets and current and long-term lease obligations that were previously presented as Other assets, Accrued expenses and Other non-current liabilities, respectively. The reclassifications had no effect on net earnings or cash flows for the years ended December 31, 2021, 2020, or 2019. |
USE OF ESTIMATES | Use of Estimates The preparation of the Company's Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting reported amounts in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates. |
FOREIGN CURRENCY TRANSLATION | Foreign Currency TranslationThe U.S. dollar is the Company's reporting currency for all periods presented. The financial statements of the Company’s foreign operating subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of the Company’s foreign operating subsidiaries are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at average rates in effect during the period. Translation gains or losses are recorded as a separate component of other comprehensive earnings (losses). |
REVENUE RECOGNITION | Revenue Recognition The Company recognizes revenue when a sales arrangement with a customer exists (e.g., contract, purchase orders, others), the transaction price is fixed or determinable and the Company has satisfied its performance obligation per the sales arrangement. The majority of Company revenue originates from contracts with a single performance obligation to deliver products, whereby performance obligations are satisfied when control of the product is transferred to the customer per the arranged shipping terms. Some Company contracts contain a combination of product sales and services, which are distinct and accounted for as separate performance obligations and are satisfied when the services are rendered. Total service revenue is not material and accounted for approximately 1% of the Company's revenue for the years ended December 31, 2021, 2020 and 2019, respectively. The Company’s revenue is measured at the determinable transaction price, net of any variable considerations granted to customers and any taxes collected from customers and subsequently remitted to governmental authorities. Variable considerations include rights to return products and sales incentives, which primarily consist of volume rebates. These variable considerations are estimated throughout the year based on various factors, including contract terms, historical experience and performance levels. Total accrued sales returns were approximately $34 million and $31 million as of December 31, 2021 and 2020, respectively, and are reported as a reduction of Accounts receivable, net. Total accrued sales incentives were approximately $73 million and $58 million as of December 31, 2021 and 2020, respectively, and are reported as part of Accrued expenses. The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have any material unsatisfied performance obligations, contract assets or liabilities as of December 31, 2021 and 2020. |
COST OF GOODS SOLD | Cost of Goods Sold (COGS) COGS, exclusive of depreciation and amortization, includes the purchase cost of goods sold net of vendor considerations, in-bound shipping costs, outbound shipping and handling costs and service costs. The Company receives vendor considerations, such as rebates to promote their products, which are generally recorded as a reduction to COGS. Rebates earned from vendors that are based on product purchases are capitalized into inventory and rebates earned based on products sold are credited directly to COGS. |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | Selling, General and Administrative Expenses (SG&A) Company SG&A is primarily comprised of depreciation and amortization, compensation and benefit costs, indirect purchasing, supply chain and branch operations, technology, leases, restructuring, impairments, advertising and selling expenses, as well as other types of general and administrative costs. |
ADVERTISING | AdvertisingAdvertising costs, which include online marketing, are generally expensed in the year the related advertisement is first presented or when incurred. Total advertising expense was $402 million, $319 million and $316 million for 2021, 2020 and 2019, respectively. |
STOCK INCENTIVE PLANS | Stock Incentive PlansThe Company measures all share-based payments using fair-value-based methods and records compensation expense on a straight-line basis over the vesting periods, net of estimated forfeitures. |
INCOME TAXES | Income Taxes The Company recognizes the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. Also, the Company evaluates deferred income taxes to determine if valuation allowances are required using a “more likely than not” standard. This assessment considers the nature, frequency and amount of book and taxable income and losses, the duration of statutory carryback and forward periods, future reversals of existing taxable temporary differences and tax planning strategies, among other matters . The Company recognizes tax benefits from uncertain tax positions only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. The Company recognizes interest expense and penalties to its tax uncertainties in the provision for income taxes. |
OTHER COMPREHENSIVE EARNINGS (LOSSES) | Other Comprehensive Earnings (Losses)The Company's Other comprehensive earnings (losses) include foreign currency translation adjustments and unrecognized gains (losses) on postretirement and other employment-related benefit plans. Accumulated other comprehensive earnings (losses) (AOCE) are presented separately as part of shareholders' equity. |
CASH AND CASH EQUIVALENTS | Cash and Cash Equivalents The Company considers investments in highly liquid debt instruments, purchased with an original maturity of 90 days or less, to be cash equivalents. |
CONCENTRATION OF CREDIT RISK | Concentration of Credit Risk The Company places temporary cash investments with institutions of high credit quality and, by policy, limits the amount of credit exposure to any one institution. Also, the Company has a broad customer base representing many diverse industries across North America, Japan and U.K. Consequently, no significant concentration of credit risk is considered to exist. |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES | Accounts Receivable and Allowance for Credit Losses The Company’s accounts receivable arises primarily from sales on credit to customers and are stated at their estimated net realizable value. The Company establishes allowances for credit losses on customer accounts that are potentially uncollectible. These allowances are determined based on several factors, including the age of the receivables, historical collection trends and economic conditions that may have an impact on a specific industry, group of customers or a specific customer. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity quality indicators for industry groups, customer classes or individual customers. |
INVENTORIES | Inventories Company inventories primarily consist of merchandise purchased for resale, and they are valued at the lower of cost or net realizable value. The Company uses the last-in, first-out (LIFO) method to account for approximately 75% of total inventory and the first-in, first-out (FIFO) method for the remaining inventory. The Company regularly reviews inventory to evaluate continued demand and records excess and obsolete provisions representing the difference between excess and obsolete inventories and net realizable value. Estimated net realizable value considers various variables, including product demand, aging and shelf life, market conditions, and liquidation or disposition history and values. If FIFO had been used for all of the Company’s inventories, they would have been $510 million and $446 million higher than reported at December 31, 2021 and December 31, 2020, respectively. Concurrently, net earnings would have increased by $49 million, $15 million and $24 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
PROPERTY, BUILDINGS AND EQUIPMENT | Property, Buildings and Equipment Property, buildings and equipment are stated at cost, less accumulated depreciation. Depreciation is computed over the estimated useful lives of the asset classes using the straight-line method. Useful lives for buildings, structures and improvements range from 10 to 50 years and furniture, fixtures, machinery and equipment from three Historically, Grainger had depreciated certain property, buildings and equipment using both the declining balance and sum-of-the-years’ digits methods as well as certain buildings over estimated useful lives of approximately thirty years. In accordance with its policy, the Company periodically reviews information impacting the pattern of consumption for its capital assets and useful lives to ensure that estimates of depreciation expenses are appropriate. The Company’s investment in its supply chain infrastructure and technology triggered the review of these patterns of consumption. Pursuant to the review and effective January 1, 2020, the method of estimating depreciation for certain assets was changed to the straight-line method and updated useful lives to forty Depreciation expense was $123 million, $116 million and $150 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company capitalized interest costs of $1 million, $4 million and $9 million for the years ended December 31, 2021, 2020 and 2019, 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 group 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 their carrying value. Impairment is measured as the amount by which the asset's carrying amount exceeds the fair value. |
LEASES | Leases The Company leases certain properties and buildings (including branches, warehouses, DCs and office space) and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company determines if an arrangement contains a lease at inception. Leases with an initial term of more than 12 months are recorded on the balance sheet as right-of-use (ROU) assets representing the right to use the underlying asset for the lease term and the corresponding current and long-term lease liabilities representing the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement or possession date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate, the ROU asset and the lease liability are re-evaluated upon a lease modification. Certain lease agreements include variable lease payments that primarily include payments for non-lease components including pass-through operating expenses such as certain maintenance costs and utilities, and payments for non-components such as real estate taxes and insurance. Lease agreements with fixed lease and non-lease components are generally accounted for as a single lease component for all underlying classes of assets. Certain of the Company’s lease arrangements contain renewal provisions from one The Company’s operating lease expense is recognized on a straight-line basis over the lease term and is recorded in SG&A. |
GOODWILL AND OTHER INTANGIBLES ASSETS | Goodwill and Other Intangible Assets In a business acquisition, the Company recognizes goodwill as the excess purchase price of an acquired reporting unit over the net amount assigned to assets acquired including intangible assets and liabilities assumed. Acquired intangibles include both assets with indefinite lives and assets that are subject to amortization, which are amortized straight-line over their estimated useful lives. The Company tests goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter and more frequently if impairment indicators exist. The Company performs qualitative assessments of significant events and circumstances, such as reporting units' historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the current global outbreak of the COVID-19 pandemic to determine the existence of impairment indicators and assess if it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying value that would necessitate a quantitative impairment test. In the quantitative test, Grainger compares the carrying value of the reporting unit or an indefinite-lived intangible asset with its fair value. Any excess of the carrying value over fair value is recorded as an impairment charge, presented as part of SG&A. The fair value of reporting units is calculated primarily using the discounted cash flow method and utilizing value indicators from a market approach to evaluate the reasonableness of the resulting fair values. Estimates of market-participant risk-adjusted weighted average cost of capital are used as a basis for determining the discount rates to apply to the reporting units’ future expected cash flows and terminal value. The Company’s indefinite-lived intangibles are primarily trade names. The fair value of trade names is calculated primarily using the relief-from-royalty method, which estimates the expected royalty savings attributable to the ownership of the trade name asset. The key assumptions when valuing a trade name are the revenue base, the royalty rate, and the discount rate. |
CAPITALIZED SOFTWARE | Additionally, the Company capitalizes certain costs related to the purchase and development of internal-use software, which are presented as intangible assets. Amortization of capitalized software is on a straight-line basis over three |
ACCOUNTING FOR DERIVATIVE INSTRUMENTS | Accounting for Derivative Instruments The Company recognizes all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction, type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Company uses statistical methods and qualitative comparisons of critical terms. The extent to which a derivative has been and is expected to continue to be, highly effective at offsetting changes in the fair value or cash flows of the hedged item is assessed and documented periodically. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. For those derivative instruments that are designated and qualify as hedging instruments, the Company classifies them as fair value hedges or cash flow hedges. |
CONTINGENCIES | Contingencies The Company accrues for costs relating to litigation claims and other contingent matters when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. |
NEW ACCOUNTING STANDARDS | New Accounting Standards Accounting Pronouncements Recently Adopted In October 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-10, Codification Improvements. These amendments improve consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the codification by amending and adding new headings, cross referencing to other guidance and refining or correcting terminology. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 . This ASU simplifies the understanding and application of the codification topics by eliminating inconsistencies and providing clarifications. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intra-period tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. The effective date of this ASU was for fiscal years and interim periods beginning after December 15, 2020. The Company adopted this ASU effective January 1, 2021 and it did not have a material impact on the Consolidated Financial Statements. Accounting Pronouncements Recently Issued In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update provides increased transparency of government assistance including the disclosure of the types of assistance an entity receives, an entity's method of accounting for government assistance and the effect of the assistance on an entity's financial statements. The guidance is effective for annual periods beginning after December 15, 2021 and should be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard and does not expect a material impact on the Financial Statements or related disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting as modified by subsequently issued ASU 2021-01. This update provides optional expedients and exceptions for applying generally accepted accounting principles to certain contract modifications and hedging relationships that reference London Inter-bank Offered Rate (LIBOR) or another reference rate expected to be discontinued. The guidance is effective upon issuance and generally can be applied prospectively to contract modifications made and hedging relationships entered or evaluated on or before December 31, 2022. The Company evaluated the impact of this ASU and it does not expect a material impact on the Consolidated Financial Statements. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
REVENUE [Abstract] | |
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, 2021 2020 2019 High-Touch Solutions N.A. Endless Assortment Total Company (2) High-Touch Solutions N.A. Endless Assortment Total Company (2) High-Touch Solutions N.A. Endless Assortment Total Company (2) Contractors 9 % 16 % 10 % 9 % 15 % 10 % 10 % 16 % 10 % Commercial 9 15 10 8 15 9 10 15 11 Government 18 3 15 20 3 16 17 3 14 Healthcare 7 2 6 9 2 7 7 1 6 Manufacturing 30 29 30 29 29 30 31 31 31 Retail/Wholesale 10 10 10 9 10 9 8 10 8 Transportation 5 3 5 5 3 5 6 3 5 Other (1) 12 22 14 11 23 14 11 21 15 Total net sales 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Percent of Total Company Revenue 78 % 20 % 100 % 78 % 18 % 100 % 79 % 16 % 100 % (1) Other primarily includes revenue from industries and customers that are not material individually, including agriculture, mining, natural resources and resellers not aligned to a major industry segment. (2) Total Company includes other businesses, which includes the Cromwell business, as well as the Fabory and China businesses in the periods prior to t heir divestitures in the second and third quarter of 2020, respectively. Other businesses account for approximately 2%, 4% a nd 5% of revenue for the twelve months ended December 31, 2021, 2020 and 2019, respectively. |
PROPERTY, BUILDINGS AND EQUIP_2
PROPERTY, BUILDINGS AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 December 31, 2020 Land $ 329 $ 329 Building, structures and improvements 1,431 1,330 Furniture, fixtures, machinery and equipment 1,567 1,878 Property, buildings and equipment $ 3,327 $ 3,537 Less: Accumulated depreciation and amortization 1,903 2,142 Property, buildings and equipment, net $ 1,424 $ 1,395 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
Schedule of Goodwill | The Company balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars): High-Touch Solutions N.A. Endless Assortment Other Total Balance at January 1, 2020 $ 318 $ 52 $ 59 $ 429 Acquisition — 15 — 15 Impairment — — (58) (58) Translation 3 3 (1) 5 Balance at December 31, 2020 321 70 — 391 Translation — (7) — (7) Balance at December 31, 2021 $ 321 $ 63 $ — $ 384 |
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, 2021 2020 Weighted average life Gross carrying amount Accumulated amortization/ impairment Net carrying amount Gross carrying amount Accumulated amortization/impairment Net carrying amount Customer lists and relationships 11.8 years $ 221 $ 176 $ 45 $ 223 $ 171 $ 52 Trademarks, trade names and other 14.1 years 36 24 12 36 22 14 Non-amortized trade names and other Indefinite 25 — 25 28 — 28 Capitalized software 4.4 years 525 369 156 461 327 134 Total intangible assets 6.9 years $ 807 $ 569 $ 238 $ 748 $ 520 $ 228 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for future periods is as follows (in millions of dollars): Year Expense 2022 $ 54 2023 41 2024 31 2025 24 2026 19 Thereafter 44 Total $ 213 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt obligations, including current maturities and debt issuance costs and discounts, net, consisted of the following (in millions of dollars): As of December 31, 2021 2020 Carrying Value Fair Value (4) Carrying Value Fair Value (4) 4.60% senior notes due 2045 (1) 1,000 1,284 $ 1,000 $ 1,343 3.75% senior notes due 2046 (1) 400 459 400 479 4.20% senior notes due 2047 (1) 400 492 400 514 1.85% senior notes due 2025 (2) 500 509 500 526 Japanese Yen term loan (3) 78 78 87 87 Other 7 7 34 34 Subtotal 2,385 2,829 2,421 2,983 Less current maturities — — (8) (8) Debt issuance costs and discounts – net of amortization (23) (23) (24) (24) Long-term debt (less current maturities) $ 2,362 $ 2,806 $ 2,389 $ 2,951 (1) In the years 2015-2017, Grainger issued $1.8 billion in long-term debt (Senior Notes). Debt was issued as follows: • In May 2017, $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually. • In May 2016, $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually. • In June 2015, $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually. The Company may redeem the Senior Notes in whole at any time or in part from time to time at a “make-whole” redemption price prior to their respective maturity dates. The redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the Senior Notes plus 20-25 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Within one year of the maturity date, the Company may redeem the Senior Notes in whole at any time or in part at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. At the time of issuance, costs and discounts of approximately $24 million representing underwriting fees and other expenses, were recorded as a contra-liability within Long-term debt and are being amortized to interest expense over the term of the Senior Notes. (2) In February 2020, the Company issued $500 million of unsecured 1.85% Senior Notes (1.85% Notes) and used the proceeds to repay the British pound term loan, Euro term loan and the Canadian dollar revolving credit facility, and to fund general working capital needs. The 1.85% Notes mature in February 2025, they require no principal payments until the maturity date and interest is payable semi-annually on February 15 and August 15, beginning in August 2020. Prior to January 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at a “make-whole” redemption price. This redemption price is calculated by reference to the then-current yield on a U.S. Treasury security with a maturity comparable to the remaining term of the 1.85% Notes plus 10 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the 1.85% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. On or after January 15, 2025, the Company may redeem the 1.85% Notes in whole at any time or in part from time to time at 100% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. At the time of issuance, costs and discounts of approximately $5 million associated with the issuance of the 1.85% Notes, representing underwriting fees and other expenses, were recorded as a contra-liability within Long-term debt and are being amortized to interest expense, net over the term of the 1.85% Notes. In connection with the 1.85% Notes, in February 2020, the Company entered into derivative instrument agreements to manage its risks associated with interest rates on the 1.85% Notes. The carrying value adjustments resulting from the interest rate swaps in both periods are presented within Other in the table above. For further discussion of the Company's hedge accounting policies and derivative instruments, see Notes 1 and 12. (3) In August 2020, MonotaRO Co. LTD., entered into a ¥9 billion term loan agreement to fund technology investments and the expansion of its distribution center network. The Japanese Yen term loan matures in 2024, payable over four equal semi-annual principal installments in 2023 and 2024 and bears average interest at 0.05%. (4) The estimated fair value of the Company’s senior notes was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
Schedule of Maturities of Long-term Debt | The scheduled aggregate principal payments required on the Company's indebtedness, based on the maturity dates defined within the debt arrangements, for the succeeding five years, excluding debt issuance costs and the impact of derivatives, are due as follows (in millions of dollars): Year Payment Amount 2022 $ — 2023 39 2024 40 2025 500 2026 5 Thereafter 1,800 Total $ 2,384 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
EMPLOYEE BENEFITS [Abstract] | |
Schedule of Net Benefit Costs | The net periodic benefits costs were valued with a measurement date of January 1 for each year and consisted of the following components (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 SG&A Service cost $ 5 $ 5 $ 4 Other (income) expense Interest cost 3 6 7 Expected return on assets (8) (8) (12) Amortization of prior service credit (9) (10) (10) Amortization of unrecognized gains (8) (5) (4) Net periodic (benefits) costs $ (17) $ (12) $ (15) |
Schedule of Accumulated and Projected Benefit Obligations | Reconciliations of the beginning and ending balances of the postretirement benefit asset (obligation), which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit asset (obligation) follow (in millions of dollars): 2021 2020 Benefit obligation at beginning of year $ 167 $ 200 Service cost 5 5 Interest cost 3 6 Plan participants' contributions 3 3 Actuarial (gains)/losses (14) (38) Benefits paid (11) (9) Benefit obligation at end of year $ 153 $ 167 Plan assets available for benefits at beginning of year $ 206 $ 198 Actual returns on plan assets 9 14 Plan participants' contributions 3 3 Benefits paid (11) (9) Plan assets available for benefits at end of year 207 206 Noncurrent postretirement benefit asset (obligation) $ 54 $ 39 |
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, 2021 2020 Prior service credit $ 42 $ 51 Unrecognized gains 90 83 Deferred tax (liability) (33) (33) Net accumulated gains $ 99 $ 101 |
Schedule of Assumptions Used | The following assumptions were used to determine net periodic benefit costs at January 1 of each year: For the Years Ended December 31, 2021 2020 2019 Discount rate 2.17 % 3.01 % 4.08 % Long-term rate of return on plan assets – net of tax 4.04 % 4.04 % 7.13 % Initial healthcare cost trend rate Pre age 65 5.81 % 6.06 % 6.31 % Post age 65 NA NA NA Catastrophic drug benefit NA NA 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 % 2.50 % The following assumptions were used to determine benefit obligations at December 31: 2021 2020 2019 Discount rate 2.57 % 2.17 % 3.01 % Expected long-term rate of return on plan assets – net of tax 4.04 % 4.04 % 4.04 % Initial healthcare cost trend rate Pre age 65 6.50 % 5.81 % 6.06 % Post age 65 NA NA NA Catastrophic drug benefit NA NA NA Ultimate healthcare cost trend rate 4.50 % 4.50 % 4.50 % Year ultimate healthcare cost trend rate reached 2030 2026 2026 HRA credit inflation index for grandfathered retirees — % — % 2.50 % |
Schedule of Allocation of Plan Assets | The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars): 2021 2020 Asset Class: Level 1 Inputs: Mutual Funds: Funds – Municipal/Provincial Bonds $ 12 $ 13 Funds – Corporate Bonds Fund 5 5 Federal Money Market Fund 4 11 Level 2 Inputs: Fixed Income: Corporate Bonds 89 102 Government/Municipal Bonds 14 8 Equity Funds 85 66 Plan Assets 209 205 Less: trust assets/(liabilities) (2) 1 Plan assets available for benefits $ 207 $ 206 |
Schedule of Expected Benefit Payments | The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future team member service) for the next ten years (in millions of dollars): Year Estimated Gross Benefit Payments 2022 $ 8 2023 9 2024 9 2025 10 2026 10 2027-2031 46 Total $ 92 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of Assets and Liabilities | Information related to operating leases is as follows (in millions of dollars): As of December 31, 2021 2020 ROU Assets Operating lease right-of-use $ 393 $ 210 Operating lease liabilities Operating lease liability 66 57 Long-term operating lease liability 334 162 Total operating lease liabilities $ 400 $ 219 |
Schedule of Operating Lease Information | As of December 31, 2021 2020 Weighted average remaining lease term 7 years 5 years Weighted average incremental borrowing rate 0.81 % 1.95 % Cash paid for operating leases $ 68 $ 69 ROU assets obtained in exchange for operating lease obligations $ 244 $ 74 |
Schedule of Maturities of Operating Lease Liabilities | Remaining maturity of existing lease liabilities as of December 31, 2021 are as follows (in millions of dollars): Year Operating Leases 2022 $ 72 2023 69 2024 53 2025 44 2026 37 Thereafter 140 Total lease payments 415 Less interest (15) Present value of lease liabilities $ 400 |
STOCK INCENTIVE PLANS (Tables)
STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
STOCK INCENTIVE PLANS [Abstract] | |
Activity for restricted stock units | The following table summarizes RSU activity (in millions, except for share and per share amounts): 2021 2020 2019 Shares Weighted Shares Weighted Shares Weighted Beginning nonvested units 317,414 $ 259.67 326,124 $ 259.88 343,814 $ 245.38 Issued 105,866 $ 406.17 140,815 $ 252.11 96,823 $ 299.25 Canceled (36,134) $ 274.74 (26,254) $ 257.56 (36,224) $ 253.22 Vested (184,825) $ 276.34 (123,271) $ 252.05 (78,289) $ 247.96 Ending nonvested units 202,321 $ 318.40 317,414 $ 259.67 326,124 $ 259.88 Fair value of shares vested $ 51 $ 31 $ 19 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
CAPITAL STOCK [Abstract] | |
Schedule of Capital Stock | The activity related to outstanding common stock and common stock held in treasury was as follows: 2021 2020 2019 Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Outstanding Common Stock Treasury Stock Balance at beginning of period 52,524,391 57,134,828 53,687,528 55,971,691 55,862,360 53,796,859 Exercise of stock options 188,444 (188,444) 311,374 (311,374) 232,052 (232,052) Settlement of restricted stock units – net of 61,377, 41,019, and 26,107 shares retained, respectively 127,969 (127,969) 82,241 (82,241) 52,182 (52,182) Settlement of performance share units – net of 9,746, 16,830, and 6,737 shares retained, respectively 12,507 (12,507) 28,098 (28,098) 14,027 (14,027) Purchase of treasury shares (1,633,106) 1,633,106 (1,584,850) 1,584,850 (2,473,093) 2,473,093 Balance at end of period 51,220,205 58,439,014 52,524,391 57,134,828 53,687,528 55,971,691 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2019 – net of tax $ (264) $ 82 $ (5) $ (187) $ (16) $ (171) Other comprehensive earnings (loss) before reclassifications – net of tax 25 8 (3) 30 3 27 Amounts reclassified to Net earnings 1 (11) — (10) — (10) Net current period activity $ 26 $ (3) $ (3) $ 20 $ 3 $ 17 Balance at December 31, 2019 – net of tax $ (238) $ 79 $ (8) $ (167) $ (13) $ (154) Other comprehensive earnings (loss) before reclassifications – net of tax 36 33 — 69 12 57 Amounts reclassified to Net earnings 47 (11) — 36 — 36 Net current period activity $ 83 $ 22 $ — $ 105 $ 12 $ 93 Balance at December 31, 2020 – net of tax $ (155) $ 101 $ (8) $ (62) $ (1) $ (61) Other comprehensive earnings (loss) before reclassifications – net of tax (64) 12 2 (50) (29) (21) Amounts reclassified to Net earnings — (14) — (14) — (14) Net current period activity (64) (2) 2 (64) (29) (35) Balance at December 31, 2021 – net of tax $ (219) $ 99 $ (6) $ (126) $ (30) $ (96) |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The effect of the Company's fair value and cash flow hedges on the Consolidated Statement of Earnings for the twelve months ended December 31, 2021 and 2020 is as follows (in millions of dollars): For the Years Ended December 31, 2021 2020 Total gains or (losses) recognized in earnings by line item in which the effects of fair value and cash flow hedges are recorded: Interest expense – net Fair value hedge: Interest rate contracts: Hedged item $ 20 $ (21) Derivatives designated as hedging instrument $ (20) $ 21 Other – net Cash flow hedge: Foreign exchange contracts: Hedged item $ — $ 2 Amount of gains (losses) reclassified from AOCE into earnings: $ — $ (2) |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value and carrying amounts of outstanding derivative instruments in the Consolidated Balance Sheets as of December 31, 2021 and 2020 was as follows (in millions of dollars): As of December 31, 2021 2020 Balance Sheet Classification Fair Value and Carrying Amounts Cross-currency swap Other non-current liabilities $ 2 $ 2 Interest rate swaps Other assets $ 1 $ 21 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Taxes by Geographical Area | Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars): For the Years Ended December 31, 2021 2020 2019 U.S. $ 1,267 $ 1,015 $ 1,226 Foreign 218 (68) (17) Total $ 1,485 $ 947 $ 1,209 |
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, 2021 2020 2019 Current income tax expense: U.S. Federal $ 221 $ 119 $ 199 U.S. State 46 28 44 Foreign 81 65 58 Total current 348 212 301 Deferred income tax expense (benefit) 23 (20) 13 Total income tax expense $ 371 $ 192 $ 314 |
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, 2021 and 2020 were as follows (in millions of dollars): As of December 31, 2021 2020 Deferred tax assets: Inventory $ — $ 14 Accrued expenses 152 93 Foreign loss carryforwards 59 45 Accrued employment-related benefits 50 37 Tax credit carryforward 27 25 Other 17 8 Deferred tax assets 305 222 Less valuation allowance (70) (53) Deferred tax assets – net of valuation allowance $ 235 $ 169 Deferred tax liabilities: Property, buildings, equipment and other capital assets (217) (145) Intangibles (67) (68) Inventory (9) — Other (8) (10) Deferred tax liabilities (301) (223) Net deferred tax liability $ (66) $ (54) The net deferred tax asset (liability) is classified as follows: Noncurrent assets $ 14 $ 14 Noncurrent liabilities (foreign) (80) (68) Net deferred tax liability $ (66) $ (54) |
Summary of Valuation Allowance Changes | The Company's valuation allowance changed as follows (in millions of dollars): For the Years Ended December 31, 2021 2020 Balance at beginning of period $ (53) $ (72) Increases primarily related to foreign NOLs (8) (16) Releases primarily related to foreign NOLs 2 — Foreign subsidiaries tax impacts due to divestiture 2 39 Tax rate changes (7) (1) Increase related to U.S. foreign tax credits (3) (2) Other changes – net (3) (1) Balance at end of period $ (70) $ (53) |
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, 2021 2020 2019 Federal income tax $ 312 $ 199 $ 254 State income taxes – net of federal income tax benefit 41 33 36 Foreign rate difference 26 23 25 Foreign subsidiaries tax impacts due to divestiture — (61) — Change in valuation allowance 7 16 11 Other – net (15) (18) (12) Income tax expense $ 371 $ 192 $ 314 Effective tax rate 25.0 % 20.3 % 26.0 % |
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, 2021 2020 2019 Balance at beginning of year $ 39 $ 28 $ 37 Additions for tax positions related to the current year 3 23 3 Additions for tax positions of prior years — — 1 Reductions for tax positions of prior years (1) (2) (1) Reductions due to statute lapse (3) (10) (10) Settlements, audit payments, refunds – net — — (2) Balance at end of year $ 38 $ 39 $ 28 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Summary of Segment Results | Following is a summary of segment results (in millions of dollars): 2021 2020 (1) 2019 (1) Net sales Operating earnings (losses) Net sales Operating earnings (losses) Net sales Operating earnings (losses) High-Touch Solutions N.A. $ 10,186 1,334 9,221 1,182 9,036 1,278 Endless Assortment 2,576 232 2,178 166 1,836 122 Other 260 (19) 398 (329) 614 (138) Total Company $ 13,022 $ 1,547 $ 11,797 $ 1,019 $ 11,486 $ 1,262 (1) Effective January 1, 2021, segment results for the years ended December 31, 2020 and 2019 were recast to reflect the Company's re-segmentation. |
Significant Reconciling Items from Segments to Consolidated | 2021 2020 (1) 2019 (1) Depreciation and amortization: High-Touch Solutions N.A. 148 $ 143 $ 186 Endless Assortment 22 17 14 Other 3 9 10 Total consolidated depreciation and amortization $ 173 $ 169 $ 210 (1) Effective January 1, 2021, segment results for the years ended December 31, 2020 and 2019 were recast to reflect the Company's re-segmentation. Depreciation and amortization presented above includes depreciation of long-lived assets and amortization of capitalized software and ROU assets. Long-lived assets consist of property, buildings and equipment. Following is revenue by geographic location (in millions of dollars): 2021 2020 2019 Revenue by geographic location: United States 10,236 9,200 8,865 Japan 1,705 1,436 1,188 Canada 560 494 539 Other foreign countries 521 667 894 $ 13,022 $ 11,797 $ 11,486 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions | Jan. 01, 2021segment | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Number of reportable segments | segment | 2 | |||
Service fee revenue (approximately) | 1.00% | 1.00% | 1.00% | |
Accrued sales returns | $ 34 | $ 31 | ||
Accrued sales incentives | 73 | 58 | ||
Advertising expense | $ 402 | 319 | $ 316 | |
Original maturity of cash (days) | 90 days | |||
Percentage of LIFO Inventory | 75.00% | |||
Inventory, LIFO Reserve | $ 510 | 446 | ||
Inventory, LIFO Reserve, Effect on Income, Net | 49 | 15 | 24 | |
Depreciation | 123 | 116 | 150 | |
Capitalized interest costs | $ 1 | 4 | $ 9 | |
Furniture, fixtures, machinery and equipment | ||||
Property, Plant and Equipment, Useful Life | 30 years | |||
Building, structures and improvements | ||||
Property, Plant and Equipment, Useful Life | 30 years | |||
Change in Accounting Method Accounted for as Change in Estimate | ||||
Depreciation | $ (34) | |||
Minimum | ||||
Buildings, Structures and Improvements, Estimated Useful Life | 10 years | |||
Furniture, Fixtures, Machinery Equipment, Estimated Useful Life | 15 years | |||
Operating lease renewal term | 1 year | |||
Capitalized software amortization period | 3 years | |||
Minimum | Furniture, fixtures, machinery and equipment | ||||
Property, Plant and Equipment, Useful Life | 40 years | |||
Maximum | ||||
Buildings, Structures and Improvements, Estimated Useful Life | 50 years | |||
Furniture, Fixtures, Machinery Equipment, Estimated Useful Life | 3 years | |||
Operating lease renewal term | 30 years | |||
Capitalized software amortization period | 5 years | |||
Maximum | Furniture, fixtures, machinery and equipment | ||||
Property, Plant and Equipment, Useful Life | 50 years |
BUSINESS DIVESTITURES AND LIQ_2
BUSINESS DIVESTITURES AND LIQUIDATIONS (Details) - Discontinued Operations - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | |
China Business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net gain (loss) on divestitures | $ 5 | ||
Fabory Business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net gain (loss) on divestitures | $ (109) | ||
Accumulated foreign currency translation losses | $ 45 | ||
Zoro Tools Europe | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Liquidation expenses | $ 9 |
REVENUE (Details)
REVENUE (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total net sales | 100.00% | 100.00% | 100.00% |
Percent of Total Company Revenue | 100.00% | 100.00% | 100.00% |
Other businesses | |||
Disaggregation of Revenue [Line Items] | |||
Percentage Of Company-Wide Revenue | 2.00% | 4.00% | 5.00% |
Contractors | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 10.00% | 10.00% | 10.00% |
Commercial | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 10.00% | 9.00% | 11.00% |
Government | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 15.00% | 16.00% | 14.00% |
Healthcare | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 6.00% | 7.00% | 6.00% |
Manufacturing | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 30.00% | 30.00% | 31.00% |
Retail/Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 10.00% | 9.00% | 8.00% |
Transportation | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 5.00% | 5.00% | 5.00% |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 14.00% | 14.00% | 15.00% |
High-Touch Solutions N.A. | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 100.00% | 100.00% | 100.00% |
Percent of Total Company Revenue | 78.00% | 78.00% | 79.00% |
High-Touch Solutions N.A. | Contractors | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 9.00% | 9.00% | 10.00% |
High-Touch Solutions N.A. | Commercial | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 9.00% | 8.00% | 10.00% |
High-Touch Solutions N.A. | Government | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 18.00% | 20.00% | 17.00% |
High-Touch Solutions N.A. | Healthcare | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 7.00% | 9.00% | 7.00% |
High-Touch Solutions N.A. | Manufacturing | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 30.00% | 29.00% | 31.00% |
High-Touch Solutions N.A. | Retail/Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 10.00% | 9.00% | 8.00% |
High-Touch Solutions N.A. | Transportation | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 5.00% | 5.00% | 6.00% |
High-Touch Solutions N.A. | Other | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 12.00% | 11.00% | 11.00% |
Endless Assortment | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 100.00% | 100.00% | 100.00% |
Percent of Total Company Revenue | 20.00% | 18.00% | 16.00% |
Endless Assortment | Contractors | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 16.00% | 15.00% | 16.00% |
Endless Assortment | Commercial | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 15.00% | 15.00% | 15.00% |
Endless Assortment | Government | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 3.00% | 3.00% | 3.00% |
Endless Assortment | Healthcare | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 2.00% | 2.00% | 1.00% |
Endless Assortment | Manufacturing | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 29.00% | 29.00% | 31.00% |
Endless Assortment | Retail/Wholesale | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 10.00% | 10.00% | 10.00% |
Endless Assortment | Transportation | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 3.00% | 3.00% | 3.00% |
Endless Assortment | Other | |||
Disaggregation of Revenue [Line Items] | |||
Total net sales | 22.00% | 23.00% | 21.00% |
PROPERTY, BUILDINGS AND EQUIP_3
PROPERTY, BUILDINGS AND EQUIPMENT (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property, buildings and equipment | $ 3,327 | $ 3,537 | |
Less: Accumulated depreciation and amortization | 1,903 | 2,142 | |
Property, buildings and equipment, net | 1,424 | 1,395 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property, buildings and equipment | 329 | 329 | |
Building, structures and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, buildings and equipment | 1,431 | 1,330 | |
Furniture, fixtures, machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, buildings and equipment | $ 1,567 | $ 1,878 | |
Property, buildings and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Impairment charges | $ 24 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | ||||
Goodwill | $ 384 | $ 391 | $ 429 | |
Cumulative goodwill impairments | 137 | |||
Impairment charges | 58 | |||
Amortization expense, intangible assets | 63 | $ 60 | $ 78 | |
High-Touch Solutions N.A. | ||||
Segment Reporting Information [Line Items] | ||||
Cumulative goodwill impairments | 32 | |||
Reporting Unit, Canada | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill | 129 | |||
Other businesses | ||||
Segment Reporting Information [Line Items] | ||||
Cumulative goodwill impairments | $ 105 | |||
Impairment charges | $ 58 |
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, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 391 | $ 429 |
Acquisition | 15 | |
Impairment | (58) | |
Translation | (7) | 5 |
Goodwill, ending balance | 384 | 391 |
Unallocated expense | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 0 | 59 |
Acquisition | 0 | |
Impairment | (58) | |
Translation | 0 | (1) |
Goodwill, ending balance | 0 | 0 |
High-Touch Solutions N.A. | Operating Segments | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 321 | 318 |
Acquisition | 0 | |
Impairment | 0 | |
Translation | 0 | 3 |
Goodwill, ending balance | 321 | 321 |
Endless Assortment | Operating Segments | ||
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 70 | 52 |
Acquisition | 15 | |
Impairment | 0 | |
Translation | (7) | 3 |
Goodwill, ending balance | $ 63 | $ 70 |
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, 2021 | Dec. 31, 2020 | |
Total intangible assets, gross | $ 807 | $ 748 |
Finite-lived intangible assets, accumulated amortization | 569 | 520 |
Total | 213 | |
Total intangible assets, net | 238 | 228 |
Customer lists and relationships | ||
Finite-lived intangible assets, gross | 221 | 223 |
Finite-lived intangible assets, accumulated amortization | 176 | 171 |
Total | 45 | 52 |
Trademarks, trade names and other | ||
Finite-lived intangible assets, gross | 36 | 36 |
Finite-lived intangible assets, accumulated amortization | 24 | 22 |
Total | 12 | 14 |
Non-amortized trade names and other | ||
Finite-lived intangible assets, gross | 25 | 28 |
Finite-lived intangible assets, accumulated amortization | 0 | 0 |
Indefinite-lived intangible assets, carrying amount | 25 | 28 |
Capitalized software | ||
Finite-lived intangible assets, gross | 525 | 461 |
Finite-lived intangible assets, accumulated amortization | 369 | 327 |
Total | $ 156 | $ 134 |
Weighted average life | ||
Finite-lived intangible assets, useful life | 6 years 10 months 24 days | |
Weighted average life | Customer lists and relationships | ||
Finite-lived intangible assets, useful life | 11 years 9 months 18 days | |
Weighted average life | Trademarks, trade names and other | ||
Finite-lived intangible assets, useful life | 14 years 1 month 6 days | |
Weighted average life | Capitalized software | ||
Finite-lived intangible assets, useful life | 4 years 4 months 24 days |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS Estimated amortization expense (Details) $ in Millions | Dec. 31, 2021USD ($) |
GOODWILL AND OTHER INTANGIBLES [Abstract] | |
2022 | $ 54 |
2023 | 41 |
2024 | 31 |
2025 | 24 |
2026 | 19 |
Thereafter | 44 |
Total | $ 213 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) - USD ($) | 1 Months Ended | |||
Feb. 29, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 31, 2017 | |
Commercial Paper | ||||
Debt Instrument [Line Items] | ||||
Short-term debt | $ 0 | $ 0 | ||
Line of credit | Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,250,000,000 | |||
Increase in maximum borrowing capacity | 1,875,000,000 | |||
5-Year Unsecured Revolving Line Of Credit | Domestic Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt, term | 5 years | |||
Maximum borrowing capacity | $ 750,000,000 | |||
Line of credit, outstanding | $ 0 | $ 0 |
LONG-TERM DEBT - SCHEDULE OF LO
LONG-TERM DEBT - SCHEDULE OF LONG-TERM DEBT (Details) $ in Millions | 1 Months Ended | 24 Months Ended | |||||||
Aug. 31, 2020JPY (¥)payment | Feb. 29, 2020USD ($) | May 31, 2017USD ($) | May 31, 2016USD ($) | Jun. 30, 2015USD ($) | May 31, 2017USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2017USD ($) | |
Carrying Value | |||||||||
Total | $ 2,385 | $ 2,421 | |||||||
Other | 7 | 34 | |||||||
Less current maturities | 0 | (8) | |||||||
Debt issuance costs and discounts – net of amortization | (23) | (24) | |||||||
Long-term debt (less current maturities) | 2,362 | 2,389 | |||||||
Fair Value | |||||||||
Other | 7 | 34 | |||||||
Subtotal | 2,829 | 2,983 | |||||||
Less current maturities | 0 | (8) | |||||||
Debt issuance costs and discounts – net of amortization | (23) | (24) | |||||||
Long-term debt (less current maturities) | 2,806 | 2,951 | |||||||
Senior notes | |||||||||
Fair Value | |||||||||
Face amount of debt | $ 1,800 | ||||||||
Debt issuance costs and discounts | $ 24 | $ 24 | |||||||
Senior notes | Debt redemption, period one | |||||||||
Fair Value | |||||||||
Debt redemption percentage | 101.00% | ||||||||
Senior notes | Debt redemption, period two | |||||||||
Fair Value | |||||||||
Debt redemption percentage | 100.00% | ||||||||
Senior notes | Minimum | |||||||||
Fair Value | |||||||||
Basis points | 0.20% | ||||||||
Senior notes | Maximum | |||||||||
Fair Value | |||||||||
Basis points | 0.25% | ||||||||
Japanese Yen Term Loan | |||||||||
Carrying Value | |||||||||
Total | 78 | 87 | |||||||
Fair Value | |||||||||
Long-term Debt, Fair Value | 78 | 87 | |||||||
Unsecured Senior Notes, 4.60% | Senior notes | |||||||||
Carrying Value | |||||||||
Total | 1,000 | 1,000 | |||||||
Fair Value | |||||||||
Long-term Debt, Fair Value | $ 1,284 | 1,343 | |||||||
Stated interest rate | 4.60% | 4.60% | |||||||
Face amount of debt | $ 1,000 | ||||||||
Debt, term | 30 years | ||||||||
Unsecured Senior Notes, 3.75% | Senior notes | |||||||||
Carrying Value | |||||||||
Total | $ 400 | 400 | |||||||
Fair Value | |||||||||
Long-term Debt, Fair Value | $ 459 | 479 | |||||||
Stated interest rate | 3.75% | 3.75% | |||||||
Face amount of debt | $ 400 | ||||||||
Debt, term | 30 years | ||||||||
Unsecured Senior Notes, 4.20% | Senior notes | |||||||||
Carrying Value | |||||||||
Total | $ 400 | 400 | |||||||
Fair Value | |||||||||
Long-term Debt, Fair Value | $ 492 | 514 | |||||||
Stated interest rate | 4.20% | 4.20% | 4.20% | ||||||
Face amount of debt | $ 400 | $ 400 | |||||||
Debt, term | 30 years | ||||||||
Unsecured Senior Notes, 1.85% | Senior notes | |||||||||
Carrying Value | |||||||||
Total | $ 500 | 500 | |||||||
Debt issuance costs and discounts – net of amortization | $ (5) | ||||||||
Fair Value | |||||||||
Long-term Debt, Fair Value | $ 509 | $ 526 | |||||||
Stated interest rate | 1.85% | 1.85% | |||||||
Face amount of debt | $ 500 | ||||||||
Basis points | 0.10% | ||||||||
Debt redemption percentage | 100.00% | ||||||||
Debt Instrument, Redemption Price, Percentage Upon Change Of Control | 101.00% | ||||||||
Term Loan Agreement, 0.05% | Japanese Yen Term Loan | |||||||||
Fair Value | |||||||||
Stated interest rate | 0.05% | ||||||||
Face amount of debt | ¥ | ¥ 9,000,000,000 | ||||||||
Number of semi-annual principal installments | payment | 4 |
LONG-TERM DEBT - SCHEDULED AGGR
LONG-TERM DEBT - SCHEDULED AGGREGATE PRINCIPAL PAYMENTS (Details) $ in Millions | Dec. 31, 2021USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
2022 | $ 0 |
2023 | 39 |
2024 | 40 |
2025 | 500 |
2026 | 5 |
Thereafter | 1,800 |
Total | $ 2,384 |
EMPLOYEE BENEFITS - Defined Con
EMPLOYEE BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
EMPLOYEE BENEFITS [Abstract] | |||
Profit sharing automatic contribution percentage | 6.00% | 3.00% | |
Profit sharing plan expense | $ 78 | $ 99 | $ 113 |
Defined contribution plans, expense | $ 16 | $ 16 | $ 19 |
EMPLOYEE BENEFITS - Postretirem
EMPLOYEE BENEFITS - Postretirement Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
HRA credit inflation index for grandfathered retirees | 4.50% | ||
Fixed Income Securities | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Target allocation, percentage | 65.00% | ||
Equity Securities | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Target allocation, percentage | 35.00% | ||
Postretirement Benefits | |||
Postretirement Benefits | |||
Service cost | $ 5 | $ 5 | $ 4 |
Interest cost | 3 | 6 | 7 |
Expected return on assets | (8) | (8) | (12) |
Amortization of prior service credits | (9) | (10) | (10) |
Amortization of unrecognized gains | (8) | (5) | (4) |
Net periodic (benefits) costs | (17) | (12) | (15) |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit obligation at beginning of year | 167 | 200 | |
Service cost | 5 | 5 | 4 |
Interest cost | 3 | 6 | 7 |
Plan participants' contributions | 3 | 3 | |
Actuarial (gains)/losses | (14) | (38) | |
Benefits paid | (11) | (9) | |
Benefit obligation at end of year | 153 | 167 | 200 |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||
Plan assets available for benefits at beginning of year | 206 | 198 | |
Actual returns on plan assets | 9 | 14 | |
Plan participants' contributions | 3 | 3 | |
Benefits paid | (11) | (9) | |
Plan assets available for benefits at end of year | 207 | 206 | $ 198 |
Noncurrent postretirement benefit asset (obligation) | 54 | 39 | |
Defined Benefit Plan, Accumulated Other Comprehensive (Income) Loss, before Tax [Abstract] | |||
Prior service credit | 42 | 51 | |
Unrecognized gains | 90 | 83 | |
Deferred tax (liability) | (33) | (33) | |
Net accumulated gains | $ 99 | $ 101 | |
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year [Abstract] | |||
Net unrecognized gains (losses), amortization period | 10 years 6 months | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||
Discount rate | 2.17% | 3.01% | 4.08% |
Long-term rate of return on plan assets – net of tax | 4.04% | 4.04% | 7.13% |
Pre age 65 | 5.81% | 6.06% | 6.31% |
Ultimate healthcare cost trend rate | 4.50% | 4.50% | 4.50% |
Year ultimate healthcare cost trend rate reached | 2026 | 2026 | 2026 |
HRA credit inflation index for grandfathered retirees | 0.00% | 2.50% | 2.50% |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||
Discount rate | 2.57% | 2.17% | 3.01% |
Expected long-term rate of return on plan assets – net of tax | 4.04% | 4.04% | 4.04% |
Pre age 65 | 6.50% | 5.81% | 6.06% |
Year ultimate healthcare cost trend rate reached | 2030 | 2026 | 2026 |
HRA credit inflation index for grandfathered retirees | 0.00% | 0.00% | 2.50% |
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | |||
2022 | $ 8 | ||
2023 | 9 | ||
2024 | 9 | ||
2025 | 10 | ||
2026 | 10 | ||
2027-2031 | 46 | ||
Total | $ 92 |
EMPLOYEE BENEFITS - Summary of
EMPLOYEE BENEFITS - Summary of Plan Assets (Details) - Postretirement Benefits - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 207 | $ 206 | $ 198 |
Fair Value, Inputs, Level 1, 2 and 3 | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | 209 | 205 | |
Funds – Municipal/Provincial Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 12 | 13 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 1 [Member] | ||
Funds – Corporate Bonds Fund | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 5 | 5 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 1 [Member] | ||
Federal Money Market Fund | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 4 | 11 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 1 [Member] | ||
Corporate Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 89 | 102 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 2 [Member] | ||
Government/Municipal Bonds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 14 | 8 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 2 [Member] | ||
Equity Funds | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ 85 | 66 | |
Defined Benefit Plan, Plan Assets, Fair Value by Hierarchy and NAV [Extensible List] | Fair Value, Inputs, Level 2 [Member] | ||
Trust Assets and Liabilities, Net | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Plan assets | $ (2) | $ 1 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease expiration date | 2036 | |||
Rent expense | $ 74 | $ 76 | $ 76 | |
Sublease income | 2 | $ 2 | $ 3 | |
Future lease obligations that have not yet commenced | $ 18 | |||
Right-Of-Use-Assets | ||||
Lessee, Lease, Description [Line Items] | ||||
Impairment charges | $ 20 |
LEASES - Schedule of Operating
LEASES - Schedule of Operating Lease Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease right-of-use | $ 393 | $ 210 |
Operating lease liability | 66 | 57 |
Long-term operating lease liability | 334 | 162 |
Total operating lease liabilities | $ 400 | $ 219 |
Weighted average remaining lease term | 7 years | 5 years |
Weighted average incremental borrowing rate | 0.81% | 1.95% |
Cash paid for operating leases | $ 68 | $ 69 |
ROU assets obtained in exchange for operating lease obligations | $ 244 | $ 74 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Operating lease right-of-use | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Operating lease liability | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term operating lease liability | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Operating Leases (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2022 | $ 72 | |
2023 | 69 | |
2024 | 53 | |
2025 | 44 | |
2026 | 37 | |
Thereafter | 140 | |
Total lease payments | 415 | |
Less interest | (15) | |
Present value of lease liabilities | $ 400 | $ 219 |
STOCK INCENTIVE PLANS (Details)
STOCK INCENTIVE PLANS (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock available for grant under stock incentive plans (in shares) | 2.1 | ||
Pretax stock-based compensation expense | $ 42 | $ 46 | $ 40 |
Income tax benefits recognized in earnings for stock-based compensation expense | 21 | 16 | 12 |
RSU expense | 30 | $ 32 | $ 27 |
Unrecognized compensation | $ 46 | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average period to recognize (in years) | 2 years 1 month 6 days | ||
Maximum | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 7 years | ||
Minimum | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 1 year |
STOCK INCENTIVE PLANS - Restric
STOCK INCENTIVE PLANS - Restricted Stock Units (Details) - Restricted Stock Units - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |||
Outstanding at beginning of period (in shares) | 317,414 | 326,124 | 343,814 |
Issued (in shares) | 105,866 | 140,815 | 96,823 |
Canceled (in shares) | (36,134) | (26,254) | (36,224) |
Vested (in shares) | (184,825) | (123,271) | (78,289) |
Outstanding at end of period (in shares) | 202,321 | 317,414 | 326,124 |
Weighted Average Price Per Share [Abstract] | |||
Outstanding at beginning of period, weighted average price per share (in dollars per share) | $ 259.67 | $ 259.88 | $ 245.38 |
Issued, weighted average price per share (in dollars per share) | 406.17 | 252.11 | 299.25 |
Cancelled, weighted average price per share (in dollars per share) | 274.74 | 257.56 | 253.22 |
Vested, weighted average price per share (in dollars per share) | 276.34 | 252.05 | 247.96 |
Outstanding at end of period, weighted average price per share (in dollars per share) | $ 318.40 | $ 259.67 | $ 259.88 |
Fair value of shares vested | $ 51 | $ 31 | $ 19 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 | |
Balance at beginning of period, treasury stock (in shares) | 57,134,828 | ||
Balance at end of period, treasury stock (in shares) | 58,439,014 | 57,134,828 | |
Stock Issued During Period, Shares, Restricted Stock Award, Retained | 61,377 | 41,019 | 26,107 |
Stock Issued During Period, Shares, Performance Share Units, Retained | 9,746 | 16,830 | 6,737 |
Common Stock | |||
Balance at beginning of period, common stock (in shares) | 52,524,391 | 53,687,528 | 55,862,360 |
Exercised (in shares) | (188,444) | (311,374) | (232,052) |
Settlement of restricted stock units, net of 41,019, 26,107 and 39,075 shares retained, respectively (in shares) | (127,969) | (82,241) | (52,182) |
Settlement of performance share units, net of 16,830, 6,737 and 1,027 shares retained, respectively (in shares) | (12,507) | (28,098) | (14,027) |
Purchase of treasury shares (in shares) | 1,633,106 | 1,584,850 | 2,473,093 |
Balance at end of period, common stock (in shares) | 51,220,205 | 52,524,391 | 53,687,528 |
Treasury Stock | |||
Balance at beginning of period, treasury stock (in shares) | 57,134,828 | 55,971,691 | 53,796,859 |
Exercised (in shares) | (188,444) | (311,374) | (232,052) |
Settlement of restricted stock units, net of 41,019, 26,107 and 39,075 shares retained, respectively (in shares) | (127,969) | (82,241) | (52,182) |
Settlement of performance share units, net of 16,830, 6,737 and 1,027 shares retained, respectively (in shares) | (12,507) | (28,098) | (14,027) |
Purchase of treasury shares (in shares) | 1,633,106 | 1,584,850 | 2,473,093 |
Balance at end of period, treasury stock (in shares) | 58,439,014 | 57,134,828 | 55,971,691 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSSES) (AOCE) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 2,093 | $ 2,060 | $ 2,093 |
Net current period activity | (64) | 105 | 20 |
Ending balance | 2,160 | 2,093 | 2,060 |
Foreign Currency Translation and Other | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (155) | (238) | (264) |
Other comprehensive earnings (loss) before reclassifications – net of tax | (64) | 36 | 25 |
Amounts reclassified to Net earnings | 0 | 47 | 1 |
Net current period activity | (64) | 83 | 26 |
Ending balance | (219) | (155) | (238) |
Total | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (62) | (167) | (187) |
Other comprehensive earnings (loss) before reclassifications – net of tax | (50) | 69 | 30 |
Amounts reclassified to Net earnings | (14) | 36 | (10) |
Net current period activity | (64) | 105 | 20 |
Ending balance | (126) | (62) | (167) |
Foreign Currency Translation Attributable to Noncontrolling Interests | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (1) | (13) | (16) |
Other comprehensive earnings (loss) before reclassifications – net of tax | (29) | 12 | 3 |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Net current period activity | (29) | 12 | 3 |
Ending balance | (30) | (1) | (13) |
AOCE Attributable to W.W. Grainger, Inc. | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (61) | (154) | (171) |
Other comprehensive earnings (loss) before reclassifications – net of tax | (21) | 57 | 27 |
Amounts reclassified to Net earnings | (14) | 36 | (10) |
Net current period activity | (35) | 93 | 17 |
Ending balance | (96) | (61) | (154) |
Defined Postretirement Benefit Plan | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | 101 | 79 | 82 |
Other comprehensive earnings (loss) before reclassifications – net of tax | 12 | 33 | 8 |
Amounts reclassified to Net earnings | (14) | (11) | (11) |
Net current period activity | (2) | 22 | (3) |
Ending balance | 99 | 101 | 79 |
Other Employment-related Benefit Plans | Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (8) | (8) | (5) |
Other comprehensive earnings (loss) before reclassifications – net of tax | 2 | 0 | (3) |
Amounts reclassified to Net earnings | 0 | 0 | 0 |
Net current period activity | 2 | 0 | (3) |
Ending balance | $ (6) | $ (8) | $ (8) |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Feb. 29, 2020 | |
Derivative [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | $ (87) | $ (93) | $ (79) | |
Other Operating Income (Expense), Net | 25 | 21 | $ 26 | |
Cumulative amount of fair value hedging adjustments | $ 501 | 521 | ||
Unsecured Senior Notes, 1.85% | Senior notes | ||||
Derivative [Line Items] | ||||
Stated interest rate | 1.85% | 1.85% | ||
Fair Value Hedging | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative, notional amount | $ 500 | 500 | ||
Fair Value Hedging | Designated as Hedging Instrument | Other Contract | ||||
Derivative [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | 20 | (21) | ||
Fair Value Hedging | Designated as Hedging Instrument | Interest Rate Swap | ||||
Derivative [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | (20) | 21 | ||
Derivative Asset, Fair Value, Gross Asset | 1 | 21 | ||
Cash Flow Hedging | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative, notional amount | 34 | 34 | ||
Cash Flow Hedging | Designated as Hedging Instrument | Other Contract | ||||
Derivative [Line Items] | ||||
Other Operating Income (Expense), Net | 0 | 2 | ||
Cash Flow Hedging | Designated as Hedging Instrument | Cross Currency Interest Rate Contract | ||||
Derivative [Line Items] | ||||
Other Operating Income (Expense), Net | 0 | (2) | ||
Derivative Asset, Fair Value, Gross Asset | $ 2 | $ 2 |
INCOME TAXES - Net Earnings Bef
INCOME TAXES - Net Earnings Before Income Taxes by Geographical Area (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net earnings before income taxes by geographical area | |||
U.S. | $ 1,267 | $ 1,015 | $ 1,226 |
Foreign | 218 | (68) | (17) |
Earnings before income taxes | $ 1,485 | $ 947 | $ 1,209 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current income tax expense: | |||
U.S. Federal | $ 221 | $ 119 | $ 199 |
U.S. State | 46 | 28 | 44 |
Foreign | 81 | 65 | 58 |
Total current | 348 | 212 | 301 |
Deferred income tax expense (benefit) | 23 | (20) | 13 |
Income tax expense | $ 371 | $ 192 | $ 314 |
INCOME TAXES - Income Tax Effec
INCOME TAXES - Income Tax Effects of Temporary Differences (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | |||
Operating Loss Carryforwards | $ 238 | ||
Deferred tax assets: | |||
Inventory | 0 | $ 14 | |
Accrued expenses | 152 | 93 | |
Foreign loss carryforwards | 59 | 45 | |
Accrued employment-related benefits | 50 | 37 | |
Tax credit carryforward | 27 | 25 | |
Other | 17 | 8 | |
Deferred tax assets | 305 | 222 | |
Less valuation allowance | (70) | (53) | $ (72) |
Deferred tax assets – net of valuation allowance | 235 | 169 | |
Deferred tax liabilities: | |||
Property, buildings, equipment and other capital assets | (217) | (145) | |
Intangibles | (67) | (68) | |
Inventory | (9) | 0 | |
Other | (8) | (10) | |
Deferred tax liabilities | (301) | (223) | |
Net deferred tax liability | (66) | (54) | |
The net deferred tax asset (liability) is classified as follows: | |||
Noncurrent assets | 14 | 14 | |
Noncurrent liabilities (foreign) | $ (80) | $ (68) |
INCOME TAXES - Changes in Valua
INCOME TAXES - Changes in Valuation Allowance (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Balance at beginning of period | $ (53) | $ (72) |
Balance at end of period | (70) | (53) |
Increases primarily related to foreign NOLs | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (8) | (16) |
Releases primarily related to foreign NOLs | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 2 | 0 |
Foreign subsidiaries tax impacts due to divestiture | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | 2 | 39 |
Tax rate changes | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (7) | (1) |
Increase related to U.S. foreign tax credits | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | (3) | (2) |
Other changes – net | ||
Deferred Tax Asset, Valuation Allowance [Roll Forward] | ||
Valuation allowance, increase (decrease) | $ (3) | $ (1) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expense with Federal Income Taxes at the Statutory Rate (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of income tax expense with federal income taxes at the statutory rate | |||
Federal income tax | $ 312 | $ 199 | $ 254 |
State income taxes – net of federal income tax benefit | 41 | 33 | 36 |
Foreign rate difference | 26 | 23 | 25 |
Foreign subsidiaries tax impacts due to divestiture | 0 | (61) | 0 |
U.S. tax legislation impact | 7 | 16 | 11 |
Excess tax benefits from stock-based compensation | (15) | (18) | (12) |
Income tax expense | $ 371 | $ 192 | $ 314 |
Effective tax rate | 25.00% | 20.30% | 26.00% |
INCOME TAXES - Changes in Liabi
INCOME TAXES - Changes in Liability for Tax Uncertainties, Excluding Interest (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Undistributed earnings of foreign subsidiaries | $ 544 | ||
Liability for tax uncertainties | 4 | $ 4 | |
Changes in liability for tax uncertainties, excluding interest | |||
Balance at beginning of year | 39 | 28 | $ 37 |
Additions for tax positions related to the current year | 3 | 23 | 3 |
Additions for tax positions of prior years | 0 | 0 | 1 |
Reductions for tax positions of prior years | (1) | (2) | (1) |
Reductions due to statute lapse | (3) | (10) | (10) |
Settlements, audit payments, refunds - net | 0 | 0 | (2) |
Balance at end of year | $ 38 | $ 39 | $ 28 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Millions | Jan. 01, 2021segment | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 2 | |||
Summarized Information: | ||||
Net sales | $ 13,022 | $ 11,797 | $ 11,486 | |
Operating earnings | 1,547 | 1,019 | 1,262 | |
Depreciation and amortization | 173 | 169 | 210 | |
United States | ||||
Summarized Information: | ||||
Net sales | 10,236 | 9,200 | 8,865 | |
JAPAN | ||||
Summarized Information: | ||||
Net sales | 1,705 | 1,436 | 1,188 | |
Canada | ||||
Summarized Information: | ||||
Net sales | 560 | 494 | 539 | |
Other foreign countries | ||||
Summarized Information: | ||||
Net sales | 521 | 667 | 894 | |
Unallocated expense | ||||
Summarized Information: | ||||
Net sales | 260 | 398 | 614 | |
Operating earnings | (19) | (329) | (138) | |
High-Touch Solutions N.A. | Operating segments | ||||
Summarized Information: | ||||
Net sales | 10,186 | 9,221 | 9,036 | |
Operating earnings | 1,334 | 1,182 | 1,278 | |
Depreciation and amortization | 148 | 143 | 186 | |
Endless Assortment | Operating segments | ||||
Summarized Information: | ||||
Net sales | 2,576 | 2,178 | 1,836 | |
Operating earnings | 232 | 166 | 122 | |
Depreciation and amortization | 22 | 17 | 14 | |
Other | Operating segments | ||||
Summarized Information: | ||||
Depreciation and amortization | $ 3 | $ 9 | $ 10 |
CONTINGENCIES AND LEGAL MATTE_2
CONTINGENCIES AND LEGAL MATTERS (Details) | Apr. 01, 2021plantiff | Dec. 31, 2019lawsuitdeathplantiff |
CONTINGENCIES AND LEGAL MATTERS [Abstract] | ||
Number of lawsuits | lawsuit | 16 | |
Number of plaintiffs | plantiff | 24 | 186 |
Number of deaths | death | 1 |