|
Illinois
|
|
36-1150280
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
100 Grainger Parkway, Lake Forest, Illinois
|
|
60045-5201
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(847) 535-1000
|
||
(Registrant’s telephone number including area code)
|
||
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock $0.50 par value
|
|
New York Stock Exchange
|
|
|
Chicago Stock Exchange
|
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [ ]
|
|
TABLE OF CONTENTS
|
Page(s)
|
||||
|
||||||
|
PART I
|
|
||||
Item 1:
|
BUSINESS
|
|||||
Item 1A:
|
RISK FACTORS
|
|||||
Item 1B:
|
UNRESOLVED STAFF COMMENTS
|
|||||
Item 2:
|
PROPERTIES
|
|||||
Item 3:
|
LEGAL PROCEEDINGS
|
|||||
Item 4:
|
MINE SAFETY DISCLOSURES
|
|||||
|
PART II
|
|
||||
Item 5:
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER
|
|||||
|
|
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|||
Item 6:
|
SELECTED FINANCIAL DATA
|
|||||
Item 7:
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
|
|||||
|
|
CONDITION AND RESULTS OF OPERATIONS
|
|
|||
Item 7A:
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|||||
Item 8:
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|||||
Item 9:
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
|
|||||
|
|
ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
|
|||
Item 9A:
|
CONTROLS AND PROCEDURES
|
|||||
Item 9B:
|
OTHER INFORMATION
|
|||||
|
PART III
|
|
||||
Item 10:
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
|||||
Item 11:
|
EXECUTIVE COMPENSATION
|
|||||
Item 12:
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
|
|||||
|
|
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
|||
Item 13:
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
|
|||||
|
|
DIRECTOR INDEPENDENCE
|
|
|||
Item 14:
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|||||
|
PART IV
|
|
||||
Item 15:
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|||||
Signatures
|
|
|
|
|
||
|
|
|
|
|
|
Location
|
|
Facility and Use (6)
|
|
Size in Square Feet (in 000's)
|
|
United States (1)
|
|
369 United States branch locations
|
|
8,357
|
|
United States (2)
|
|
15 Distribution Centers
|
|
6,699
|
|
United States (3)
|
|
Other facilities
|
|
3,709
|
|
Canada (4)
|
|
185 Acklands - Grainger facilities
|
|
2,890
|
|
Other Businesses (5)
|
|
Other facilities
|
|
3,923
|
|
Chicago Area (2)
|
|
Headquarters and General Offices
|
|
1,349
|
|
|
|
Total Square Feet
|
|
26,927
|
|
(1)
|
United States branches consist of 273 owned and 96 leased properties located throughout the U.S. Branches range in size from approximately 1,400 to 109,000 square feet. Most leases expire between 2013 and 2020.
|
(2)
|
These facilities are primarily owned.
|
(3)
|
These facilities include both owned and leased locations, consisting of storage facilities, office space and idle properties, including a one million square foot facility for a new distribution center in Illinois. Operations at this facility began to be phased in during the fourth quarter of 2012 and will be fully operational in 2013.
|
(4)
|
Acklands - Grainger facilities consist of general offices, distribution centers and branches located throughout Canada, of which 64 are owned and 121 leased.
|
(5)
|
These facilities include owned and leased locations in Europe, Asia, Latin America and other U.S. operations.
|
(6)
|
Owned facilities are not subject to any mortgages.
|
|
|
Prices
|
|
|
||||||||
|
Quarters
|
High
|
|
Low
|
|
Dividends
|
||||||
2012
|
First
|
$
|
221.84
|
|
|
$
|
184.37
|
|
|
$
|
0.66
|
|
|
Second
|
221.00
|
|
|
172.50
|
|
|
0.80
|
|
|||
|
Third
|
211.36
|
|
|
176.50
|
|
|
0.80
|
|
|||
|
Fourth
|
218.23
|
|
|
184.78
|
|
|
0.80
|
|
|||
|
Year
|
$
|
221.84
|
|
|
$
|
172.50
|
|
|
$
|
3.06
|
|
2011
|
First
|
$
|
140.17
|
|
|
$
|
129.01
|
|
|
$
|
0.54
|
|
|
Second
|
154.68
|
|
|
137.75
|
|
|
0.66
|
|
|||
|
Third
|
165.55
|
|
|
124.33
|
|
|
0.66
|
|
|||
|
Fourth
|
193.21
|
|
|
141.36
|
|
|
0.66
|
|
|||
|
Year
|
$
|
193.21
|
|
|
$
|
124.33
|
|
|
$
|
2.52
|
|
Period
|
Total Number of Shares Purchased (A)
|
Average Price Paid per Share (B)
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (C)
|
Maximum Number of
Shares That May Yet be Purchased Under the Plans or Programs |
||
Oct. 1 – Oct. 31
|
27,500
|
202.46
|
27,500
|
5,564,009
|
|
shares
|
Nov. 1 – Nov. 30
|
53,489
|
191.00
|
53,489
|
5,510,520
|
|
shares
|
Dec. 1 – Dec. 31
|
169,851
|
194.56
|
169,851
|
5,340,669
|
|
shares
|
Total
|
250,840
|
194.67
|
250,840
|
|
|
(A)
|
There were no shares withheld to satisfy tax withholding obligations.
|
(B)
|
Average price paid per share includes any commissions paid and includes only those amounts related to purchases as part of publicly announced plans or programs.
|
(C)
|
Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors on July 28, 2010. The program has no specified expiration date. Activity is reported on a trade date basis.
|
|
December 31,
|
|||||||||||||||||
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
||||||||||||
W.W. Grainger, Inc.
|
$
|
100
|
|
$
|
92
|
|
$
|
115
|
|
$
|
167
|
|
$
|
231
|
|
$
|
253
|
|
Dow Jones US Industrial Suppliers Total Stock Market Index
|
100
|
|
78
|
|
98
|
|
137
|
|
176
|
|
198
|
|
||||||
S&P 500 Stock Index
|
100
|
|
63
|
|
80
|
|
92
|
|
94
|
|
109
|
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(In thousands of dollars, except for per share amounts)
|
||||||||||||||||||
Net sales
|
$
|
8,950,045
|
|
|
$
|
8,078,185
|
|
|
$
|
7,182,158
|
|
|
$
|
6,221,991
|
|
|
$
|
6,850,032
|
|
Net earnings attributable to W.W. Grainger, Inc.
|
689,881
|
|
|
658,423
|
|
|
510,865
|
|
|
430,466
|
|
|
475,355
|
|
|||||
Net earnings per basic share
|
9.71
|
|
|
9.26
|
|
|
7.05
|
|
|
5.70
|
|
|
6.07
|
|
|||||
Net earnings per diluted share
|
9.52
|
|
|
9.07
|
|
|
6.93
|
|
|
5.62
|
|
|
5.97
|
|
|||||
Total assets
|
5,014,598
|
|
|
4,716,062
|
|
|
3,904,377
|
|
|
3,726,332
|
|
|
3,515,417
|
|
|||||
Long-term debt (less current maturities) and other long-term liabilities
|
817,229
|
|
|
603,858
|
|
|
747,404
|
|
|
722,334
|
|
|
719,878
|
|
|||||
Cash dividends paid per share
|
$
|
3.06
|
|
|
$
|
2.52
|
|
|
$
|
2.08
|
|
|
$
|
1.78
|
|
|
$
|
1.55
|
|
|
United States
|
|
Canada
|
||||
|
Estimated 2012
|
|
Forecasted 2013
|
|
Estimated 2012
|
|
Forecasted 2013
|
GDP
|
2.2%
|
|
1.9%
|
|
1.9%
|
|
1.6%
|
Industrial Production
|
3.7%
|
|
2.4%
|
|
0.5%
|
|
0.3%
|
Exports
|
3.2%
|
|
2.4%
|
|
3.4%
|
|
3.5%
|
Business Investment
|
7.7%
|
|
3.8%
|
|
5.4%
|
|
4.4%
|
Business Inventory
|
2.5%
|
|
2.2%
|
|
—
|
|
—
|
Oil prices
|
—
|
|
—
|
|
$102/barrel
|
|
$95/barrel
|
Source: Global Insight (February 2013)
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|||||||||||||
|
As a Percent of Net Sales
|
|
Percent Increase/(Decrease) from Prior Year
|
|||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
10.8
|
%
|
|
12.5
|
%
|
Cost of merchandise sold
|
56.2
|
|
|
56.5
|
|
|
58.2
|
|
|
10.2
|
|
|
9.4
|
|
Gross profit
|
43.8
|
|
|
43.5
|
|
|
41.8
|
|
|
11.5
|
|
|
16.8
|
|
Operating expenses
|
31.2
|
|
|
30.5
|
|
|
29.9
|
|
|
13.3
|
|
|
14.6
|
|
Operating earnings
|
12.6
|
|
|
13.0
|
|
|
11.9
|
|
|
7.5
|
|
|
22.3
|
|
Other income (expense)
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(86.5
|
)
|
Income taxes
|
4.7
|
|
|
4.8
|
|
|
4.7
|
|
|
8.8
|
|
|
13.2
|
|
Noncontrolling interest
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
12.3
|
|
|
194.0
|
|
Net earnings attributable to W.W. Grainger, Inc.
|
7.7
|
%
|
|
8.1
|
%
|
|
7.1
|
%
|
|
4.8
|
%
|
|
28.9
|
%
|
|
Percent Increase/ (Decrease)
|
Volume
|
6%
|
Business acquisitions
|
3%
|
Price
|
3%
|
Foreign exchange
|
(1)%
|
Total
|
11%
|
|
Twelve Months Ended December 31,
|
|
|||
|
2012
|
|
2011
|
%
|
|
Diluted earnings per share reported
|
$9.52
|
|
$9.07
|
5
|
%
|
GSA/USPS settlement
|
0.66
|
|
—
|
|
|
Restructuring
|
0.18
|
|
—
|
|
|
Goodwill impairment
|
0.04
|
|
—
|
|
|
Charge for U.S. branch closures
|
0.03
|
|
0.16
|
|
|
Settlement of prior year tax reviews
|
—
|
|
(0.12)
|
|
|
Gain on sale of joint venture
|
—
|
|
(0.07)
|
|
|
Subtotal
|
0.91
|
|
(0.03)
|
|
|
Diluted earnings per share adjusted
|
$10.43
|
|
$9.04
|
15
|
%
|
|
Percent Increase/ (Decrease)
|
Volume
|
4%
|
Price
|
3%
|
Total
|
7%
|
|
Percent Increase/ (Decrease)
|
Volume
|
11%
|
Price
|
1%
|
Foreign exchange
|
(1)%
|
Total
|
11%
|
|
For the Years Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
Interest income (expense) - net
|
$
|
(13,418
|
)
|
|
$
|
(7,023
|
)
|
Equity in net income of unconsolidated entity
|
—
|
|
|
314
|
|
||
Gain on sale of investment in unconsolidated entity
|
—
|
|
|
7,639
|
|
||
Other non-operating income
|
1,866
|
|
|
709
|
|
||
Other non-operating expense
|
(1,784
|
)
|
|
(2,541
|
)
|
||
|
$
|
(13,336
|
)
|
|
$
|
(902
|
)
|
|
Percent Increase/ (Decrease)
|
Volume
|
8%
|
Business acquisitions
|
2%
|
Price
|
2%
|
Foreign exchange
|
1%
|
Oil spill cleanup in the Gulf of Mexico
|
(1)%
|
Total
|
12%
|
|
Twelve Months Ended December 31,
|
|
|||||||
|
2011
|
|
2010
|
%
|
|||||
Diluted earnings per share reported
|
$
|
9.07
|
|
|
$
|
6.93
|
|
31
|
%
|
Charge for U.S. branch closures
|
0.16
|
|
|
—
|
|
|
|||
Settlement of prior year tax reviews
|
(0.12
|
)
|
|
—
|
|
|
|||
Gain on sale of joint venture
|
(0.07
|
)
|
|
—
|
|
|
|||
Paid time off policy change
|
—
|
|
|
(0.28
|
)
|
|
|||
Write-down of deferred tax asset
|
—
|
|
|
0.15
|
|
|
|||
Subtotal
|
(0.03
|
)
|
|
(0.13
|
)
|
|
|||
Diluted earnings per share adjusted
|
$
|
9.04
|
|
|
$
|
6.80
|
|
33
|
%
|
|
Percent Increase/ (Decrease)
|
Volume
|
7%
|
Price
|
3%
|
Gulf of Mexico 2010 oil spill cleanup
|
(2)%
|
Total
|
8%
|
|
Percent Increase/ (Decrease)
|
Volume
|
12%
|
Foreign exchange
|
5%
|
Acquisitions
|
3%
|
Total
|
20%
|
|
For the Years Ended December 31,
|
||||||
|
2011
|
|
2010
|
||||
Interest income (expense) - net
|
$
|
(7,023
|
)
|
|
$
|
(6,972
|
)
|
Equity in net income (loss) of unconsolidated entity
|
314
|
|
|
(182
|
)
|
||
Gain on sale of investment in unconsolidated entity
|
7,639
|
|
|
—
|
|
||
Other non-operating income
|
709
|
|
|
1,608
|
|
||
Other non-operating expense
|
(2,541
|
)
|
|
(1,151
|
)
|
||
|
$
|
(902
|
)
|
|
$
|
(6,697
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Land, buildings, structures and improvements
|
$
|
57,929
|
|
|
$
|
51,249
|
|
|
$
|
61,001
|
|
Furniture, fixtures, machinery and equipment
|
145,483
|
|
|
118,228
|
|
|
50,152
|
|
|||
Subtotal
|
203,412
|
|
|
169,477
|
|
|
111,153
|
|
|||
Capitalized software
|
46,448
|
|
|
27,465
|
|
|
15,971
|
|
|||
Total
|
$
|
249,860
|
|
|
$
|
196,942
|
|
|
$
|
127,124
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total Amounts Committed
|
|
Less than 1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
More than 5 Years
|
||||||||||
Debt obligations
|
$
|
564,644
|
|
|
$
|
97,596
|
|
|
$
|
62,136
|
|
|
$
|
389,964
|
|
|
$
|
14,948
|
|
Interest on debt
|
39,408
|
|
|
12,679
|
|
|
15,920
|
|
|
7,955
|
|
|
2,854
|
|
|||||
Operating lease obligations
|
231,687
|
|
|
54,456
|
|
|
87,554
|
|
|
50,521
|
|
|
39,156
|
|
|||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Uncompleted additions to
property, buildings and equipment
|
85,475
|
|
|
78,560
|
|
|
6,915
|
|
|
—
|
|
|
—
|
|
|||||
Commitments to purchase
inventory
|
352,795
|
|
|
352,795
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase obligations
|
204,869
|
|
|
145,992
|
|
|
58,194
|
|
|
683
|
|
|
—
|
|
|||||
Other liabilities
|
344,190
|
|
|
176,068
|
|
|
21,465
|
|
|
23,088
|
|
|
123,569
|
|
|||||
Total
|
$
|
1,823,068
|
|
|
$
|
918,146
|
|
|
$
|
252,184
|
|
|
$
|
472,211
|
|
|
$
|
180,527
|
|
|
|
For the Years Ended December,
|
||||
|
|
2012
|
|
2011
|
|
2010
|
Risk-free interest rate
|
|
1.1%
|
|
2.6%
|
|
2.9%
|
Expected life
|
|
6 years
|
|
6 years
|
|
6 years
|
Expected volatility
|
|
25.9%
|
|
24.6%
|
|
24.7%
|
Expected dividend yield
|
|
1.6%
|
|
1.8%
|
|
2.0%
|
|
1 Percentage Point
|
||||||
|
Increase
|
|
(Decrease)
|
||||
Effect on total of service and interest cost
|
$
|
8,909
|
|
|
$
|
(6,670
|
)
|
Effect on accumulated postretirement benefit obligation
|
35,541
|
|
|
(28,647
|
)
|
(A)
|
Management's Annual Report on Internal Control Over Financial Reporting
|
(B)
|
Attestation Report of the Registered Public Accounting Firm
|
(C)
|
Changes in Internal Control Over Financial Reporting
|
Name and Age
|
Positions and Offices Held and Principal Occupation and Employment During the Past Five Years
|
Laura D. Brown (49)
|
Senior Vice President, Communications and Investor Relations, a position assumed in 2010 after serving as Vice President, Global Business Communications, a position assumed in 2009 and Vice President, Investor Relations, a position assumed in 2008. Previously, Ms. Brown served as Vice President, Marketing, a position assumed in 2005. After joining Grainger in 2000, she served in various management positions including Vice President, Finance and Vice President, Internet Business Analysis and Supplier Management.
|
Court D. Carruthers (40)
|
Senior Vice President and President, Grainger U.S., a position assumed in 2012 after serving as President, Grainger International, a position assumed in 2009, and Senior Vice President of Grainger, a position assumed in 2007. Previously, Mr. Carruthers served as President of Acklands - Grainger Inc., a position assumed in 2006. Prior to assuming the last-mentioned position, he served as Vice President, National Accounts and Sales of Acklands - Grainger Inc., a position assumed in 2002 when he joined that company.
|
Timothy M. Ferrarell (55)
|
Senior Vice President and Chief Information Officer, a position assumed in June 2007. Prior to this role, Mr. Ferrarell served as Senior Vice President, Enterprise Systems, since June 2001, and took on responsibility for Enterprise Processes in 2006. He has served in increasingly responsible roles since joining Grainger in 1990 including Vice President, Quality and Business Planning, Vice President, Marketing Communications, Vice President, Product Line Development, and Director, Product Management.
|
Joseph C. High (58)
|
Mr. High joined Grainger as Senior Vice President, Chief People Officer in June 2011. Prior to joining Grainger, Mr. High was the Senior Vice President of Human Resources at Owens Corning in Toledo, Ohio, a position assumed in 2004.
|
John L. Howard (55)
|
Senior Vice President and General Counsel, a position assumed in 2000.
|
Gregory S. Irving (54)
|
Vice President and Controller, a position assumed in 2008. Previously, Mr. Irving served as Vice President, Finance, for Acklands - Grainger Inc. since 2004. After joining Grainger in 1999 he served in various management positions including Vice President, Financial Services and Director, Internal Audit.
|
Ronald L. Jadin (52)
|
Senior Vice President and Chief Financial Officer, a position assumed in 2008. Previously, Mr. Jadin served as Vice President and Controller, a position assumed in 2006 after serving as Vice President, Finance. Upon joining Grainger in 1998, he served as Director, Financial Planning and Analysis.
|
Donald G. Macpherson (45)
|
Senior Vice President and President, Global Supply Chain and Corporate Strategy, a position assumed in 2012 after serving as Senior Vice President, Global Supply Chain, a position assumed in 2008. Mr. Macpherson joined Grainger in 2008 as Senior Vice President, Supply Chain. Before joining Grainger, he was Partner and Director of the Boston Consulting Group, a global management consulting firm and advisor on business strategy.
|
Michael A. Pulick (48)
|
Senior Vice President and President, Grainger International, a position assumed in 2012 after serving as Senior Vice President and President, Grainger U.S., a position assumed in 2008. Previously, Mr. Pulick served as Senior Vice President of Customer Service, a position assumed in 2006. After joining Grainger in 1999, Mr. Pulick has held a number of increasingly responsible positions in Grainger's supplier and product management areas including Vice President, Product Management and Vice President, Merchandising.
|
James T. Ryan (54)
|
Chairman of the Board, President and Chief Executive Officer of Grainger, positions assumed in 2009, 2006 and 2008, respectively. Mr. Ryan became Chief Operating Officer and was appointed to Grainger's Board of Directors in 2007. Prior to that, Mr. Ryan served as Group President, a position assumed in 2004. He has served Grainger in increasingly responsible roles since 1980, including Executive Vice President, Marketing, Sales and Service; Vice President, Information Services; President, Grainger.com; and President, Grainger Parts.
|
Page(s)
|
|
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
|
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
FINANCIAL STATEMENTS
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
|
|
CONSOLIDATED BALANCE SHEETS
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net sales
|
$
|
8,950,045
|
|
|
$
|
8,078,185
|
|
|
$
|
7,182,158
|
|
Cost of merchandise sold
|
5,033,885
|
|
|
4,567,393
|
|
|
4,176,474
|
|
|||
Gross profit
|
3,916,160
|
|
|
3,510,792
|
|
|
3,005,684
|
|
|||
Warehousing, marketing and administrative expenses
|
2,785,035
|
|
|
2,458,363
|
|
|
2,145,209
|
|
|||
Operating earnings
|
1,131,125
|
|
|
1,052,429
|
|
|
860,475
|
|
|||
Other income and (expense):
|
|
|
|
|
|
|
|
||||
Interest income
|
2,660
|
|
|
2,068
|
|
|
1,215
|
|
|||
Interest expense
|
(16,078
|
)
|
|
(9,091
|
)
|
|
(8,187
|
)
|
|||
Equity in net income (loss) of unconsolidated entities
|
—
|
|
|
314
|
|
|
(182
|
)
|
|||
Gain on sale of investment in unconsolidated entity
|
—
|
|
|
7,639
|
|
|
—
|
|
|||
Other non-operating income
|
1,866
|
|
|
709
|
|
|
1,608
|
|
|||
Other non-operating expense
|
(1,784
|
)
|
|
(2,541
|
)
|
|
(1,151
|
)
|
|||
Total other income and (expense)
|
(13,336
|
)
|
|
(902
|
)
|
|
(6,697
|
)
|
|||
Earnings before income taxes
|
1,117,789
|
|
|
1,051,527
|
|
|
853,778
|
|
|||
Income taxes
|
418,940
|
|
|
385,115
|
|
|
340,196
|
|
|||
Net earnings
|
698,849
|
|
|
666,412
|
|
|
513,582
|
|
|||
Less: Net earnings attributable to noncontrolling interest
|
8,968
|
|
|
7,989
|
|
|
2,717
|
|
|||
Net earnings attributable to W.W. Grainger, Inc.
|
$
|
689,881
|
|
|
$
|
658,423
|
|
|
$
|
510,865
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
9.71
|
|
|
$
|
9.26
|
|
|
$
|
7.05
|
|
Diluted
|
$
|
9.52
|
|
|
$
|
9.07
|
|
|
$
|
6.93
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
69,811,881
|
|
|
69,690,854
|
|
|
70,836,945
|
|
|||
Diluted
|
71,181,733
|
|
|
71,176,158
|
|
|
72,138,858
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net earnings
|
$
|
698,849
|
|
|
$
|
666,412
|
|
|
$
|
513,582
|
|
Other comprehensive earnings (losses):
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments, net of
tax (expense) benefit of $(1,653), $1,325 and $(3,397), respectively
|
7,344
|
|
|
(36,117
|
)
|
|
46,450
|
|
|||
Reclassification of cumulative currency translation
|
—
|
|
|
525
|
|
|
—
|
|
|||
Defined postretirement benefit plan, net of tax (expense) benefit of $(47,948), $18,725 and $1,821, respectively
|
75,625
|
|
|
(30,038
|
)
|
|
(2,874
|
)
|
|||
Other employment-related benefit plans and derivatives, net of tax benefit of $2,825, $89 and $2,321, respectively
|
(9,519
|
)
|
|
(1,932
|
)
|
|
(4,287
|
)
|
|||
Total other comprehensive earnings (losses)
|
73,450
|
|
|
(67,562
|
)
|
|
39,289
|
|
|||
Comprehensive earnings, net of tax
|
772,299
|
|
|
598,850
|
|
|
552,871
|
|
|||
Less: Comprehensive earnings attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|||
Net earnings
|
8,968
|
|
|
7,989
|
|
|
2,717
|
|
|||
Foreign currency translation adjustments
|
(8,866
|
)
|
|
4,127
|
|
|
8,712
|
|
|||
Comprehensive earnings attributable to W.W. Grainger, Inc.
|
$
|
772,197
|
|
|
$
|
586,734
|
|
|
$
|
541,442
|
|
|
As of December 31,
|
||||||
ASSETS
|
2012
|
|
2011
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
452,063
|
|
|
$
|
335,491
|
|
Accounts receivable (less allowances for doubtful
|
|
|
|
|
|
||
accounts of $19,449 and $18,801, respectively)
|
940,020
|
|
|
888,697
|
|
||
Inventories – net
|
1,301,935
|
|
|
1,268,647
|
|
||
Prepaid expenses and other assets
|
110,414
|
|
|
100,081
|
|
||
Deferred income taxes
|
55,967
|
|
|
47,410
|
|
||
Prepaid income taxes
|
40,241
|
|
|
54,574
|
|
||
Total current assets
|
2,900,640
|
|
|
2,694,900
|
|
||
PROPERTY, BUILDINGS AND EQUIPMENT
|
|
|
|
||||
Land
|
265,224
|
|
|
252,161
|
|
||
Buildings, structures and improvements
|
1,224,044
|
|
|
1,186,002
|
|
||
Furniture, fixtures, machinery and equipment
|
1,271,166
|
|
|
1,127,159
|
|
||
|
2,760,434
|
|
|
2,565,322
|
|
||
Less: Accumulated depreciation and amortization
|
1,615,861
|
|
|
1,505,027
|
|
||
Property, buildings and equipment – net
|
1,144,573
|
|
|
1,060,295
|
|
||
DEFERRED INCOME TAXES
|
51,536
|
|
|
100,830
|
|
||
GOODWILL
|
543,670
|
|
|
509,183
|
|
||
OTHER ASSETS AND INTANGIBLES – NET
|
374,179
|
|
|
350,854
|
|
||
TOTAL ASSETS
|
$
|
5,014,598
|
|
|
$
|
4,716,062
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
As of December 31,
|
||||||
CURRENT LIABILITIES
|
2012
|
|
2011
|
||||
Short-term debt
|
$
|
79,071
|
|
|
$
|
119,970
|
|
Current maturities of long-term debt
|
18,525
|
|
|
221,539
|
|
||
Trade accounts payable
|
428,782
|
|
|
477,648
|
|
||
Accrued compensation and benefits
|
165,450
|
|
|
207,010
|
|
||
Accrued contributions to employees’ profit sharing plans
|
170,434
|
|
|
159,950
|
|
||
Accrued expenses
|
204,800
|
|
|
178,652
|
|
||
Income taxes payable
|
12,941
|
|
|
23,156
|
|
||
Total current liabilities
|
1,080,003
|
|
|
1,387,925
|
|
||
LONG-TERM DEBT (less current maturities)
|
467,048
|
|
|
175,055
|
|
||
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES
|
119,280
|
|
|
100,218
|
|
||
EMPLOYMENT-RELATED AND OTHER NONCURRENT LIABILITIES
|
230,901
|
|
|
328,585
|
|
||
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||
Cumulative Preferred Stock – $5 par value – 12,000,000 shares authorized; none issued or outstanding
|
—
|
|
|
—
|
|
||
Common Stock – $0.50 par value – 300,000,000 shares authorized;
issued 109,659,219 shares
|
54,830
|
|
|
54,830
|
|
||
Additional contributed capital
|
812,573
|
|
|
700,826
|
|
||
Retained earnings
|
5,278,577
|
|
|
4,806,110
|
|
||
Accumulated other comprehensive earnings (losses)
|
53,578
|
|
|
(28,738
|
)
|
||
Treasury stock, at cost – 40,180,724 and 39,696,367 shares, respectively
|
(3,175,646
|
)
|
|
(2,904,243
|
)
|
||
Total W.W. Grainger, Inc. shareholders’ equity
|
3,023,912
|
|
|
2,628,785
|
|
||
Noncontrolling interest
|
93,454
|
|
|
95,494
|
|
||
Total shareholders' equity
|
3,117,366
|
|
|
2,724,279
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
5,014,598
|
|
|
$
|
4,716,062
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
698,849
|
|
|
$
|
666,412
|
|
|
$
|
513,582
|
|
Provision for losses on accounts receivable
|
9,504
|
|
|
4,761
|
|
|
6,718
|
|
|||
Deferred income taxes and tax uncertainties
|
12,343
|
|
|
1,666
|
|
|
(5,553
|
)
|
|||
Depreciation and amortization
|
159,049
|
|
|
149,200
|
|
|
149,678
|
|
|||
Stock-based compensation
|
55,500
|
|
|
54,020
|
|
|
49,796
|
|
|||
Gain on investment in unconsolidated entities
|
—
|
|
|
(7,639
|
)
|
|
—
|
|
|||
Change in operating assets and liabilities – net of business acquisitions:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(45,953
|
)
|
|
(85,083
|
)
|
|
(127,790
|
)
|
|||
Inventories
|
(14,872
|
)
|
|
(219,680
|
)
|
|
(80,545
|
)
|
|||
Prepaid expenses and other assets
|
8,346
|
|
|
(24,228
|
)
|
|
(8,806
|
)
|
|||
Trade accounts payable
|
(54,314
|
)
|
|
86,395
|
|
|
36,219
|
|
|||
Other current liabilities
|
(58,673
|
)
|
|
50,718
|
|
|
49,576
|
|
|||
Current income taxes payable
|
(9,349
|
)
|
|
16,827
|
|
|
(1,503
|
)
|
|||
Accrued employment-related benefits cost
|
45,795
|
|
|
45,680
|
|
|
18,128
|
|
|||
Other – net
|
9,970
|
|
|
7,059
|
|
|
(3,055
|
)
|
|||
Net cash provided by operating activities
|
816,195
|
|
|
746,108
|
|
|
596,445
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Additions to property, buildings and equipment
|
(249,860
|
)
|
|
(196,942
|
)
|
|
(127,124
|
)
|
|||
Proceeds from sale of property, buildings and equipment
|
8,530
|
|
|
7,278
|
|
|
6,508
|
|
|||
Cash paid for business acquisitions, net of cash acquired
|
(64,808
|
)
|
|
(359,296
|
)
|
|
(62,072
|
)
|
|||
Other – net
|
482
|
|
|
13,892
|
|
|
13,529
|
|
|||
Net cash used in investing activities
|
(305,656
|
)
|
|
(535,068
|
)
|
|
(169,159
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Borrowings under lines of credit
|
161,160
|
|
|
218,885
|
|
|
35,297
|
|
|||
Payments against lines of credit
|
(205,006
|
)
|
|
(194,325
|
)
|
|
(29,799
|
)
|
|||
Proceeds from issuance of long-term debt
|
300,000
|
|
|
172,464
|
|
|
200,000
|
|
|||
Payments of long-term debt and commercial paper
|
(219,950
|
)
|
|
(179,296
|
)
|
|
(239,122
|
)
|
|||
Proceeds from stock options exercised
|
72,084
|
|
|
84,337
|
|
|
86,528
|
|
|||
Excess tax benefits from stock-based compensation
|
57,885
|
|
|
52,098
|
|
|
25,650
|
|
|||
Purchase of treasury stock
|
(340,532
|
)
|
|
(151,082
|
)
|
|
(504,803
|
)
|
|||
Cash dividends paid
|
(220,077
|
)
|
|
(180,527
|
)
|
|
(152,338
|
)
|
|||
Net cash used in financing activities
|
(394,436
|
)
|
|
(177,446
|
)
|
|
(578,587
|
)
|
|||
Exchange rate effect on cash and cash equivalents
|
469
|
|
|
(11,557
|
)
|
|
4,884
|
|
|||
NET CHANGE IN CASH AND CASH EQUIVALENTS:
|
116,572
|
|
|
22,037
|
|
|
(146,417
|
)
|
|||
Cash and cash equivalents at beginning of year
|
335,491
|
|
|
313,454
|
|
|
459,871
|
|
|||
Cash and cash equivalents at end of year
|
$
|
452,063
|
|
|
$
|
335,491
|
|
|
$
|
313,454
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash payments for interest (net of amounts capitalized)
|
$
|
16,028
|
|
|
$
|
8,996
|
|
|
$
|
8,188
|
|
Cash payments for income taxes
|
$
|
383,698
|
|
|
$
|
312,616
|
|
|
$
|
319,754
|
|
|
W.W. Grainger, Inc. Shareholders' Equity
|
|
|
||||||||||||||||
|
Common Stock
|
Additional Contributed Capital
|
Retained Earnings
|
Accumulated Other Comprehensive Earnings (Losses)
|
Treasury Stock
|
|
Noncontrolling
Interest
|
||||||||||||
Balance at January 1, 2010
|
$
|
54,830
|
|
$
|
596,358
|
|
$
|
3,966,508
|
|
$
|
12,374
|
|
$
|
(2,466,350
|
)
|
|
$
|
63,479
|
|
Exercise of stock options
|
—
|
|
(11,211
|
)
|
—
|
|
—
|
|
98,052
|
|
|
171
|
|
||||||
Tax benefits on stock-based compensation awards
|
—
|
|
28,225
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Stock option expense
|
—
|
|
17,163
|
|
—
|
|
—
|
|
—
|
|
|
333
|
|
||||||
Amortization of other stock-based compensation awards
|
—
|
|
29,725
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Settlement and vesting of other stock-based compensation awards
|
—
|
|
(22,090
|
)
|
—
|
|
—
|
|
9,297
|
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
(484
|
)
|
—
|
|
—
|
|
(498,011
|
)
|
|
(428
|
)
|
||||||
Net earnings
|
—
|
|
—
|
|
510,865
|
|
—
|
|
—
|
|
|
2,717
|
|
||||||
Other comprehensive earnings
|
—
|
|
—
|
|
—
|
|
30,577
|
|
—
|
|
|
8,712
|
|
||||||
Cash dividends paid ($2.08 per share)
|
—
|
|
—
|
|
(150,612
|
)
|
—
|
|
—
|
|
|
(1,726
|
)
|
||||||
Fair value at acquisition
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
9,196
|
|
||||||
Balance at December 31, 2010
|
$
|
54,830
|
|
$
|
637,686
|
|
$
|
4,326,761
|
|
$
|
42,951
|
|
$
|
(2,857,012
|
)
|
|
$
|
82,454
|
|
Exercise of stock options
|
—
|
|
(11,506
|
)
|
—
|
|
—
|
|
95,384
|
|
|
459
|
|
||||||
Tax benefits on stock-based compensation awards
|
—
|
|
55,824
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Stock option expense
|
—
|
|
16,838
|
|
—
|
|
—
|
|
—
|
|
|
294
|
|
||||||
Amortization of other stock-based compensation awards
|
—
|
|
33,162
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Settlement and vesting of other stock-based compensation awards
|
—
|
|
(31,067
|
)
|
—
|
|
—
|
|
8,257
|
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
(111
|
)
|
—
|
|
—
|
|
(150,872
|
)
|
|
(99
|
)
|
||||||
Net earnings
|
—
|
|
—
|
|
658,423
|
|
—
|
|
—
|
|
|
7,989
|
|
||||||
Other comprehensive earnings
|
—
|
|
—
|
|
—
|
|
(71,689
|
)
|
—
|
|
|
4,127
|
|
||||||
Cash dividends paid ($2.52 per share)
|
—
|
|
—
|
|
(179,074
|
)
|
—
|
|
—
|
|
|
(1,453
|
)
|
||||||
Fair value at acquisition
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
1,723
|
|
||||||
Balance at December 31, 2011
|
$
|
54,830
|
|
$
|
700,826
|
|
$
|
4,806,110
|
|
$
|
(28,738
|
)
|
$
|
(2,904,243
|
)
|
|
$
|
95,494
|
|
Exercise of stock options
|
—
|
|
(927
|
)
|
—
|
|
—
|
|
72,502
|
|
|
564
|
|
||||||
Tax benefits on stock-based compensation awards
|
—
|
|
60,122
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
Stock option expense
|
—
|
|
17,898
|
|
—
|
|
—
|
|
—
|
|
|
105
|
|
||||||
Amortization of other stock-based compensation awards
|
—
|
|
35,125
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Settlement and vesting of other stock-based compensation awards
|
—
|
|
(31,175
|
)
|
—
|
|
—
|
|
1,452
|
|
|
—
|
|
||||||
Director's stock compensation
|
—
|
|
30,867
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
(163
|
)
|
—
|
|
—
|
|
(345,357
|
)
|
|
(148
|
)
|
||||||
Net earnings
|
—
|
|
—
|
|
689,881
|
|
—
|
|
—
|
|
|
8,968
|
|
||||||
Other comprehensive earnings
|
—
|
|
—
|
|
—
|
|
82,316
|
|
—
|
|
|
(8,866
|
)
|
||||||
Cash dividends paid ($3.06 per share)
|
—
|
|
—
|
|
(217,414
|
)
|
—
|
|
—
|
|
|
(2,663
|
)
|
||||||
Balance at December 31, 2012
|
$
|
54,830
|
|
$
|
812,573
|
|
$
|
5,278,577
|
|
$
|
53,578
|
|
$
|
(3,175,646
|
)
|
|
$
|
93,454
|
|
Buildings, structures and improvements
|
10 to 30 years
|
Furniture, fixtures, machinery and equipment
|
3 to 10 years
|
|
|
United States
|
|
Canada
|
|
Other Businesses
|
|
Total
|
||||||||
Balance at January 1, 2011
|
|
$
|
151,220
|
|
|
$
|
153,922
|
|
|
$
|
82,090
|
|
|
$
|
387,232
|
|
Acquisitions
|
|
—
|
|
|
171
|
|
|
135,080
|
|
|
135,251
|
|
||||
Purchase price adjustments
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Translation
|
|
—
|
|
|
(3,448
|
)
|
|
(9,863
|
)
|
|
(13,311
|
)
|
||||
Balance at December 31, 2011
|
|
151,231
|
|
|
150,645
|
|
|
207,307
|
|
|
509,183
|
|
||||
Acquisitions
|
|
23,385
|
|
|
—
|
|
|
12,466
|
|
|
35,851
|
|
||||
Purchase price adjustments
|
|
—
|
|
|
—
|
|
|
4,523
|
|
|
4,523
|
|
||||
Impairment
|
|
(4,177
|
)
|
|
—
|
|
|
—
|
|
|
(4,177
|
)
|
||||
Translation
|
|
—
|
|
|
4,130
|
|
|
(5,840
|
)
|
|
(1,710
|
)
|
||||
Balance at December 31, 2012
|
|
$
|
170,439
|
|
|
$
|
154,775
|
|
|
$
|
218,456
|
|
|
$
|
543,670
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
2012
|
|
2011
|
||||||||||||||||||||
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Amortized customer lists and relationships
|
$
|
279,068
|
|
|
$
|
124,137
|
|
|
$
|
154,931
|
|
|
$
|
270,460
|
|
|
$
|
114,422
|
|
|
$
|
156,038
|
|
Amortized trademarks, trade names and other
|
34,907
|
|
|
21,885
|
|
|
13,022
|
|
|
35,280
|
|
|
19,914
|
|
|
15,366
|
|
||||||
Non-amortized trade names
|
74,782
|
|
|
—
|
|
|
74,782
|
|
|
76,025
|
|
|
—
|
|
|
76,025
|
|
||||||
Total intangible assets
|
$
|
388,757
|
|
|
$
|
146,022
|
|
|
$
|
242,735
|
|
|
$
|
381,765
|
|
|
$
|
134,336
|
|
|
$
|
247,429
|
|
Customer lists and relationships
|
6 to 22 years
|
Amortized trademarks, trade names and other
|
5 to 17 years
|
Year
|
|
Expense
|
|
||||
2013
|
|
$
|
12,372
|
|
|||
2014
|
|
12,162
|
|
||||
2015
|
|
11,913
|
|
||||
2016
|
|
11,762
|
|
||||
2017
|
|
11,215
|
|
||||
Thereafter
|
|
108,529
|
|
|
For the Years Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
Balance at beginning of period
|
$
|
18,801
|
|
|
$
|
24,552
|
|
Provision for uncollectible accounts
|
9,504
|
|
|
4,761
|
|
||
Write-off of uncollectible accounts, net of recoveries
|
(9,100
|
)
|
|
(8,138
|
)
|
||
Business acquisitions, foreign currency and other
|
244
|
|
|
(2,374
|
)
|
||
Balance at end of period
|
$
|
19,449
|
|
|
$
|
18,801
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Lines of credit
|
$
|
79,071
|
|
|
$
|
69,004
|
|
Commercial paper
|
—
|
|
|
50,000
|
|
||
Other short-term borrowings
|
—
|
|
|
966
|
|
||
|
$
|
79,071
|
|
|
$
|
119,970
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Bank term loan
|
$
|
300,000
|
|
|
$
|
219,932
|
|
Euro-denominated bank term loan
|
158,328
|
|
|
155,340
|
|
||
Other
|
27,245
|
|
|
21,322
|
|
||
Less current maturities
|
(18,525
|
)
|
|
(221,539
|
)
|
||
|
$
|
467,048
|
|
|
$
|
175,055
|
|
Year
|
|
Payment Amount
|
|
|
2013
|
|
$
|
18,525
|
|
2014
|
|
27,411
|
|
|
2015
|
|
34,725
|
|
|
2016
|
|
388,030
|
|
|
2017
|
|
1,934
|
|
|
Thereafter
|
|
14,948
|
|
|
|
As of December 31,
|
||||||
Derivatives Designated as Hedges
|
|
2012
|
|
2011
|
||||
Interest rate swap
|
|
$
|
4,120
|
|
|
$
|
1,574
|
|
Foreign currency forwards
|
|
$
|
7,916
|
|
|
$
|
4,781
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Service cost
|
$
|
20,058
|
|
|
$
|
15,762
|
|
|
$
|
14,293
|
|
Interest cost
|
12,810
|
|
|
13,352
|
|
|
12,852
|
|
|||
Expected return on assets
|
(6,210
|
)
|
|
(5,790
|
)
|
|
(4,434
|
)
|
|||
Amortization of prior service credit
|
(495
|
)
|
|
(495
|
)
|
|
(495
|
)
|
|||
Amortization of transition asset
|
(143
|
)
|
|
(143
|
)
|
|
(143
|
)
|
|||
Amortization of unrecognized losses
|
4,827
|
|
|
3,269
|
|
|
3,649
|
|
|||
Net periodic benefits costs
|
$
|
30,847
|
|
|
$
|
25,955
|
|
|
$
|
25,722
|
|
|
2012
|
|
2011
|
||||
Benefit obligation at beginning of year
|
$
|
328,912
|
|
|
$
|
257,978
|
|
Service cost
|
20,058
|
|
|
15,762
|
|
||
Interest cost
|
12,810
|
|
|
13,352
|
|
||
Plan participants' contributions
|
2,150
|
|
|
2,103
|
|
||
Plan amendment
|
(84,004
|
)
|
|
—
|
|
||
Actuarial (gains) losses
|
(28,234
|
)
|
|
44,883
|
|
||
Benefits paid
|
(6,047
|
)
|
|
(5,551
|
)
|
||
Medicare Part D Subsidy received
|
442
|
|
|
385
|
|
||
Benefit obligation at end of year
|
246,087
|
|
|
328,912
|
|
||
|
|
|
|
|
|
||
Plan assets available for benefits at beginning of year
|
103,519
|
|
|
96,507
|
|
||
Actual returns (losses) on plan assets
|
13,355
|
|
|
(720
|
)
|
||
Employer's contributions
|
4,962
|
|
|
11,180
|
|
||
Plan participants' contributions
|
2,150
|
|
|
2,103
|
|
||
Benefits paid
|
(6,047
|
)
|
|
(5,551
|
)
|
||
Plan assets available for benefits at end of year
|
117,939
|
|
|
103,519
|
|
||
|
|
|
|
|
|
||
Noncurrent postretirement benefit obligation
|
$
|
128,148
|
|
|
$
|
225,393
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Prior service credit (cost)
|
$
|
81,968
|
|
|
$
|
(1,542
|
)
|
Transition asset
|
286
|
|
|
428
|
|
||
Unrecognized losses
|
(78,407
|
)
|
|
(118,612
|
)
|
||
Deferred tax (liability) asset
|
(1,618
|
)
|
|
46,330
|
|
||
Net gains (losses)
|
$
|
2,229
|
|
|
$
|
(73,396
|
)
|
|
2013
|
||
Amortization of prior service credit
|
$
|
(7,723
|
)
|
Amortization of transition asset
|
(143
|
)
|
|
Amortization of unrecognized losses
|
4,931
|
|
|
Estimated amount to be amortized from AOCE into net periodic postretirement benefit costs
|
$
|
(2,935
|
)
|
|
For the Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Discount rate
|
4.50
|
%
|
|
5.60
|
%
|
|
6.00
|
%
|
Expected long-term rate of return on plan assets, net of tax
|
6.00
|
%
|
|
6.00
|
%
|
|
6.00
|
%
|
Initial healthcare cost trend rate
|
8.50
|
%
|
|
9.00
|
%
|
|
9.50
|
%
|
Ultimate healthcare cost trend rate
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
Year ultimate healthcare cost trend rate reached
|
2019
|
|
|
2019
|
|
|
2019
|
|
|
1 Percentage Point
|
||||||
|
Increase
|
|
(Decrease)
|
||||
Effect on total service and interest cost
|
$
|
8,909
|
|
|
$
|
(6,670
|
)
|
Effect on APBO
|
35,541
|
|
|
(28,647
|
)
|
|
2012
|
|
2011
|
||||
Registered investment companies
|
|
|
|
||||
Fidelity Spartan U.S. Equity Index Fund
|
$
|
51,169
|
|
|
$
|
44,138
|
|
Vanguard 500 Index Fund
|
51,336
|
|
|
44,265
|
|
||
Vanguard Total International Stock
|
21,739
|
|
|
18,379
|
|
||
Total Assets
|
$
|
124,244
|
|
|
$
|
106,782
|
|
Year
|
|
Estimated Gross Benefit Payments
|
||
2013
|
|
$
|
4,959
|
|
2014
|
|
5,714
|
|
|
2015
|
|
6,553
|
|
|
2016
|
|
7,530
|
|
|
2017
|
|
8,660
|
|
|
2018-2022
|
|
$
|
61,393
|
|
Year
|
|
Future Minimum Lease Payments
|
||
2013
|
|
$
|
54,456
|
|
2014
|
|
47,913
|
|
|
2015
|
|
39,641
|
|
|
2016
|
|
30,088
|
|
|
2017
|
|
20,433
|
|
|
Thereafter
|
|
39,156
|
|
|
Total minimum payments required
|
|
231,687
|
|
|
Less amounts representing sublease income
|
|
(1,803
|
)
|
|
|
|
$
|
229,884
|
|
|
Shares Subject to Option
|
|
Weighted Average Price Per Share
|
|
Options Exercisable
|
||||
Outstanding at January 1, 2010
|
5,474,596
|
|
|
$
|
68.07
|
|
|
3,141,996
|
|
Granted
|
945,450
|
|
|
$
|
106.70
|
|
|
|
|
Exercised
|
(1,444,898
|
)
|
|
$
|
64.39
|
|
|
|
|
Canceled or expired
|
(93,900
|
)
|
|
$
|
84.02
|
|
|
|
|
Outstanding at December 31, 2010
|
4,881,248
|
|
|
$
|
77.61
|
|
|
2,486,478
|
|
Granted
|
520,327
|
|
|
$
|
149.15
|
|
|
|
|
Exercised
|
(1,323,883
|
)
|
|
$
|
63.08
|
|
|
|
|
Canceled or expired
|
(117,017
|
)
|
|
$
|
89.18
|
|
|
|
|
Outstanding at December 31, 2011
|
3,960,675
|
|
|
$
|
91.53
|
|
|
1,808,667
|
|
Granted
|
404,111
|
|
|
$
|
203.96
|
|
|
|
|
Exercised
|
(972,015
|
)
|
|
$
|
74.14
|
|
|
|
|
Canceled or expired
|
(34,055
|
)
|
|
$
|
105.36
|
|
|
|
|
Outstanding at December 31, 2012
|
3,358,716
|
|
|
$
|
109.95
|
|
|
1,629,468
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
Fair value of options exercised
|
|
$
|
18,120
|
|
|
$
|
20,933
|
|
|
$
|
22,665
|
|
Total intrinsic value of options exercised
|
|
126,138
|
|
|
124,441
|
|
|
75,204
|
|
|||
Fair value of options vested
|
|
15,551
|
|
|
13,549
|
|
|
17,974
|
|
|||
Settlements of options exercised
|
|
72,066
|
|
|
83,504
|
|
|
87,024
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||||||||
|
|
|
|
Weighted Average
|
|
|
|
|
Weighted Average
|
|
||||||||||||||||
Range of
Exercise
Prices
|
|
Number
|
|
Remaining
Contractual
Life
|
|
Exercise
Price
|
|
Intrinsic
Value
(000's)
|
|
Number
|
|
Remaining
Contractual
Life
|
|
Exercise
Price
|
|
Intrinsic
Value
(000's)
|
||||||||||
$45.50 - $78.86
|
|
714,047
|
|
|
2.92 years
|
|
$
|
65.56
|
|
|
$
|
97,688
|
|
|
714,047
|
|
|
2.92 years
|
|
$
|
65.56
|
|
|
$
|
97,688
|
|
$81.49 - $85.82
|
|
875,035
|
|
|
5.70 years
|
|
$
|
83.23
|
|
|
104,251
|
|
|
875,035
|
|
|
5.70 years
|
|
$
|
83.23
|
|
|
104,251
|
|
||
$91.61 - $108.15
|
|
848,250
|
|
|
7.25 years
|
|
$
|
106.53
|
|
|
81,282
|
|
|
36,550
|
|
|
6.97 years
|
|
$
|
105.20
|
|
|
3,552
|
|
||
$110.54 - $204.24
|
|
921,384
|
|
|
8.75 years
|
|
$
|
172.86
|
|
|
27,187
|
|
|
3,836
|
|
|
8.53 years
|
|
$
|
160.89
|
|
|
159
|
|
||
|
|
3,358,716
|
|
|
6.34 years
|
|
$
|
109.95
|
|
|
$
|
310,408
|
|
|
1,629,468
|
|
|
4.52 years
|
|
$
|
76.16
|
|
|
$
|
205,650
|
|
|
|
For the years ended December 31,
|
||||
|
|
2012
|
|
2011
|
|
2010
|
Risk-free interest rate
|
|
1.1%
|
|
2.6%
|
|
2.9%
|
Expected life
|
|
6 years
|
|
6 years
|
|
6 years
|
Expected volatility
|
|
25.9%
|
|
24.6%
|
|
24.7%
|
Expected dividend yield
|
|
1.6%
|
|
1.8%
|
|
2.0%
|
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
|
Shares
|
|
Weighted Average Price Per Share
|
|
Shares
|
|
Weighted Average Price Per Share
|
|
Shares
|
|
Weighted Average Price Per Share
|
|||||||||
Beginning nonvested
shares outstanding
|
192,740
|
|
|
$
|
109.16
|
|
|
177,120
|
|
|
$
|
84.74
|
|
|
72,362
|
|
|
$
|
80.01
|
|
Issued
|
28,639
|
|
|
$
|
177.75
|
|
|
96,236
|
|
|
$
|
127.43
|
|
|
140,400
|
|
|
$
|
87.29
|
|
Cancelled
|
(1,666
|
)
|
|
$
|
114.41
|
|
|
(13,056
|
)
|
|
$
|
87.24
|
|
|
(1,069
|
)
|
|
$
|
86.00
|
|
Vested
|
(101,734
|
)
|
|
$
|
90.47
|
|
|
(67,560
|
)
|
|
$
|
72.86
|
|
|
(34,573
|
)
|
|
$
|
86.00
|
|
Ending nonvested shares
outstanding
|
117,979
|
|
|
$
|
141.86
|
|
|
192,740
|
|
|
$
|
109.16
|
|
|
177,120
|
|
|
$
|
84.74
|
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
|||||||||
Beginning nonvested units
|
1,119,488
|
|
$
|
100.76
|
|
|
1,205,787
|
|
$
|
88.65
|
|
|
1,241,364
|
|
$
|
80.96
|
|
Issued
|
152,995
|
|
$
|
204.26
|
|
|
242,212
|
|
$
|
152.55
|
|
|
274,740
|
|
$
|
109.63
|
|
Cancelled
|
(37,972
|
)
|
$
|
123.01
|
|
|
(92,202
|
)
|
$
|
89.57
|
|
|
(61,745
|
)
|
$
|
82.59
|
|
Vested
|
(255,623
|
)
|
$
|
88.36
|
|
|
(236,309
|
)
|
$
|
86.13
|
|
|
(248,572
|
)
|
$
|
77.37
|
|
Ending nonvested units
|
978,888
|
|
$
|
118.60
|
|
|
1,119,488
|
|
$
|
100.76
|
|
|
1,205,787
|
|
$
|
88.65
|
|
Fair value of shares vested (in millions)
|
$23
|
|
|
$20
|
|
|
$19
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
|
Units
|
Dollars
|
|
Units
|
Dollars
|
|
Units
|
Dollars
|
|||||||||
Beginning balance
|
142,797
|
|
$
|
26,730
|
|
|
130,377
|
|
$
|
18,006
|
|
|
113,509
|
|
$
|
10,991
|
|
Dividends
|
2,273
|
|
454
|
|
|
2,244
|
|
350
|
|
|
2,416
|
|
261
|
|
|||
Deferred fees
|
9,170
|
|
1,871
|
|
|
12,601
|
|
1,878
|
|
|
14,452
|
|
1,563
|
|
|||
Retirement distribution
|
(2,465
|
)
|
(461
|
)
|
|
(2,425
|
)
|
(335
|
)
|
|
—
|
|
—
|
|
|||
Unit appreciation
|
—
|
|
2,358
|
|
|
—
|
|
6,831
|
|
|
—
|
|
5,191
|
|
|||
Ending balance
|
151,775
|
|
$
|
30,952
|
|
|
142,797
|
|
$
|
26,730
|
|
|
130,377
|
|
$
|
18,006
|
|
|
2012
|
|
2011
|
||||||
|
Outstanding Common Stock
|
Treasury Stock
|
|
Outstanding Common Stock
|
Treasury Stock
|
||||
Balance at beginning of period
|
69,962,852
|
|
39,696,367
|
|
|
69,377,802
|
|
40,281,417
|
|
Exercise of stock options, net of 5,310, and 0 shares swapped in stock-for-stock exchange, respectively
|
966,705
|
|
(966,705
|
)
|
|
1,323,883
|
|
(1,323,883
|
)
|
Settlement of restricted stock units, net of 121,353 and 141,467 shares retained, respectively
|
225,997
|
|
(225,997
|
)
|
|
257,931
|
|
(257,931
|
)
|
Settlement of performance share units, net of 23,590 and 11,731 shares retained, respectively
|
44,051
|
|
(44,051
|
)
|
|
22,842
|
|
(22,842
|
)
|
Purchase of treasury shares
|
(1,721,110
|
)
|
1,721,110
|
|
|
(1,019,606
|
)
|
1,019,606
|
|
Balance at end of period
|
69,478,495
|
|
40,180,724
|
|
|
69,962,852
|
|
39,696,367
|
|
|
|
As of December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Foreign currency translation adjustments
|
|
$
|
85,231
|
|
|
$
|
76,234
|
|
Derivative instruments
|
|
(11,965
|
)
|
|
(6,286
|
)
|
||
Postretirement benefit plan
|
|
3,847
|
|
|
(119,726
|
)
|
||
Other employment-related benefit plans
|
|
(9,835
|
)
|
|
(3,170
|
)
|
||
Deferred tax (liability) asset
|
|
(11,184
|
)
|
|
35,592
|
|
||
Total accumulated other comprehensive earnings (losses)
|
|
56,094
|
|
|
(17,356
|
)
|
||
Less: Foreign currency translation adjustments attributable to noncontrolling interest
|
|
2,516
|
|
|
11,382
|
|
||
Total accumulated other comprehensive earnings (losses) attributable to W.W. Grainger, Inc.
|
|
$
|
53,578
|
|
|
$
|
(28,738
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
324,848
|
|
|
$
|
275,489
|
|
|
$
|
283,481
|
|
State
|
40,508
|
|
|
49,098
|
|
|
48,241
|
|
|||
Foreign
|
53,564
|
|
|
45,405
|
|
|
21,235
|
|
|||
Total current
|
418,920
|
|
|
369,992
|
|
|
352,957
|
|
|||
Deferred tax provision (benefit)
|
20
|
|
|
15,123
|
|
|
(12,761
|
)
|
|||
Total provision
|
$
|
418,940
|
|
|
$
|
385,115
|
|
|
$
|
340,196
|
|
|
As of December 31,
|
||||||
|
2012
|
|
2011
|
||||
Deferred tax assets:
|
|
|
|
||||
Inventory
|
$
|
30,991
|
|
|
$
|
26,845
|
|
Accrued expenses
|
26,706
|
|
|
30,411
|
|
||
Accrued employment-related benefits
|
139,931
|
|
|
170,514
|
|
||
Foreign operating loss carryforwards
|
67,148
|
|
|
58,813
|
|
||
Other
|
31,008
|
|
|
23,870
|
|
||
Deferred tax assets
|
295,784
|
|
|
310,453
|
|
||
Less valuation allowance
|
(54,434
|
)
|
|
(53,739
|
)
|
||
Deferred tax assets, net of valuation allowance
|
$
|
241,350
|
|
|
$
|
256,714
|
|
Deferred tax liabilities:
|
|
|
|
||||
Property, buildings and equipment
|
(37,876
|
)
|
|
(22,498
|
)
|
||
Intangibles
|
(114,955
|
)
|
|
(112,569
|
)
|
||
Software
|
(16,653
|
)
|
|
(10,194
|
)
|
||
Prepaids
|
(20,509
|
)
|
|
(22,038
|
)
|
||
Other
|
(19,291
|
)
|
|
(16,893
|
)
|
||
Deferred tax liabilities
|
(209,284
|
)
|
|
(184,192
|
)
|
||
Net deferred tax asset
|
$
|
32,066
|
|
|
$
|
72,522
|
|
The net deferred tax asset is classified as follows:
|
|
|
|
||||
Current assets
|
$
|
55,967
|
|
|
$
|
47,410
|
|
Noncurrent assets
|
51,536
|
|
|
100,830
|
|
||
Noncurrent liabilities (foreign)
|
(75,437
|
)
|
|
(75,718
|
)
|
||
Net deferred tax asset
|
$
|
32,066
|
|
|
$
|
72,522
|
|
|
For the Years Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
Beginning balance
|
$
|
53,739
|
|
|
$
|
20,087
|
|
Increase related to foreign net operating loss carryforwards
|
695
|
|
|
33,652
|
|
||
Ending balance
|
$
|
54,434
|
|
|
$
|
53,739
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Federal income tax at the 35% statutory rate
|
$
|
391,226
|
|
|
$
|
368,034
|
|
|
$
|
298,822
|
|
State income taxes, net of federal income tax benefit
|
26,099
|
|
|
32,226
|
|
|
30,457
|
|
|||
Other - net
|
1,615
|
|
|
(15,145
|
)
|
|
10,917
|
|
|||
Income tax expense
|
$
|
418,940
|
|
|
$
|
385,115
|
|
|
$
|
340,196
|
|
Effective tax rate
|
37.5
|
%
|
|
36.6
|
%
|
|
39.8
|
%
|
|
2012
|
|
2011
|
||||
Balance at beginning of year
|
$
|
22,760
|
|
|
$
|
34,060
|
|
Additions to tax positions related to the current year
|
11,369
|
|
|
8,067
|
|
||
Additions for tax positions of prior years
|
8,977
|
|
|
2,175
|
|
||
Reductions for tax positions of prior years
|
(1,447
|
)
|
|
(8,087
|
)
|
||
Reductions due to statute lapse
|
(737
|
)
|
|
(696
|
)
|
||
Settlements, audit payments, refunds - net
|
15
|
|
|
(12,759
|
)
|
||
Balance at end of year
|
$
|
40,937
|
|
|
$
|
22,760
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
|
|
|
|
||||||
Net earnings attributable to W.W. Grainger, Inc. as reported
|
$
|
689,881
|
|
|
$
|
658,423
|
|
|
$
|
510,865
|
|
Distributed earnings available to participating securities
|
(3,641
|
)
|
|
(3,216
|
)
|
|
(3,086
|
)
|
|||
Undistributed earnings available to participating securities
|
(8,704
|
)
|
|
(9,635
|
)
|
|
(8,355
|
)
|
|||
Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders
|
677,536
|
|
|
645,572
|
|
|
499,424
|
|
|||
Undistributed earnings allocated to participating securities
|
8,704
|
|
|
9,635
|
|
|
8,355
|
|
|||
Undistributed earnings reallocated to participating securities
|
(8,540
|
)
|
|
(9,438
|
)
|
|
(8,208
|
)
|
|||
Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders
|
$
|
677,700
|
|
|
$
|
645,769
|
|
|
$
|
499,571
|
|
|
|
|
|
|
|
||||||
Denominator for basic earnings per share – weighted average shares
|
69,811,881
|
|
|
69,690,854
|
|
|
70,836,945
|
|
|||
Effect of dilutive securities
|
1,369,852
|
|
|
1,485,304
|
|
|
1,301,913
|
|
|||
Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities
|
71,181,733
|
|
|
71,176,158
|
|
|
72,138,858
|
|
|||
Earnings per share two-class method
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
9.71
|
|
|
$
|
9.26
|
|
|
$
|
7.05
|
|
Diluted
|
$
|
9.52
|
|
|
$
|
9.07
|
|
|
$
|
6.93
|
|
|
2012
|
||||||||||||||
|
United States
|
|
Canada
|
|
Other Businesses
|
|
Total
|
||||||||
Total net sales
|
$
|
6,925,842
|
|
|
$
|
1,105,782
|
|
|
$
|
1,006,762
|
|
|
$
|
9,038,386
|
|
Intersegment net sales
|
(87,249
|
)
|
|
(363
|
)
|
|
(729
|
)
|
|
(88,341
|
)
|
||||
Net sales to external customers
|
6,838,593
|
|
|
1,105,419
|
|
|
1,006,033
|
|
|
8,950,045
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Segment operating earnings
|
1,132,722
|
|
|
127,412
|
|
|
20,289
|
|
|
1,280,423
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment assets
|
1,884,102
|
|
|
387,915
|
|
|
347,905
|
|
|
2,619,922
|
|
||||
Depreciation and amortization
|
99,229
|
|
|
14,058
|
|
|
19,202
|
|
|
132,489
|
|
||||
Additions to long-lived assets
|
$
|
182,985
|
|
|
$
|
46,330
|
|
|
$
|
21,611
|
|
|
$
|
250,926
|
|
|
2011
|
||||||||||||||
|
United States
|
|
Canada
|
|
Other Businesses
|
|
Total
|
||||||||
Total net sales
|
$
|
6,501,343
|
|
|
$
|
992,823
|
|
|
$
|
647,666
|
|
|
$
|
8,141,832
|
|
Intersegment net sales
|
(62,766
|
)
|
|
(163
|
)
|
|
(718
|
)
|
|
(63,647
|
)
|
||||
Net sales to external customers
|
6,438,577
|
|
|
992,660
|
|
|
646,948
|
|
|
8,078,185
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating earnings
|
1,066,324
|
|
|
107,582
|
|
|
30,984
|
|
|
1,204,890
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment assets
|
1,845,703
|
|
|
335,900
|
|
|
331,896
|
|
|
2,513,499
|
|
||||
Depreciation and amortization
|
100,017
|
|
|
12,840
|
|
|
11,035
|
|
|
123,892
|
|
||||
Additions to long-lived assets
|
$
|
148,803
|
|
|
$
|
29,744
|
|
|
$
|
13,402
|
|
|
$
|
191,949
|
|
|
2010
|
||||||||||||||
|
United States
|
|
Canada
|
|
Other Businesses
|
|
Total
|
||||||||
Total net sales
|
$
|
6,020,069
|
|
|
$
|
820,941
|
|
|
$
|
389,621
|
|
|
$
|
7,230,631
|
|
Intersegment net sales
|
(47,913
|
)
|
|
(137
|
)
|
|
(423
|
)
|
|
(48,473
|
)
|
||||
Net sales to external customers
|
5,972,156
|
|
|
820,804
|
|
|
389,198
|
|
|
7,182,158
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating earnings
|
920,222
|
|
|
46,836
|
|
|
11,661
|
|
|
978,719
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment assets
|
1,629,208
|
|
|
313,133
|
|
|
151,348
|
|
|
2,093,689
|
|
||||
Depreciation and amortization
|
105,478
|
|
|
12,407
|
|
|
7,809
|
|
|
125,694
|
|
||||
Additions to long-lived assets
|
$
|
100,194
|
|
|
$
|
20,745
|
|
|
$
|
5,660
|
|
|
$
|
126,599
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Operating earnings:
|
|
|
|
|
|
||||||
Total operating earnings for reportable segments
|
$
|
1,280,423
|
|
|
$
|
1,204,890
|
|
|
$
|
978,719
|
|
Unallocated expenses
|
(149,298
|
)
|
|
(152,461
|
)
|
|
(118,244
|
)
|
|||
Total consolidated operating earnings
|
$
|
1,131,125
|
|
|
$
|
1,052,429
|
|
|
$
|
860,475
|
|
Assets:
|
|
|
|
|
|
|
|
|
|||
Assets for reportable segments
|
$
|
2,619,922
|
|
|
$
|
2,513,499
|
|
|
$
|
2,093,689
|
|
Other current and noncurrent assets
|
1,967,480
|
|
|
1,749,029
|
|
|
1,323,082
|
|
|||
Unallocated assets
|
427,196
|
|
|
453,534
|
|
|
487,606
|
|
|||
Total consolidated assets
|
$
|
5,014,598
|
|
|
$
|
4,716,062
|
|
|
$
|
3,904,377
|
|
|
2012
|
||||||||||
|
Segment
Totals
|
|
Unallocated
|
|
Consolidated Total
|
||||||
Other significant items:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
$
|
132,489
|
|
|
$
|
13,123
|
|
|
$
|
145,612
|
|
Additions to long-lived assets
|
$
|
250,926
|
|
|
$
|
6,998
|
|
|
$
|
257,924
|
|
|
|
|
|
|
|
||||||
|
|
|
Revenues
|
|
Long-lived Assets
|
||||||
Geographic information:
|
|
|
|
|
|
||||||
United States
|
|
|
$
|
6,786,361
|
|
|
$
|
944,400
|
|
||
Canada
|
|
|
1,120,470
|
|
|
136,644
|
|
||||
Other foreign countries
|
|
|
1,043,214
|
|
|
135,438
|
|
||||
|
|
|
$
|
8,950,045
|
|
|
$
|
1,216,482
|
|
|
2011
|
||||||||||
|
Segment
Totals
|
|
Unallocated
|
|
Consolidated Total
|
||||||
Other significant items:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
$
|
123,892
|
|
|
$
|
13,319
|
|
|
$
|
137,211
|
|
Additions to long-lived assets
|
$
|
191,949
|
|
|
$
|
5,665
|
|
|
$
|
197,614
|
|
|
|
|
|
|
|
||||||
|
|
|
Revenues
|
|
Long-lived Assets
|
||||||
Geographic information:
|
|
|
|
|
|
||||||
United States
|
|
|
$
|
6,388,506
|
|
|
$
|
872,947
|
|
||
Canada
|
|
|
998,014
|
|
|
102,085
|
|
||||
Other foreign countries
|
|
|
691,665
|
|
|
129,014
|
|
||||
|
|
|
$
|
8,078,185
|
|
|
$
|
1,104,046
|
|
|
2010
|
||||||||||
|
Segment
Totals
|
|
Unallocated
|
|
Consolidated Total
|
||||||
Other significant items:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
$
|
125,694
|
|
|
$
|
12,099
|
|
|
$
|
137,793
|
|
Additions to long-lived assets
|
$
|
126,599
|
|
|
$
|
4,941
|
|
|
$
|
131,540
|
|
|
|
|
|
|
|
||||||
|
|
|
Revenues
|
|
Long-lived Assets
|
||||||
Geographic information:
|
|
|
|
|
|
||||||
United States
|
|
|
$
|
5,922,668
|
|
|
$
|
845,008
|
|
||
Canada
|
|
|
823,220
|
|
|
87,325
|
|
||||
Other foreign countries
|
|
|
436,270
|
|
|
64,900
|
|
||||
|
|
|
$
|
7,182,158
|
|
|
$
|
997,233
|
|
|
|
2012 Quarter Ended
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
Net sales
|
|
$
|
2,193,445
|
|
|
$
|
2,249,275
|
|
|
$
|
2,281,205
|
|
|
$
|
2,226,120
|
|
|
$
|
8,950,045
|
|
Cost of merchandise sold
|
|
1,219,113
|
|
|
1,270,932
|
|
|
1,287,245
|
|
|
1,256,595
|
|
|
5,033,885
|
|
|||||
Gross profit
|
|
974,332
|
|
|
978,343
|
|
|
993,960
|
|
|
969,525
|
|
|
3,916,160
|
|
|||||
Warehousing, marketing and
administrative expenses
|
|
669,971
|
|
|
664,343
|
|
|
739,634
|
|
|
711,087
|
|
|
2,785,035
|
|
|||||
Operating earnings
|
|
304,361
|
|
|
314,000
|
|
|
254,326
|
|
|
258,438
|
|
|
1,131,125
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc.
|
|
187,516
|
|
|
190,704
|
|
|
155,394
|
|
|
156,267
|
|
|
689,881
|
|
|||||
Earnings per share - basic
|
|
2.63
|
|
|
2.68
|
|
|
2.19
|
|
|
2.21
|
|
|
9.71
|
|
|||||
Earnings per share - diluted (1)
|
|
$
|
2.57
|
|
|
$
|
2.63
|
|
|
$
|
2.15
|
|
|
$
|
2.17
|
|
|
$
|
9.52
|
|
|
|
2011 Quarter Ended
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
Net sales
|
|
$
|
1,883,612
|
|
|
$
|
2,003,022
|
|
|
$
|
2,114,647
|
|
|
$
|
2,076,904
|
|
|
$
|
8,078,185
|
|
Cost of merchandise sold
|
|
1,053,998
|
|
|
1,140,628
|
|
|
1,201,648
|
|
|
1,171,119
|
|
|
4,567,393
|
|
|||||
Gross profit
|
|
829,614
|
|
|
862,394
|
|
|
912,999
|
|
|
905,785
|
|
|
3,510,792
|
|
|||||
Warehousing, marketing and
administrative expenses
|
|
567,000
|
|
|
597,112
|
|
|
609,959
|
|
|
684,292
|
|
|
2,458,363
|
|
|||||
Operating earnings
|
|
262,614
|
|
|
265,282
|
|
|
303,040
|
|
|
221,493
|
|
|
1,052,429
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc.
|
|
157,933
|
|
|
169,885
|
|
|
182,121
|
|
|
148,484
|
|
|
658,423
|
|
|||||
Earnings per share - basic
|
|
2.23
|
|
|
2.39
|
|
|
2.56
|
|
|
2.08
|
|
|
9.26
|
|
|||||
Earnings per share - diluted
|
|
$
|
2.18
|
|
|
$
|
2.34
|
|
|
$
|
2.51
|
|
|
$
|
2.04
|
|
|
$
|
9.07
|
|
(1)
|
The third quarter of 2012 included a $0.66 per share expense related to the settlement of disputes involving the GSA and USPS contracts.
|
W.W. GRAINGER, INC.
|
|
|
|
By:
|
/s/ James T. Ryan
|
|
James T. Ryan
|
|
Chairman, President and
|
|
Chief Executive Officer
|
|
|
|
/s/ James T. Ryan
|
|
/s/ Stuart L. Levenick
|
James T. Ryan
|
|
Stuart L. Levenick
|
Chairman, President and Chief Executive Officer
|
|
Director
|
(Principal Executive Officer and Director)
|
|
|
|
|
/s/ John W. McCarter, Jr.
|
/s/ Ronald L. Jadin
|
|
John W. McCarter, Jr.
|
Ronald L. Jadin
|
|
Director
|
Senior Vice President
|
|
|
and Chief Financial Officer
|
|
/s/ Neil S. Novich
|
(Principal Financial Officer)
|
|
Neil S. Novich
|
|
|
Director
|
/s/ Gregory S. Irving
|
|
|
Gregory S. Irving
|
|
/s/ Michael J. Roberts
|
Vice President and Controller
|
|
Michael J. Roberts
|
(Principal Accounting Officer)
|
|
Director
|
|
|
|
/s/ Brian P. Anderson
|
|
/s/ Gary L. Rogers
|
Brian P. Anderson
|
|
Gary L. Rogers
|
Director
|
|
Director
|
|
|
|
/s/ Wilbur H. Gantz
|
|
/s/ E. Scott Santi
|
Wilbur H. Gantz
|
|
E. Scott Santi
|
Director
|
|
Director
|
|
|
|
/s/ V. Ann Hailey
|
|
/s/ James D. Slavik
|
V. Ann Hailey
|
|
James D. Slavik
|
Director
|
|
Director
|
|
|
|
/s/ William K. Hall
|
|
|
William K. Hall
|
|
|
Director
|
|
|
1.
|
General.
This award is governed by and subject to the terms and conditions of this Agreement, the Plan and the Unfair Competition Agreement (the terms of which are hereby incorporated herein by reference). In general, the Executive will be entitled to receive a number of Performance Shares determined by the Company’s performance against its sales growth target (as described in Section 2 below), with the vesting of those Performance Shares being subject to the Company’s achievement of its return on invested capital target (as described in Section 3 below).
|
2.
|
Grant of Performance Shares; 2013 Sales Target.
The Company hereby awards to the Executive a total of _______ Performance Shares (the “Target Number”), such number being subject to possible adjustment as follows. The actual number of Performance Shares which the Executive will receive will depend on the Company’s total net sales during its 2013 fiscal year. Such number will be calculated in accordance with the following table:
|
If, the Company’s 2013 sales are at:
|
Then the number of
Performance Shares will be:
|
Less than $XX Billion
|
Zero (0)
|
$XX Billion
|
Fifty percent (50%) of the Target Number
|
$XX Billion
|
One hundred percent (100%) of the
Target Number
|
$XX Billion or more
|
Two hundred percent (200%) of the
Target Number
|
3.
|
Vesting; ROIC Target.
The vesting of the Performance Shares will depend upon the Company’s average return on invested capital (“ROIC”) during the period of three fiscal years beginning with the 2012 fiscal year, i.e., the Company’s 2012, 2013 and 2014 fiscal years (the “Measuring Period”). For this purpose, ROIC means the Company’s operating earnings divided by its net working assets. Vesting will be determined in accordance with the following table:
|
If the Company’s average ROIC
during the Measuring Period is:
|
Then the following percentage of
Performance Shares will vest:
|
Less than eighteen percent (18%)
|
Zero (0)
|
Eighteen percent (18%) or more
|
One hundred percent (100%)
|
4.
|
Receipt by the Executive of the Plan.
The Executive acknowledges receipt of the Plan booklet which contains the entire Plan. The Executive represents and warrants that he has read the Plan and that he agrees that all Performance Shares awarded under it shall be subject to all of the terms and conditions of the Plan, including but not limited to the exclusive right of the Committee to interpret and determine the terms and provisions of the Performance Share Award Agreements and the Plan and to make all determinations necessary or advisable for the administration of the Plan, all of which interpretations and determinations shall be final and binding. Without limiting the generality of the foregoing, the Committee shall have the discretion to adjust the terms and conditions of awards of Performance Shares to correct for any windfalls or shortfalls in such awards which, in the Committee’s determination, arise from factors beyond the awardees’ control, provided, however, that the Committee’s authority with respect to any award to a “covered employee,” as defined in Section 162(m)(3) of the Code, shall be limited to decreasing, and not increasing, such award.
|
5.
|
Tax Withholding Obligations.
If the Performance Shares shall vest, the Executive shall be responsible for any required withholding including, but without limitation, taxes, FICA contributions, or the like under any federal, state or applicable statute, rule, or regulation. Upon such vesting, the Company may withhold a number of shares of Common Stock having a fair market value on the date that the amount is to be withheld equal to the amount determined by the Company to be the required statutory minimum withholding; this amount may or may not satisfy the Executive’s calendar year withholding obligation. The Company shall not issue and shall not deliver any of its Common Stock upon the vesting and settlement of the Performance Shares until and unless the proper provision for minimum required withholding has been made.
|
6.
|
Recoupment of Incentive-based Compensation.
|
a.
|
If the Board of Directors determines that the Executive has committed fraud against the Company or has been engaged in any criminal conduct that involves or is related to the Company and such Executive is entitled to receive performance shares, stock options, restricted stock units or cash incentive compensation (“Incentive Compensation”) then the Company shall recover from the Executive such Incentive Compensation, in whole or in part, for any period of time, as it deems appropriate under the circumstances. The Board shall have sole discretion in determining whether the Executive’s conduct was in compliance with the law or Company policy and the extent to which the Company will seek recovery of the Incentive Compensation notwithstanding any other remedies available to the Company. If the Executive engages in misconduct or is believed to have engaged in misconduct, the Company shall be entitled to recover from the Executive, and the Executive shall re-pay awards received pursuant to this Program, in whole or in part, for any period of time, as the Company deems appropriate under the circumstances.
|
b.
|
In the event of a restatement of materially inaccurate financial results, the Board has the discretion to recover cash incentive payments or the settlement of performance shares (“Incentive Payments”) that were paid or settled to the Executive during the period covered by the restatement as set forth herein. If the payment or settlement of Incentive Payments would have been lower had the achievement of applicable financial performance goals been calculated based on such restated financial results, the Board may, if it determines appropriate in its sole discretion, recover the portion of the paid or settled Incentive Payments in excess of the payment or settlement that would have been made based on the restated financial results. The Company will not seek to recover Incentive Payments received or settled more than three years after the date of the initial filing that contained the incorrect financial results.
|
7.
|
Other Terms and Conditions Applicable to the Performance Shares.
|
a.
|
Rights of Shareholder.
The Executive shall not have any voting rights with respect to the Performance Shares. The Executive shall have no right to receive dividend equivalent payments with respect to the Performance Shares.
|
b.
|
Termination of Employment.
If the Executive’s employment terminates during the Measuring Period for any reason other than retirement, disability or death, then the Performance Shares will be forfeited in full and the Executive shall have no further rights with respect to the award hereunder. If the Executive engages in misconduct, or is believed to have engaged in misconduct all awards will be forfeited.
|
c.
|
Retirement/Death.
If the Executive’s employment with the Company terminates during the Measuring Period by reason of retirement or death, then the Executive or the Executive’s estate will be entitled to receive in settlement of the Performance Shares a number of shares of Common Stock equal to the product of (x) the number of Performance Shares, if any, which subsequently vest under Section 3 above,
multiplied by
(y) a fraction, the numerator of which is the number of months during the Measuring Period that the Executive was employed by the Company and the denominator of which is the total number of months in the Measuring Period, i.e., 36 months. For purposes of the foregoing calculation, the Executive will be deemed to have been employed by the Company during the month that his employment terminates if, and only if, such termination occurs on or after the fifteenth (15
th
) calendar day of that month.
|
d.
|
Disability.
If the Executive’s employment with the Company terminates during the Measuring Period by reason of disability (defined below), then the Executive will be entitled to receive in settlement of the Performance Shares a number of shares of Common Stock calculated in the same manner as under Subsection c immediately above, provided, however, that if such termination of employment occurs during the first fiscal year of the Measuring Period, then for purposes of such calculation the number of Performance Shares referred to in clause (x) of such calculation shall be determined as though the Company had met, but not exceeded, its sales growth target and 100 percent of such Performance Shares had vested. For purposes of the foregoing, the term “disability” means the Executive’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted for a continuous period of not less than twelve (12) months.
|
8.
|
Severability.
The provisions of the Agreement shall be severable, and in the event that any provision of it is found to be unenforceable, all other provisions shall be binding and enforceable on the parties as drafted. In the event that any provision is found to be unenforceable, the parties consent to the Court’s modification of that provision in order to make the provision enforceable, subject to the limitations of the Court’s powers under the law.
|
9.
|
Venue.
The Executive acknowledges that, in the event that a determination of the enforceability of this Agreement is sought, or any other judicial proceedings are brought pertaining to this Agreement, the Company has the choice of venue and the preferred venue for such proceedings is Cook County, Illinois.
|
10.
|
Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, excluding any conflicts or choice of law rules or principles thereof.
|
•
|
Encourage decision-making focused on producing a favorable rate of ROIC and on growing the business rapidly, thus leading to improvements in shareholder value.
|
•
|
Influence participants to make decisions consistent with shareholders’ interests.
|
•
|
Align management with Company objectives.
|
•
|
Attract and retain the talent required to achieve the Company’s objectives.
|
ROIC
|
=
|
Operating Earnings
Net Working Assets
|
|
Sales growth
|
=
|
Total Company Sales, Current Year
Total Company Sales, Prior Year
|
-1
|
Subsidiaries (51% or more ownership)
|
|
|
|
|
|
Name of Company
|
|
Where Organized
|
779146 Canada Inc.
|
|
Canada
|
Acklands - Grainger Inc.
|
|
Canada
|
American Fabory Corporation
|
|
Delaware
|
Beleggingsmij Maasoever Rotterdam B.V.
|
|
Netherlands
|
BMF Finance B.V.
|
|
Netherlands
|
BMF Fundco B.V.
|
|
Netherlands
|
BMF Management Services B.V.
|
|
Netherlands
|
BMFGH Holding B.V.
|
|
Netherlands
|
BMFGH Manpar B.V.
|
|
Netherlands
|
Borstlap International B.V.
|
|
Netherlands
|
Combori N.V.
|
|
Belgium
|
CV Noordoever (85%)
|
|
Netherlands
|
Dayton Electric Manufacturing Co.
|
|
Illinois
|
Dutch Industrial Fasteners B.V.
|
|
Netherlands
|
Fabory Asia B.V.
|
|
Netherlands
|
Fabory Bulgaria EOOD
|
|
Bulgaria
|
Fabory Canada Inc.
|
|
Canada
|
Fabory Centres Belgium N.V.
|
|
Belgium
|
Fabory CZ Holding S.R.O.
|
|
Czech Republic
|
Fabory France S.A.
|
|
France
|
Fabory Industrial Services B.V.
|
|
Netherlands
|
Fabory Kötoelem Kereskedelmi KFT
|
|
Hungary
|
Fabory Masters in Fasteners Group B.V.
|
|
Netherlands
|
Fabory Nederland B.V.
|
|
Netherlands
|
Fabory Overseas Holding B.V.
|
|
Netherlands
|
Fabory Poland SPZOO
|
|
Poland
|
Fabory Portugal Lda.
|
|
Portugal
|
Fabory Shanghai Co. Ltd.
|
|
China
|
Fabory Slovakia SRO
|
|
Slovakia
|
Fabory Spain S.L.
|
|
Spain
|
Fabory Special Projects B.V.
|
|
Netherlands
|
Fabory SRL
|
|
Romania
|
Fabory UK Holdings Ltd.
|
|
United Kingdom
|
Fabory UK Ltd.
|
|
United Kingdom
|
Fabory U.S.A., Ltd.
|
|
Delaware
|
FFSA S.A.
|
|
France
|
Fixbolt (Suhzou) Co., Ltd. Taicang
|
|
China
|
Fixbolt B.V.
|
|
Netherlands
|
GHC Specialty Brands, LLC
|
|
Wisconsin
|
GMMI LLC
|
|
Delaware
|
Grainger Asia Pacific K.K.
|
|
Japan
|
Grainger Brasil Comércio e Distribuição Ltda.
|
|
Brazil
|
Grainger Brasil Participacoes Ltda.
|
|
Brazil
|
Grainger Canada Holdings ULC
|
|
Canada
|
Grainger Caribe, Inc.
|
|
Illinois
|
Grainger China LLC
|
|
China
|
Grainger Colombia Holding Company, LLC
|
|
Delaware
|
Grainger Colombia S.A.S. (80%)
|
|
Colombia
|
Grainger Dominicana SRL
|
|
Dominican Republic
|
Grainger Global Holdings, Inc.
|
|
Delaware
|
Grainger Global Trading (Shanghai) Company Limited
|
|
China
|
Grainger India Private Limited
|
|
India
|
Grainger Industrial MRO de Costa Rica, S.R.L.
|
|
Costa Rica
|
Grainger Industrial Supply India Private Limited
|
|
India
|
Grainger International Holdings B.V.
|
|
Netherlands
|
Grainger International, Inc.
|
|
Illinois
|
Grainger Japan Holdings, Inc.
|
|
Delaware
|
Grainger Japan, Inc.
|
|
Delaware
|
Grainger Latin America Holding Company, Inc.
|
|
Delaware
|
Grainger Management LLC
|
|
Illinois
|
Grainger Mexico LLC
|
|
Delaware
|
Grainger Panama S.A.
|
|
Panama
|
Grainger Panama Services S. de R.L.
|
|
Panama
|
Grainger Peru S.R.L.
|
|
Peru
|
Grainger Registry Services, LLC
|
|
Delaware
|
Grainger Safety Services, Inc.
|
|
Delaware
|
Grainger Service Holding Company, Inc. (d/b/a Grainger Lighting Services
|
|
Delaware
|
Grainger Services International Inc.
|
|
Illinois
|
Grainger Services Network, Inc.
|
|
Delaware
|
Grainger Trinidad, Inc.
|
|
Delaware
|
Grainger, S.A. de C.V.
|
|
Mexico
|
GWW Investments C.V.
|
|
Netherlands
|
Hamos België BVBA
|
|
Belgium
|
Hamos Holland B.V.
|
|
Netherlands
|
Imperial Supplies Holdings, Inc.
|
|
Delaware
|
Imperial Supplies LLC
|
|
Delaware
|
Inbema N.V.
|
|
Curaçao Netherlands Antilles
|
India Pacific Brands
|
|
Mauritius
|
Klaassen Fasteners B.V.
|
|
Netherlands
|
Klaassen Fasteners BVBA
|
|
Belgium
|
LN Participacoes Ltda.
|
|
Brazil
|
Metric Fasteners Corporation
|
|
Delaware
|
MonotaRO Co., Ltd. (52.42%)
|
|
Japan
|
Mountain Ventures WWG III, LLC
|
|
Delaware
|
Mountain Ventures WWG IV, LLC
|
|
Delaware
|
Mountain Ventures WWG V, LLC
|
|
Delaware
|
Mountain Ventures WWG VI, LLC
|
|
Delaware
|
Mountain Ventures WWG, LLC
|
|
Delaware
|
Mountain Ventures WWG, VII, LLC
|
|
Delaware
|
MRO Soluciones, S.A. de C.V.
|
|
Mexico
|
Pimentel Fasteners B.V.
|
|
Netherlands
|
Pro Tool Point Supply, Inc.
|
|
Illinois
|
PSS West, Inc.
|
|
California
|
Safety Registry Services, LLC
|
|
Delaware
|
Solus Sécurité Inc.
|
|
Canada
|
Techni-Tool, Inc.
|
|
Pennsylvania
|
WEX WWG VIII, LLC
|
|
Delaware
|
WWG de Mexico, S.A. de C.V.
|
|
Mexico
|
WWG International Finance C.V.
|
|
Netherlands
|
WWG Servicios, S.A. de C.V.
|
|
Mexico
|
WWGH LLC
|
|
Delaware
|
Zoro Tools, Inc.
|
|
Delaware
|
Affiliates (50% and less ownership)
|
|
|
|
|
|
Name of Company
|
|
Where Organized
|
Sterling Fabory India Private Ltd. (50%)
|
|
India
|
1.
|
I have reviewed this Annual Report on Form 10-K of W.W. Grainger, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/
s/ J. T. Ryan
|
Name:
|
J. T. Ryan
|
Title:
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of W.W. Grainger, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/
s/ R. L. Jadin
|
Name:
|
R. L. Jadin
|
Title:
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Grainger.
|
/s/ J. T. Ryan
|
J. T. Ryan
|
Chairman, President and Chief Executive Officer
|
February 27, 2013
|
|
|
|
/s/ R. L. Jadin
|
R. L. Jadin
|
Senior Vice President and Chief Financial Officer
|
February 27, 2013
|