|
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)
|
|
390 United States branch locations
|
|
8,554
|
|
United States (2)
|
|
18 Distribution Centers
|
|
6,793
|
|
United States (3)
|
|
Other facilities
|
|
3,344
|
|
Canada (4)
|
|
182 Acklands – Grainger facilities
|
|
2,872
|
|
Other Businesses (5)
|
|
Other facilities
|
|
4,205
|
|
Chicago Area (2)
|
|
Headquarters and General Offices
|
|
1,595
|
|
|
|
Total Square Feet
|
|
27,363
|
|
(1)
|
United States branches consist of 273 owned and 117 leased properties located throughout the U.S. Branches range in size from approximately 1,000 to 109,000 square feet. Most leases expire between 2014 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.
|
(4)
|
Acklands – Grainger facilities consist of general offices, distribution centers and branches located throughout Canada, of which 64 are owned and 118 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
|
||||||
2013
|
First
|
$
|
233.95
|
|
|
$
|
201.49
|
|
|
$
|
0.80
|
|
|
Second
|
269.17
|
|
|
216.64
|
|
|
0.93
|
|
|||
|
Third
|
276.38
|
|
|
245.01
|
|
|
0.93
|
|
|||
|
Fourth
|
274.37
|
|
|
246.86
|
|
|
0.93
|
|
|||
|
Year
|
$
|
276.38
|
|
|
$
|
201.49
|
|
|
$
|
3.59
|
|
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
|
|
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
|
112,330
|
267.18
|
112,330
|
4,115,080
|
|
shares
|
Nov. 1 – Nov. 30
|
386,491
|
262.46
|
386,491
|
3,728,589
|
|
shares
|
Dec. 1 – Dec. 31
|
106,921
|
256.19
|
106,921
|
3,621,668
|
|
shares
|
Total
|
605,742
|
262.23
|
605,742
|
|
|
(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,
|
|||||||||||||||||
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||
W.W. Grainger, Inc.
|
$
|
100
|
|
$
|
125
|
|
$
|
182
|
|
$
|
251
|
|
$
|
276
|
|
$
|
353
|
|
Dow Jones US Industrial Suppliers Total Stock Market Index
|
100
|
|
126
|
|
177
|
|
226
|
|
255
|
|
305
|
|
||||||
S&P 500 Stock Index
|
100
|
|
126
|
|
146
|
|
149
|
|
172
|
|
228
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
|
(In thousands of dollars, except for per share amounts)
|
||||||||||||||||||
Net sales
|
$
|
9,437,758
|
|
|
$
|
8,950,045
|
|
|
$
|
8,078,185
|
|
|
$
|
7,182,158
|
|
|
$
|
6,221,991
|
|
Net earnings attributable to W.W. Grainger, Inc.
|
797,036
|
|
|
689,881
|
|
|
658,423
|
|
|
510,865
|
|
|
430,466
|
|
|||||
Net earnings per basic share
|
11.31
|
|
|
9.71
|
|
|
9.26
|
|
|
7.05
|
|
|
5.70
|
|
|||||
Net earnings per diluted share
|
11.13
|
|
|
9.52
|
|
|
9.07
|
|
|
6.93
|
|
|
5.62
|
|
|||||
Total assets
|
5,266,328
|
|
|
5,014,598
|
|
|
4,716,062
|
|
|
3,904,377
|
|
|
3,726,332
|
|
|||||
Long-term debt (less current maturities) and other long-term liabilities
|
743,702
|
|
|
817,229
|
|
|
603,858
|
|
|
747,404
|
|
|
722,334
|
|
|||||
Cash dividends paid per share
|
$
|
3.59
|
|
|
$
|
3.06
|
|
|
$
|
2.52
|
|
|
$
|
2.08
|
|
|
$
|
1.78
|
|
|
United States
|
|
Canada
|
||||
|
Estimated 2013
|
|
Forecasted 2014
|
|
Estimated 2013
|
|
Forecasted 2014
|
GDP
|
1.9%
|
|
2.7%
|
|
1.8%
|
|
2.4%
|
Industrial Production
|
2.6%
|
|
3.2%
|
|
1.3%
|
|
2.5%
|
Exports
|
2.8%
|
|
4.9%
|
|
1.2%
|
|
2.9%
|
Business Investment
|
2.9%
|
|
6.3%
|
|
1.2%
|
|
6.6%
|
Business Inventory
|
4.2%
|
|
3.0%
|
|
—
|
|
—
|
Source: Global Insight (February 2014)
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|||||||||||||
|
As a Percent of Net Sales
|
|
Percent Increase/(Decrease) from Prior Year
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
5.4
|
%
|
|
10.8
|
%
|
Cost of merchandise sold
|
56.2
|
|
|
56.2
|
|
|
56.5
|
|
|
5.3
|
|
|
10.2
|
|
Gross profit
|
43.8
|
|
|
43.8
|
|
|
43.5
|
|
|
5.6
|
|
|
11.5
|
|
Operating expenses
|
30.1
|
|
|
31.2
|
|
|
30.5
|
|
|
2.0
|
|
|
13.3
|
|
Operating earnings
|
13.7
|
|
|
12.6
|
|
|
13.0
|
|
|
14.7
|
|
|
7.5
|
|
Other income (expense)
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(30.6
|
)
|
|
—
|
|
Income taxes
|
5.1
|
|
|
4.7
|
|
|
4.8
|
|
|
14.5
|
|
|
8.8
|
|
Noncontrolling interest
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
19.5
|
|
|
12.3
|
|
Net earnings attributable to W.W. Grainger, Inc.
|
8.4
|
%
|
|
7.7
|
%
|
|
8.1
|
%
|
|
15.5
|
%
|
|
4.8
|
%
|
|
Percent Increase/ (Decrease)
|
Volume
|
3
|
Business acquisitions
|
2
|
Price
|
1
|
Foreign exchange
|
(1)
|
Total
|
5%
|
|
Twelve Months Ended December 31,
|
|
|||
|
2013
|
|
2012
|
%
|
|
Diluted earnings per share reported
|
$11.13
|
|
$9.52
|
17
|
%
|
GSA/USPS settlement
|
—
|
|
0.66
|
|
|
Goodwill impairment
|
0.29
|
|
0.04
|
|
|
Restructuring
|
0.10
|
|
0.18
|
|
|
Charge for U.S. branch closures
|
—
|
|
0.03
|
|
|
Subtotal
|
0.39
|
|
0.91
|
|
|
Diluted earnings per share adjusted
|
$11.52
|
|
$10.43
|
10
|
%
|
|
Percent Increase
|
Volume
|
4
|
Business acquisitions
|
2
|
Price
|
1
|
Total
|
7%
|
|
Percent Increase/ (Decrease)
|
Volume
|
4
|
Foreign exchange
|
(3)
|
Total
|
1%
|
|
Percent Increase/ (Decrease)
|
Volume/Price
|
10
|
Foreign exchange
|
(7)
|
Total
|
3%
|
|
For the Years Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Interest income (expense) - net
|
$
|
(9,991
|
)
|
|
$
|
(13,418
|
)
|
Other non-operating income
|
2,732
|
|
|
1,866
|
|
||
Other non-operating expense
|
(1,996
|
)
|
|
(1,784
|
)
|
||
Total
|
$
|
(9,255
|
)
|
|
$
|
(13,336
|
)
|
|
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
|
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
|
)
|
||
Total
|
$
|
(13,336
|
)
|
|
$
|
(902
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Land, buildings, structures and improvements
|
$
|
60,419
|
|
|
$
|
57,929
|
|
|
$
|
51,249
|
|
Furniture, fixtures, machinery and equipment
|
152,328
|
|
|
145,483
|
|
|
118,228
|
|
|||
Subtotal
|
212,747
|
|
|
203,412
|
|
|
169,477
|
|
|||
Capitalized software
|
59,398
|
|
|
46,448
|
|
|
27,465
|
|
|||
Total
|
$
|
272,145
|
|
|
$
|
249,860
|
|
|
$
|
196,942
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total Amounts Committed
|
|
Less than 1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
More than 5 Years
|
||||||||||
Debt obligations
|
$
|
542,799
|
|
|
$
|
97,286
|
|
|
$
|
429,010
|
|
|
$
|
2,498
|
|
|
$
|
14,005
|
|
Interest on debt
|
28,367
|
|
|
9,992
|
|
|
13,574
|
|
|
4,771
|
|
|
30
|
|
|||||
Operating lease obligations
|
230,644
|
|
|
67,993
|
|
|
97,929
|
|
|
44,785
|
|
|
19,937
|
|
|||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Uncompleted additions to
property, buildings and equipment
|
65,536
|
|
|
65,536
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Commitments to purchase
inventory
|
402,935
|
|
|
402,935
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other purchase obligations
|
261,773
|
|
|
176,651
|
|
|
63,233
|
|
|
21,833
|
|
|
56
|
|
|||||
Other liabilities
|
303,324
|
|
|
185,272
|
|
|
23,862
|
|
|
24,554
|
|
|
69,636
|
|
|||||
Total
|
$
|
1,835,378
|
|
|
$
|
1,005,665
|
|
|
$
|
627,608
|
|
|
$
|
98,441
|
|
|
$
|
103,664
|
|
|
|
For the Years Ended December 31,
|
||||
|
|
2013
|
|
2012
|
|
2011
|
Risk-free interest rate
|
|
0.9%
|
|
1.1%
|
|
2.6%
|
Expected life
|
|
6 years
|
|
6 years
|
|
6 years
|
Expected volatility
|
|
25.5%
|
|
25.9%
|
|
24.6%
|
Expected dividend yield
|
|
1.5%
|
|
1.6%
|
|
1.8%
|
|
1 Percentage Point
|
||||||
|
Increase
|
|
(Decrease)
|
||||
Effect on total of service and interest cost
|
$
|
2,205
|
|
|
$
|
(1,777
|
)
|
Effect on postretirement benefit obligation
|
29,776
|
|
|
(24,196
|
)
|
(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
|
Michael S. Ali (52)
|
Senior Vice President and Chief Information Officer, a position assumed in July 2013. Prior to joining Grainger, Dr. Ali was Senior Vice-President, Application Services and PMO at U.S. Foods, a position assumed in 2012 after serving as CIO at Harman, a position assumed in 2010. Prior to this position, Dr. Ali held several management roles in Ford Motor Company from 2000 to 2010.
|
Laura D. Brown (50)
|
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.
|
Court D. Carruthers (41)
|
Senior Vice President and Group President, Americas, a position assumed in 2013 after serving as Senior Vice President and President, Grainger U.S., a position assumed in 2012, President, Grainger International, a position assumed in 2009, and Senior Vice President of Grainger, a position assumed in 2007.
|
Joseph C. High (59)
|
Senior Vice President and Chief People Officer, a position assumed 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 (56)
|
Senior Vice President and General Counsel, a position assumed in 2000.
|
Gregory S. Irving (55)
|
Vice President and Controller, a position assumed in 2008. Previously, Mr. Irving served as Vice President, Finance, for Acklands - Grainger Inc. since 2004.
|
Ronald L. Jadin (53)
|
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.
|
Donald G. Macpherson (46)
|
Senior Vice President and Group President, Global Supply Chain and International, a position assumed in 2013 after serving as Senior Vice President and President, Global Supply Chain and Corporate Strategy, a position assumed in 2012, and Senior Vice President, Global Supply Chain, a position assumed in 2008.
|
James T. Ryan (55)
|
Chairman of the Board, President and Chief Executive Officer of Grainger, positions assumed in 2009, 2006 and 2008, respectively.
|
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,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
$
|
9,437,758
|
|
|
$
|
8,950,045
|
|
|
$
|
8,078,185
|
|
Cost of merchandise sold
|
5,301,275
|
|
|
5,033,885
|
|
|
4,567,393
|
|
|||
Gross profit
|
4,136,483
|
|
|
3,916,160
|
|
|
3,510,792
|
|
|||
Warehousing, marketing and administrative expenses
|
2,839,629
|
|
|
2,785,035
|
|
|
2,458,363
|
|
|||
Operating earnings
|
1,296,854
|
|
|
1,131,125
|
|
|
1,052,429
|
|
|||
Other income and (expense):
|
|
|
|
|
|
|
|
||||
Interest income
|
3,234
|
|
|
2,660
|
|
|
2,068
|
|
|||
Interest expense
|
(13,225
|
)
|
|
(16,078
|
)
|
|
(9,091
|
)
|
|||
Equity in net income of unconsolidated entity
|
—
|
|
|
—
|
|
|
314
|
|
|||
Gain on sale of investment in unconsolidated entity
|
—
|
|
|
—
|
|
|
7,639
|
|
|||
Other non-operating income
|
2,732
|
|
|
1,866
|
|
|
709
|
|
|||
Other non-operating expense
|
(1,996
|
)
|
|
(1,784
|
)
|
|
(2,541
|
)
|
|||
Total other income and (expense)
|
(9,255
|
)
|
|
(13,336
|
)
|
|
(902
|
)
|
|||
Earnings before income taxes
|
1,287,599
|
|
|
1,117,789
|
|
|
1,051,527
|
|
|||
Income taxes
|
479,850
|
|
|
418,940
|
|
|
385,115
|
|
|||
Net earnings
|
807,749
|
|
|
698,849
|
|
|
666,412
|
|
|||
Less: Net earnings attributable to noncontrolling interest
|
10,713
|
|
|
8,968
|
|
|
7,989
|
|
|||
Net earnings attributable to W.W. Grainger, Inc.
|
$
|
797,036
|
|
|
$
|
689,881
|
|
|
$
|
658,423
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
11.31
|
|
|
$
|
9.71
|
|
|
$
|
9.26
|
|
Diluted
|
$
|
11.13
|
|
|
$
|
9.52
|
|
|
$
|
9.07
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
69,455,507
|
|
|
69,811,881
|
|
|
69,690,854
|
|
|||
Diluted
|
70,576,432
|
|
|
71,181,733
|
|
|
71,176,158
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net earnings
|
$
|
807,749
|
|
|
$
|
698,849
|
|
|
$
|
666,412
|
|
Other comprehensive earnings (losses):
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments, net of
tax benefit (expense) of $4,078, $(1,653) and $1,325, respectively
|
(78,253
|
)
|
|
7,344
|
|
|
(36,117
|
)
|
|||
Reclassification of cumulative currency translation
|
—
|
|
|
—
|
|
|
525
|
|
|||
Defined postretirement benefit plan, net of tax (expense) benefit of $(20,188), $(47,948) and $18,725, respectively
|
32,658
|
|
|
75,625
|
|
|
(30,038
|
)
|
|||
Other employment-related benefit plans and derivatives, net of tax (expense) benefit of $(3,080), $2,825 and $89, respectively
|
5,309
|
|
|
(9,519
|
)
|
|
(1,932
|
)
|
|||
Total other comprehensive earnings (losses)
|
(40,286
|
)
|
|
73,450
|
|
|
(67,562
|
)
|
|||
Comprehensive earnings, net of tax
|
767,463
|
|
|
772,299
|
|
|
598,850
|
|
|||
Less: Comprehensive earnings attributable to noncontrolling interest:
|
|
|
|
|
|
|
|
|
|||
Net earnings
|
10,713
|
|
|
8,968
|
|
|
7,989
|
|
|||
Foreign currency translation adjustments
|
(15,622
|
)
|
|
(8,866
|
)
|
|
4,127
|
|
|||
Comprehensive earnings attributable to W.W. Grainger, Inc.
|
$
|
772,372
|
|
|
$
|
772,197
|
|
|
$
|
586,734
|
|
|
As of December 31,
|
||||||
ASSETS
|
2013
|
|
2012
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
430,644
|
|
|
$
|
452,063
|
|
Accounts receivable (less allowances for doubtful
|
|
|
|
|
|
||
accounts of $20,096 and $19,449, respectively)
|
1,101,656
|
|
|
940,020
|
|
||
Inventories – net
|
1,305,520
|
|
|
1,301,935
|
|
||
Prepaid expenses and other assets
|
115,331
|
|
|
110,414
|
|
||
Deferred income taxes
|
75,819
|
|
|
55,967
|
|
||
Prepaid income taxes
|
15,315
|
|
|
40,241
|
|
||
Total current assets
|
3,044,285
|
|
|
2,900,640
|
|
||
PROPERTY, BUILDINGS AND EQUIPMENT
|
|
|
|
||||
Land
|
277,256
|
|
|
265,224
|
|
||
Buildings, structures and improvements
|
1,259,237
|
|
|
1,224,044
|
|
||
Furniture, fixtures, machinery and equipment
|
1,404,597
|
|
|
1,271,166
|
|
||
|
2,941,090
|
|
|
2,760,434
|
|
||
Less: Accumulated depreciation and amortization
|
1,732,528
|
|
|
1,615,861
|
|
||
Property, buildings and equipment – net
|
1,208,562
|
|
|
1,144,573
|
|
||
DEFERRED INCOME TAXES
|
16,209
|
|
|
51,536
|
|
||
GOODWILL
|
525,467
|
|
|
543,670
|
|
||
OTHER ASSETS AND INTANGIBLES – NET
|
471,805
|
|
|
374,179
|
|
||
TOTAL ASSETS
|
$
|
5,266,328
|
|
|
$
|
5,014,598
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
As of December 31,
|
||||||
CURRENT LIABILITIES
|
2013
|
|
2012
|
||||
Short-term debt
|
$
|
66,857
|
|
|
$
|
79,071
|
|
Current maturities of long-term debt
|
30,429
|
|
|
18,525
|
|
||
Trade accounts payable
|
510,634
|
|
|
428,782
|
|
||
Accrued compensation and benefits
|
185,905
|
|
|
165,450
|
|
||
Accrued contributions to employees’ profit sharing plans
|
176,800
|
|
|
170,434
|
|
||
Accrued expenses
|
218,835
|
|
|
204,800
|
|
||
Income taxes payable
|
6,330
|
|
|
12,941
|
|
||
Total current liabilities
|
1,195,790
|
|
|
1,080,003
|
|
||
LONG-TERM DEBT (less current maturities)
|
445,513
|
|
|
467,048
|
|
||
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES
|
113,585
|
|
|
119,280
|
|
||
EMPLOYMENT-RELATED AND OTHER NONCURRENT LIABILITIES
|
184,604
|
|
|
230,901
|
|
||
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
|
893,055
|
|
|
812,573
|
|
||
Retained earnings
|
5,822,612
|
|
|
5,278,577
|
|
||
Accumulated other comprehensive earnings
|
28,914
|
|
|
53,578
|
|
||
Treasury stock, at cost – 40,805,281 and 40,180,724 shares, respectively
|
(3,548,973
|
)
|
|
(3,175,646
|
)
|
||
Total W.W. Grainger, Inc. shareholders’ equity
|
3,250,438
|
|
|
3,023,912
|
|
||
Noncontrolling interest
|
76,398
|
|
|
93,454
|
|
||
Total shareholders' equity
|
3,326,836
|
|
|
3,117,366
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
5,266,328
|
|
|
$
|
5,014,598
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
807,749
|
|
|
$
|
698,849
|
|
|
$
|
666,412
|
|
Provision for losses on accounts receivable
|
8,855
|
|
|
9,504
|
|
|
4,761
|
|
|||
Deferred income taxes and tax uncertainties
|
(9,319
|
)
|
|
12,343
|
|
|
1,666
|
|
|||
Depreciation and amortization
|
180,613
|
|
|
159,049
|
|
|
149,200
|
|
|||
Impairment of goodwill and other intangible assets
|
26,284
|
|
|
4,945
|
|
|
—
|
|
|||
(Gains) losses from sales of assets
|
(22,155
|
)
|
|
2,609
|
|
|
8,069
|
|
|||
Stock-based compensation
|
55,590
|
|
|
55,500
|
|
|
54,020
|
|
|||
Gain on sale of investment in unconsolidated entity
|
—
|
|
|
—
|
|
|
(7,639
|
)
|
|||
Change in operating assets and liabilities – net of business acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(126,465
|
)
|
|
(45,953
|
)
|
|
(85,083
|
)
|
|||
Inventories
|
(23,636
|
)
|
|
(14,872
|
)
|
|
(219,680
|
)
|
|||
Prepaid expenses and other assets
|
16,873
|
|
|
8,346
|
|
|
(24,228
|
)
|
|||
Trade accounts payable
|
71,118
|
|
|
(54,314
|
)
|
|
86,395
|
|
|||
Other current liabilities
|
(707
|
)
|
|
(58,673
|
)
|
|
50,718
|
|
|||
Current income taxes payable
|
(4,813
|
)
|
|
(9,349
|
)
|
|
16,827
|
|
|||
Accrued employment-related benefits cost
|
9,872
|
|
|
45,795
|
|
|
45,680
|
|
|||
Other – net
|
(3,361
|
)
|
|
2,416
|
|
|
(1,010
|
)
|
|||
Net cash provided by operating activities
|
986,498
|
|
|
816,195
|
|
|
746,108
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Additions to property, buildings and equipment
|
(272,145
|
)
|
|
(249,860
|
)
|
|
(196,942
|
)
|
|||
Proceeds from sales of property, buildings and equipment
|
26,701
|
|
|
8,530
|
|
|
7,278
|
|
|||
Cash paid for business acquisitions, net of cash acquired
|
(153,915
|
)
|
|
(64,808
|
)
|
|
(359,296
|
)
|
|||
Other – net
|
(68
|
)
|
|
482
|
|
|
13,892
|
|
|||
Net cash used in investing activities
|
(399,427
|
)
|
|
(305,656
|
)
|
|
(535,068
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Borrowings under lines of credit
|
144,805
|
|
|
161,160
|
|
|
218,885
|
|
|||
Payments against lines of credit
|
(154,450
|
)
|
|
(205,006
|
)
|
|
(194,325
|
)
|
|||
Proceeds from issuance of long-term debt
|
—
|
|
|
300,000
|
|
|
172,464
|
|
|||
Payments of long-term debt and commercial paper
|
(16,681
|
)
|
|
(219,950
|
)
|
|
(179,296
|
)
|
|||
Proceeds from stock options exercised
|
69,412
|
|
|
72,084
|
|
|
84,337
|
|
|||
Excess tax benefits from stock-based compensation
|
59,984
|
|
|
57,885
|
|
|
52,098
|
|
|||
Purchase of treasury stock
|
(438,473
|
)
|
|
(340,532
|
)
|
|
(151,082
|
)
|
|||
Cash dividends paid
|
(255,466
|
)
|
|
(220,077
|
)
|
|
(180,527
|
)
|
|||
Net cash used in financing activities
|
(590,869
|
)
|
|
(394,436
|
)
|
|
(177,446
|
)
|
|||
Exchange rate effect on cash and cash equivalents
|
(17,621
|
)
|
|
469
|
|
|
(11,557
|
)
|
|||
NET CHANGE IN CASH AND CASH EQUIVALENTS:
|
(21,419
|
)
|
|
116,572
|
|
|
22,037
|
|
|||
Cash and cash equivalents at beginning of year
|
452,063
|
|
|
335,491
|
|
|
313,454
|
|
|||
Cash and cash equivalents at end of year
|
$
|
430,644
|
|
|
$
|
452,063
|
|
|
$
|
335,491
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash payments for interest (net of amounts capitalized)
|
$
|
12,954
|
|
|
$
|
16,028
|
|
|
$
|
8,996
|
|
Cash payments for income taxes
|
$
|
414,363
|
|
|
$
|
383,698
|
|
|
$
|
312,616
|
|
|
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, 2011
|
$
|
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
|
|
Exercise of stock options
|
—
|
|
4,035
|
|
—
|
|
—
|
|
64,140
|
|
|
583
|
|
Tax benefits on stock-based compensation awards
|
—
|
|
62,385
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Stock option expense
|
—
|
|
17,373
|
|
—
|
|
—
|
|
—
|
|
|
72
|
|
||||||
Amortization of other stock-based compensation awards
|
—
|
|
34,049
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Settlement and vesting of other stock-based compensation awards
|
—
|
|
(37,851
|
)
|
—
|
|
—
|
|
(3,709
|
)
|
|
—
|
|
||||||
Purchase of treasury stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(433,758
|
)
|
|
(183
|
)
|
||||||
Purchase of noncontrolling interest - Colombia
|
—
|
|
(51
|
)
|
—
|
|
—
|
|
—
|
|
|
(9,612
|
)
|
||||||
Net earnings
|
—
|
|
—
|
|
797,036
|
|
—
|
|
—
|
|
|
10,713
|
|
||||||
Other comprehensive earnings
|
—
|
|
—
|
|
—
|
|
(24,664
|
)
|
—
|
|
|
(15,622
|
)
|
||||||
Cash dividends paid ($3.59 per share)
|
—
|
|
542
|
|
(253,001
|
)
|
—
|
|
—
|
|
|
(3,007
|
)
|
||||||
Balance at December 31, 2013
|
$
|
54,830
|
|
$
|
893,055
|
|
$
|
5,822,612
|
|
$
|
28,914
|
|
$
|
(3,548,973
|
)
|
|
$
|
76,398
|
|
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, 2012
|
|
$
|
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
|
|
||||
Acquisitions
|
|
35,820
|
|
|
—
|
|
|
—
|
|
|
35,820
|
|
||||
Purchase price adjustments
|
|
(12,900
|
)
|
|
—
|
|
|
2,067
|
|
|
(10,833
|
)
|
||||
Impairment
|
|
(12,861
|
)
|
|
—
|
|
|
(11,260
|
)
|
|
(24,121
|
)
|
||||
Translation
|
|
—
|
|
|
(10,187
|
)
|
|
(8,882
|
)
|
|
(19,069
|
)
|
||||
Balance at December 31, 2013
|
|
$
|
180,498
|
|
|
$
|
144,588
|
|
|
$
|
200,381
|
|
|
$
|
525,467
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Amortized customer lists and relationships
|
$
|
350,760
|
|
|
$
|
134,889
|
|
|
$
|
215,871
|
|
|
$
|
279,068
|
|
|
$
|
124,137
|
|
|
$
|
154,931
|
|
Amortized trademarks, trade names and other
|
38,670
|
|
|
23,919
|
|
|
14,751
|
|
|
34,907
|
|
|
21,885
|
|
|
13,022
|
|
||||||
Non-amortized trade names
|
72,790
|
|
|
—
|
|
|
72,790
|
|
|
74,782
|
|
|
—
|
|
|
74,782
|
|
||||||
Total intangible assets
|
$
|
462,220
|
|
|
$
|
158,808
|
|
|
$
|
303,412
|
|
|
$
|
388,757
|
|
|
$
|
146,022
|
|
|
$
|
242,735
|
|
Customer lists and relationships
|
6 to 22 years
|
Amortized trademarks, trade names and other
|
3 to 17 years
|
Year
|
|
Expense
|
|
||||
2014
|
|
$
|
20,257
|
|
|||
2015
|
|
20,057
|
|
||||
2016
|
|
18,587
|
|
||||
2017
|
|
17,630
|
|
||||
2018
|
|
16,580
|
|
||||
Thereafter
|
|
137,511
|
|
|
For the Years Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Balance at beginning of period
|
$
|
19,449
|
|
|
$
|
18,801
|
|
Provision for uncollectible accounts
|
8,855
|
|
|
9,504
|
|
||
Write-off of uncollectible accounts, net of recoveries
|
(7,942
|
)
|
|
(9,100
|
)
|
||
Business acquisitions, foreign currency and other
|
(266
|
)
|
|
244
|
|
||
Balance at end of period
|
$
|
20,096
|
|
|
$
|
19,449
|
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Bank term loan
|
$
|
292,500
|
|
|
$
|
300,000
|
|
Euro-denominated bank term loan
|
158,067
|
|
|
158,328
|
|
||
Other
|
25,375
|
|
|
27,245
|
|
||
Less current maturities
|
(30,429
|
)
|
|
(18,525
|
)
|
||
|
$
|
445,513
|
|
|
$
|
467,048
|
|
Year
|
|
Payment Amount
|
|
|
2014
|
|
$
|
30,429
|
|
2015
|
|
35,124
|
|
|
2016
|
|
393,886
|
|
|
2017
|
|
1,392
|
|
|
2018
|
|
1,106
|
|
|
Thereafter
|
|
14,005
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Service cost
|
$
|
10,589
|
|
|
$
|
20,058
|
|
|
$
|
15,762
|
|
Interest cost
|
8,938
|
|
|
12,810
|
|
|
13,352
|
|
|||
Expected return on assets
|
(7,076
|
)
|
|
(6,210
|
)
|
|
(5,790
|
)
|
|||
Amortization of prior service credit
|
(7,412
|
)
|
|
(495
|
)
|
|
(495
|
)
|
|||
Amortization of transition asset
|
(143
|
)
|
|
(143
|
)
|
|
(143
|
)
|
|||
Amortization of unrecognized losses
|
3,724
|
|
|
4,827
|
|
|
3,269
|
|
|||
Net periodic benefits costs
|
$
|
8,620
|
|
|
$
|
30,847
|
|
|
$
|
25,955
|
|
|
2013
|
|
2012
|
||||
Benefit obligation at beginning of year
|
$
|
246,087
|
|
|
$
|
328,912
|
|
Service cost
|
10,589
|
|
|
20,058
|
|
||
Interest cost
|
8,938
|
|
|
12,810
|
|
||
Plan participants' contributions
|
2,289
|
|
|
2,150
|
|
||
Plan amendment
|
—
|
|
|
(84,004
|
)
|
||
Actuarial (gains)
|
(38,476
|
)
|
|
(28,234
|
)
|
||
Benefits paid
|
(6,021
|
)
|
|
(6,047
|
)
|
||
Medicare Part D Subsidy received
|
82
|
|
|
442
|
|
||
Benefit obligation at end of year
|
223,488
|
|
|
246,087
|
|
||
|
|
|
|
|
|
||
Plan assets available for benefits at beginning of year
|
117,939
|
|
|
103,519
|
|
||
Actual returns on plan assets
|
25,278
|
|
|
13,355
|
|
||
Employer's contributions
|
5,029
|
|
|
4,962
|
|
||
Plan participants' contributions
|
2,289
|
|
|
2,150
|
|
||
Benefits paid
|
(6,021
|
)
|
|
(6,047
|
)
|
||
Plan assets available for benefits at end of year
|
144,514
|
|
|
117,939
|
|
||
|
|
|
|
|
|
||
Noncurrent postretirement benefit obligation
|
$
|
78,974
|
|
|
$
|
128,148
|
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Prior service credit
|
$
|
74,556
|
|
|
$
|
81,968
|
|
Transition asset
|
143
|
|
|
286
|
|
||
Unrecognized losses
|
(18,006
|
)
|
|
(78,407
|
)
|
||
Deferred tax (liability)
|
(21,806
|
)
|
|
(1,618
|
)
|
||
Net gains
|
$
|
34,887
|
|
|
$
|
2,229
|
|
|
2014
|
||
Amortization of prior service credit
|
$
|
(7,253
|
)
|
Amortization of transition asset
|
(143
|
)
|
|
Amortization of unrecognized losses
|
1,154
|
|
|
Estimated amount to be amortized from AOCE into net periodic postretirement benefit costs
|
$
|
(6,242
|
)
|
|
For the Years Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Discount rate
|
4.00
|
%
|
|
4.50
|
%
|
|
5.60
|
%
|
Expected long-term rate of return on plan assets, net of tax
|
6.00
|
%
|
|
6.00
|
%
|
|
6.00
|
%
|
Initial healthcare cost trend rate
|
8.00
|
%
|
|
8.50
|
%
|
|
9.00
|
%
|
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
|
$
|
2,205
|
|
|
$
|
(1,777
|
)
|
Effect on postretirement benefit obligation
|
29,776
|
|
|
(24,196
|
)
|
|
2013
|
|
2012
|
||||
Registered investment companies
|
|
|
|
||||
Fidelity Spartan U.S. Equity Index Fund
|
$
|
67,160
|
|
|
$
|
51,169
|
|
Vanguard 500 Index Fund
|
67,931
|
|
|
51,336
|
|
||
Vanguard Total International Stock
|
25,034
|
|
|
21,739
|
|
||
Total Assets
|
$
|
160,125
|
|
|
$
|
124,244
|
|
Year
|
|
Estimated Gross Benefit Payments
|
||
2014
|
|
$
|
5,299
|
|
2015
|
|
6,075
|
|
|
2016
|
|
6,952
|
|
|
2017
|
|
8,001
|
|
|
2018
|
|
9,159
|
|
|
2019-2023
|
|
$
|
65,751
|
|
Year
|
|
Future Minimum Lease Payments
|
||
2014
|
|
$
|
67,993
|
|
2015
|
|
56,697
|
|
|
2016
|
|
41,232
|
|
|
2017
|
|
27,657
|
|
|
2018
|
|
17,128
|
|
|
Thereafter
|
|
19,937
|
|
|
Total minimum payments required
|
|
230,644
|
|
|
Less amounts representing sublease income
|
|
(4,353
|
)
|
|
|
|
$
|
226,291
|
|
|
Shares Subject to Option
|
|
Weighted Average Price Per Share
|
|
Options Exercisable
|
||||
Outstanding at January 1, 2011
|
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
|
|
Granted
|
348,054
|
|
|
$
|
245.95
|
|
|
|
|
Exercised
|
(805,235
|
)
|
|
$
|
85.75
|
|
|
|
|
Canceled or expired
|
(51,080
|
)
|
|
$
|
150.15
|
|
|
|
|
Outstanding at December 31, 2013
|
2,850,455
|
|
|
$
|
132.67
|
|
|
1,652,417
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Fair value of options exercised
|
|
$
|
16,407
|
|
|
$
|
18,120
|
|
|
$
|
20,933
|
|
Total intrinsic value of options exercised
|
|
124,752
|
|
|
126,138
|
|
|
124,441
|
|
|||
Fair value of options vested
|
|
20,219
|
|
|
15,551
|
|
|
13,549
|
|
|||
Settlements of options exercised
|
|
69,049
|
|
|
72,066
|
|
|
83,504
|
|
|
|
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)
|
||||||||||
$48.12 - $78.86
|
|
458,381
|
|
|
2.19 years
|
|
$
|
67.44
|
|
|
$
|
86,183
|
|
|
458,381
|
|
|
2.19 years
|
|
$
|
67.44
|
|
|
$
|
86,183
|
|
$81.49 - $85.82
|
|
637,830
|
|
|
4.66 years
|
|
$
|
83.21
|
|
|
109,838
|
|
|
637,830
|
|
|
4.66 years
|
|
$
|
83.21
|
|
|
109,838
|
|
||
$91.61 - $110.54
|
|
526,054
|
|
|
6.29 years
|
|
$
|
107.24
|
|
|
77,950
|
|
|
526,054
|
|
|
6.29 years
|
|
$
|
107.24
|
|
|
77,950
|
|
||
$124.93 - $204.24
|
|
884,682
|
|
|
7.76 years
|
|
$
|
173.26
|
|
|
72,685
|
|
|
26,730
|
|
|
7.52 years
|
|
$
|
159.78
|
|
|
2,557
|
|
||
$245.86 - $262.14
|
|
343,508
|
|
|
9.31 years
|
|
$
|
245.95
|
|
|
3,254
|
|
|
3,422
|
|
|
9.16 years
|
|
$
|
245.86
|
|
|
33
|
|
||
|
|
2,850,455
|
|
|
6.09 years
|
|
$
|
132.67
|
|
|
$
|
349,910
|
|
|
1,652,417
|
|
|
4.55 years
|
|
$
|
88.06
|
|
|
$
|
276,561
|
|
|
|
For the years ended December 31,
|
||||
|
|
2013
|
|
2012
|
|
2011
|
Risk-free interest rate
|
|
0.9%
|
|
1.1%
|
|
2.6%
|
Expected life
|
|
6 years
|
|
6 years
|
|
6 years
|
Expected volatility
|
|
25.5%
|
|
25.9%
|
|
24.6%
|
Expected dividend yield
|
|
1.5%
|
|
1.6%
|
|
1.8%
|
|
2013
|
|
2012
|
|
2011
|
|||||||||||||||
|
Shares
|
|
Weighted Average Price Per Share
|
|
Shares
|
|
Weighted Average Price Per Share
|
|
Shares
|
|
Weighted Average Price Per Share
|
|||||||||
Beginning nonvested
shares outstanding
|
117,979
|
|
|
$
|
141.86
|
|
|
192,740
|
|
|
$
|
109.16
|
|
|
177,120
|
|
|
$
|
84.74
|
|
Issued
|
31,553
|
|
|
$
|
191.36
|
|
|
28,639
|
|
|
$
|
177.75
|
|
|
96,236
|
|
|
$
|
127.43
|
|
Canceled
|
(7,659
|
)
|
|
$
|
148.25
|
|
|
(1,666
|
)
|
|
$
|
114.41
|
|
|
(13,056
|
)
|
|
$
|
87.24
|
|
Vested
|
(84,340
|
)
|
|
$
|
130.35
|
|
|
(101,734
|
)
|
|
$
|
90.47
|
|
|
(67,560
|
)
|
|
$
|
72.86
|
|
Ending nonvested shares
outstanding
|
57,533
|
|
|
$
|
185.02
|
|
|
117,979
|
|
|
$
|
141.86
|
|
|
192,740
|
|
|
$
|
109.16
|
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
|||||||||
Beginning nonvested units
|
978,888
|
|
$
|
118.60
|
|
|
1,119,488
|
|
$
|
100.76
|
|
|
1,205,787
|
|
$
|
88.65
|
|
Issued
|
139,529
|
|
$
|
248.28
|
|
|
152,995
|
|
$
|
204.26
|
|
|
242,212
|
|
$
|
152.55
|
|
Canceled
|
(54,533
|
)
|
$
|
141.48
|
|
|
(37,972
|
)
|
$
|
123.01
|
|
|
(92,202
|
)
|
$
|
89.57
|
|
Vested
|
(324,167
|
)
|
$
|
89.62
|
|
|
(255,623
|
)
|
$
|
88.36
|
|
|
(236,309
|
)
|
$
|
86.13
|
|
Ending nonvested units
|
739,717
|
|
$
|
154.09
|
|
|
978,888
|
|
$
|
118.60
|
|
|
1,119,488
|
|
$
|
100.76
|
|
Fair value of shares vested (in millions)
|
$29
|
|
|
$23
|
|
|
$20
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
|
Units
|
Dollars
|
|
Units
|
Dollars
|
|
Units
|
Dollars
|
|||||||||
Beginning balance
|
151,775
|
|
$
|
30,952
|
|
|
142,797
|
|
$
|
26,730
|
|
|
130,377
|
|
$
|
18,006
|
|
Dividends
|
2,259
|
|
559
|
|
|
2,273
|
|
454
|
|
|
2,244
|
|
350
|
|
|||
Deferred fees
|
7,337
|
|
2,059
|
|
|
9,170
|
|
1,871
|
|
|
12,601
|
|
1,878
|
|
|||
Retirement distribution
|
(2,503
|
)
|
(507
|
)
|
|
(2,465
|
)
|
(461
|
)
|
|
(2,425
|
)
|
(335
|
)
|
|||
Unit appreciation
|
—
|
|
—
|
|
|
—
|
|
2,358
|
|
|
—
|
|
6,831
|
|
|||
Ending balance
|
158,868
|
|
$
|
33,063
|
|
|
151,775
|
|
$
|
30,952
|
|
|
142,797
|
|
$
|
26,730
|
|
|
2013
|
|
2012
|
||||||
|
Outstanding Common Stock
|
Treasury Stock
|
|
Outstanding Common Stock
|
Treasury Stock
|
||||
Balance at beginning of period
|
69,478,495
|
|
40,180,724
|
|
|
69,962,852
|
|
39,696,367
|
|
Exercise of stock options, net of 5,134, and 5,310 shares swapped in stock-for-stock exchange, respectively
|
800,101
|
|
(800,101
|
)
|
|
966,705
|
|
(966,705
|
)
|
Settlement of restricted stock units, net of 135,341 and 121,353 shares retained, respectively
|
232,483
|
|
(232,483
|
)
|
|
225,997
|
|
(225,997
|
)
|
Settlement of performance share units, net of 39,874 and 23,590 shares retained, respectively
|
61,860
|
|
(61,860
|
)
|
|
44,051
|
|
(44,051
|
)
|
Purchase of treasury shares
|
(1,719,001
|
)
|
1,719,001
|
|
|
(1,721,110
|
)
|
1,721,110
|
|
Balance at end of period
|
68,853,938
|
|
40,805,281
|
|
|
69,478,495
|
|
40,180,724
|
|
|
|
As of December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Foreign currency translation adjustments
|
|
$
|
2,900
|
|
|
$
|
85,231
|
|
Derivative instruments
|
|
(1,944
|
)
|
|
(11,965
|
)
|
||
Postretirement benefit plan
|
|
56,693
|
|
|
3,847
|
|
||
Other employment-related benefit plans
|
|
(11,467
|
)
|
|
(9,835
|
)
|
||
Deferred tax (liability) asset
|
|
(30,374
|
)
|
|
(11,184
|
)
|
||
Total accumulated other comprehensive earnings
|
|
15,808
|
|
|
56,094
|
|
||
Less: Foreign currency translation adjustments attributable to noncontrolling interest
|
|
(13,106
|
)
|
|
2,516
|
|
||
Total accumulated other comprehensive earnings attributable to W.W. Grainger, Inc.
|
|
$
|
28,914
|
|
|
$
|
53,578
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
398,593
|
|
|
$
|
324,848
|
|
|
$
|
275,489
|
|
State
|
42,526
|
|
|
40,508
|
|
|
49,098
|
|
|||
Foreign
|
52,277
|
|
|
53,564
|
|
|
45,405
|
|
|||
Total current
|
493,396
|
|
|
418,920
|
|
|
369,992
|
|
|||
Deferred tax provision (benefit)
|
(13,546
|
)
|
|
20
|
|
|
15,123
|
|
|||
Total provision
|
$
|
479,850
|
|
|
$
|
418,940
|
|
|
$
|
385,115
|
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Inventory
|
$
|
35,381
|
|
|
$
|
30,991
|
|
Accrued expenses
|
38,368
|
|
|
26,706
|
|
||
Accrued employment-related benefits
|
123,555
|
|
|
139,931
|
|
||
Foreign operating loss carryforwards
|
70,204
|
|
|
67,148
|
|
||
Other
|
30,862
|
|
|
31,008
|
|
||
Deferred tax assets
|
298,370
|
|
|
295,784
|
|
||
Less valuation allowance
|
(62,825
|
)
|
|
(54,434
|
)
|
||
Deferred tax assets, net of valuation allowance
|
$
|
235,545
|
|
|
$
|
241,350
|
|
Deferred tax liabilities:
|
|
|
|
||||
Property, buildings and equipment
|
(38,210
|
)
|
|
(37,876
|
)
|
||
Intangibles
|
(119,923
|
)
|
|
(114,955
|
)
|
||
Software
|
(17,492
|
)
|
|
(16,653
|
)
|
||
Prepaids
|
(18,945
|
)
|
|
(20,509
|
)
|
||
Other
|
(17,378
|
)
|
|
(19,291
|
)
|
||
Deferred tax liabilities
|
(211,948
|
)
|
|
(209,284
|
)
|
||
Net deferred tax asset
|
$
|
23,597
|
|
|
$
|
32,066
|
|
The net deferred tax asset is classified as follows:
|
|
|
|
||||
Current assets
|
$
|
75,819
|
|
|
$
|
55,967
|
|
Noncurrent assets
|
16,209
|
|
|
51,536
|
|
||
Noncurrent liabilities (foreign)
|
(68,431
|
)
|
|
(75,437
|
)
|
||
Net deferred tax asset
|
$
|
23,597
|
|
|
$
|
32,066
|
|
|
For the Years Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Beginning balance
|
$
|
54,434
|
|
|
$
|
53,739
|
|
Increase related to foreign net operating loss carryforwards
|
8,391
|
|
|
695
|
|
||
Ending balance
|
$
|
62,825
|
|
|
$
|
54,434
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Federal income tax at the 35% statutory rate
|
$
|
450,660
|
|
|
$
|
391,226
|
|
|
$
|
368,034
|
|
State income taxes, net of federal income tax benefit
|
27,430
|
|
|
26,099
|
|
|
32,226
|
|
|||
Other - net
|
1,760
|
|
|
1,615
|
|
|
(15,145
|
)
|
|||
Income tax expense
|
$
|
479,850
|
|
|
$
|
418,940
|
|
|
$
|
385,115
|
|
Effective tax rate
|
37.3
|
%
|
|
37.5
|
%
|
|
36.6
|
%
|
|
2013
|
|
2012
|
||||
Balance at beginning of year
|
$
|
40,937
|
|
|
$
|
22,760
|
|
Additions to tax positions related to the current year
|
8,396
|
|
|
11,369
|
|
||
Additions for tax positions of prior years
|
2,308
|
|
|
8,977
|
|
||
Reductions for tax positions of prior years
|
(7,242
|
)
|
|
(1,447
|
)
|
||
Reductions due to statute lapse
|
(18
|
)
|
|
(737
|
)
|
||
Settlements, audit payments, refunds - net
|
(4,064
|
)
|
|
15
|
|
||
Balance at end of year
|
$
|
40,317
|
|
|
$
|
40,937
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
||||||
Net earnings attributable to W.W. Grainger, Inc. as reported
|
$
|
797,036
|
|
|
$
|
689,881
|
|
|
$
|
658,423
|
|
Distributed earnings available to participating securities
|
(3,304
|
)
|
|
(3,641
|
)
|
|
(3,216
|
)
|
|||
Undistributed earnings available to participating securities
|
(8,348
|
)
|
|
(8,704
|
)
|
|
(9,635
|
)
|
|||
Numerator for basic earnings per share - Undistributed and distributed earnings available to common shareholders
|
785,384
|
|
|
677,536
|
|
|
645,572
|
|
|||
Undistributed earnings allocated to participating securities
|
8,348
|
|
|
8,704
|
|
|
9,635
|
|
|||
Undistributed earnings reallocated to participating securities
|
(8,218
|
)
|
|
(8,540
|
)
|
|
(9,438
|
)
|
|||
Numerator for diluted earnings per share - Undistributed and distributed earnings available to common shareholders
|
$
|
785,514
|
|
|
$
|
677,700
|
|
|
$
|
645,769
|
|
|
|
|
|
|
|
||||||
Denominator for basic earnings per share – weighted average shares
|
69,455,507
|
|
|
69,811,881
|
|
|
69,690,854
|
|
|||
Effect of dilutive securities
|
1,120,925
|
|
|
1,369,852
|
|
|
1,485,304
|
|
|||
Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities
|
70,576,432
|
|
|
71,181,733
|
|
|
71,176,158
|
|
|||
Earnings per share two-class method
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
11.31
|
|
|
$
|
9.71
|
|
|
$
|
9.26
|
|
Diluted
|
$
|
11.13
|
|
|
$
|
9.52
|
|
|
$
|
9.07
|
|
|
2013
|
||||||||||||||
|
United States
|
|
Canada
|
|
Other Businesses
|
|
Total
|
||||||||
Total net sales
|
$
|
7,413,712
|
|
|
$
|
1,114,285
|
|
|
$
|
1,040,473
|
|
|
$
|
9,568,470
|
|
Intersegment net sales
|
(128,660
|
)
|
|
(300
|
)
|
|
(1,752
|
)
|
|
(130,712
|
)
|
||||
Net sales to external customers
|
7,285,052
|
|
|
1,113,985
|
|
|
1,038,721
|
|
|
9,437,758
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Segment operating earnings
|
1,304,175
|
|
|
128,768
|
|
|
7,599
|
|
|
1,440,542
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment assets
|
2,045,564
|
|
|
392,147
|
|
|
359,007
|
|
|
2,796,718
|
|
||||
Depreciation and amortization
|
116,392
|
|
|
14,309
|
|
|
19,754
|
|
|
150,455
|
|
||||
Additions to long-lived assets
|
$
|
177,046
|
|
|
$
|
63,821
|
|
|
$
|
23,951
|
|
|
$
|
264,818
|
|
|
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
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Operating earnings:
|
|
|
|
|
|
||||||
Total operating earnings for reportable segments
|
$
|
1,440,542
|
|
|
$
|
1,280,423
|
|
|
$
|
1,204,890
|
|
Unallocated expenses
|
(143,688
|
)
|
|
(149,298
|
)
|
|
(152,461
|
)
|
|||
Total consolidated operating earnings
|
$
|
1,296,854
|
|
|
$
|
1,131,125
|
|
|
$
|
1,052,429
|
|
Assets:
|
|
|
|
|
|
|
|
|
|||
Assets for reportable segments
|
$
|
2,796,718
|
|
|
$
|
2,619,922
|
|
|
$
|
2,513,499
|
|
Other current and noncurrent assets
|
2,118,298
|
|
|
1,967,480
|
|
|
1,749,029
|
|
|||
Unallocated assets
|
351,312
|
|
|
427,196
|
|
|
453,534
|
|
|||
Total consolidated assets
|
$
|
5,266,328
|
|
|
$
|
5,014,598
|
|
|
$
|
4,716,062
|
|
|
2013
|
||||||||||
|
Segment
Totals
|
|
Unallocated
|
|
Consolidated Total
|
||||||
Other significant items:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
$
|
150,455
|
|
|
$
|
14,447
|
|
|
$
|
164,902
|
|
Additions to long-lived assets
|
$
|
264,818
|
|
|
$
|
12,782
|
|
|
$
|
277,600
|
|
|
|
|
|
|
|
||||||
|
|
|
Revenues
|
|
Long-lived Assets
|
||||||
Geographic information:
|
|
|
|
|
|
||||||
United States
|
|
|
$
|
7,290,746
|
|
|
$
|
1,004,806
|
|
||
Canada
|
|
|
1,126,559
|
|
|
176,491
|
|
||||
Other foreign countries
|
|
|
1,020,453
|
|
|
134,535
|
|
||||
|
|
|
$
|
9,437,758
|
|
|
$
|
1,315,832
|
|
|
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
|
|
|
|
2013 Quarter Ended
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
Net sales
|
|
$
|
2,280,435
|
|
|
$
|
2,381,561
|
|
|
$
|
2,398,530
|
|
|
$
|
2,377,232
|
|
|
$
|
9,437,758
|
|
Cost of merchandise sold
|
|
1,248,699
|
|
|
1,334,577
|
|
|
1,347,164
|
|
|
1,370,835
|
|
|
5,301,275
|
|
|||||
Gross profit
|
|
1,031,736
|
|
|
1,046,984
|
|
|
1,051,366
|
|
|
1,006,397
|
|
|
4,136,483
|
|
|||||
Warehousing, marketing and
administrative expenses
|
|
688,431
|
|
|
696,912
|
|
|
704,651
|
|
|
749,635
|
|
|
2,839,629
|
|
|||||
Operating earnings
|
|
343,305
|
|
|
350,072
|
|
|
346,715
|
|
|
256,762
|
|
|
1,296,854
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc.
|
|
211,838
|
|
|
217,660
|
|
|
210,789
|
|
|
156,749
|
|
|
797,036
|
|
|||||
Earnings per share - basic
|
|
2.99
|
|
|
3.08
|
|
|
2.99
|
|
|
2.24
|
|
|
11.31
|
|
|||||
Earnings per share - diluted
|
|
$
|
2.94
|
|
|
$
|
3.03
|
|
|
$
|
2.95
|
|
|
$
|
2.20
|
|
|
$
|
11.13
|
|
|
|
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
|
|
(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/ V. Ann Hailey
|
|
/s/ E. Scott Santi
|
V. Ann Hailey
|
|
E. Scott Santi
|
Director
|
|
Director
|
|
|
|
/s/ William K. Hall
|
|
/s/ James D. Slavik
|
William K. Hall
|
|
James D. Slavik
|
Director
|
|
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; 2015 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 2015 fiscal year. Such number will be calculated in accordance with the following table:
|
If, the Company’s 2015 sales are at:
|
Then the number of
Performance Shares will be:
|
Less than $9.5 Billion
|
Zero (0)
|
$9.5 Billion
|
Fifty percent (50%) of the Target Number
|
$11.3 Billion
|
One hundred percent (100%) of the
Target Number
|
$11.9 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 2013 fiscal year, i.e., the Company’s 2013, 2014 and 2015 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.
|
1.
|
Resignation as Officer; Separation Date.
The Officer hereby acknowledges that he has voluntarily resigned effective August 31, 2013 (the “Resignation Date”) as an Officer of Grainger and of all corporations that are direct or indirect subsidiaries of or otherwise affiliated with Grainger (“Affiliates”), and as trustee, member or fiduciary of all trusts, committees or similar bodies of or otherwise affiliated with Grainger and the Affiliates. In an effort to provide for an orderly transition, the Officer has agreed to continue providing ongoing services at his current rate of pay to Grainger for purposes associated with role and activity transition during the period of September 1, 2013 through December 31, 2013 (the “Separation Date”).
|
2.
|
Separation Payments.
During the formal Compensation Continuation period beginning January 1, 2014 and extending through December 31, 2015, the Officer shall be paid on a pro-rata basis in an amount representing the equivalent of eighteen (18) months of pay at the Officer’s current base pay rate. Each payment shall be paid in an equal bi-weekly installment amount less required deductions through December 31, 2015 (the “Termination Date”). No Separation Payments shall be made to the Officer until at least the eight (8
th
) day following the day on which the Officer signs this Agreement, and provided that the Agreement is not revoked by the Officer pursuant to Section 22 prior to that date.
|
3.
|
Benefits.
|
a.
|
Health, Dental, Life and Vision.
To the extent that the Officer currently participates, Grainger will continue to provide, through deductions from the Officer’s Separation Payments at the same rate paid by employees, group health, dental and vision benefits and life insurance as currently maintained for the Officer, or as subsequently modified by Grainger, through the Termination Date. Dental benefits, health benefits and group life insurance will terminate earlier, however, on the date that the Officer becomes eligible for benefit coverage through a subsequent employer. After the Officer’s benefit coverage ceases on December 31, 2015, the Officer may elect to continue group health and dental benefits under COBRA.
|
b.
|
Profit Sharing.
For the 2013, 2014 and 2015 plan years, the Officer will be eligible to share in contributions under the W.W. Grainger, Inc. Employees Profit Sharing Plan (“PST”) and the W.W. Grainger, Inc. Supplemental Profit Sharing Plan (“SPSP”). The Separation Payments received in such plan years, including in the case of the 2013 plan year, the MIP payment described in Section 3(e) below, will be included for purposes of determining the amount of the Officer’s contributions under the PST (to the extent permitted by applicable law) and SPSP. To the extent that the Officer is not permitted to share in PST contributions under the terms of the PST, such amounts shall be contributed to the SPSP in addition to funds otherwise allocated to the Officer under the SPSP. After the Termination Date, the Officer will be eligible for distribution of his vested funds in accordance with the terms of PST and SPSP applicable to Plan participants.
|
c.
|
Unemployment Benefits.
The Officer agrees that he will not apply for unemployment benefits while he continues to receive Separation Payments through the Officer’s Termination Date or at any time in the future that would otherwise be chargeable to Grainger’s unemployment insurance account. Any amounts of unemployment insurance benefits received by the Officer shall offset the Officer’s Separation Payments.
|
d.
|
PTO Time.
The Officer understands that he will not be eligible for or accrue any additional PTO eligibility after the Separation Date. Payment for any earned but unused PTO will be incorporated in Officer’s Compensation Continuation payments as previously referenced in Paragraph 2 above in an effort to enhance the value of each payment.
|
e.
|
Management Incentive Program (MIP).
As an additional Separation Payment to those provided for in Section 2 hereof, the Officer will participate in the 2013 MIP. For such period, the Officer’s payment shall be based upon the Officer’s current salary, target percentage level and Company performance. This payment will be made to Officer during the first quarter of 2014, when executive MIP bonuses are paid. Officer will not be eligible for any MIP or other cash incentive award other than the above referenced amounts or for any other periods following the Separation Date.
|
f.
|
Career Continuation - Outplacement Assistance.
Officer shall be eligible to receive professional Career Continuation - Outplacement services at Grainger’s expense. Officer may interview and then select a service provider from those designated firms made available to him for this purpose by Grainger.
|
g.
|
Tax Preparation - Financial Planning.
The Officer will be reimbursed up to a maximum of $10,000.00 for professional tax preparation and financial planning assistance associated with the preparation of his 2013 tax year filings. The Officer shall not receive any tax preparation allowance beyond those referenced above.
|
h.
|
Deferred Compensation / Deferred Stock.
Exercisable and payable according to the Program’s provisions (timing 6 months after Termination Date). All deferred Compensation and Deferred Stock shall become payable and or exercisable six (6) months after my Termination Date pursuant to the provisions of the Program then in effect.
|
i.
|
Cessation of Benefits.
All other benefits and the Officer’s eligibility to participate in any other Grainger employee programs will cease as of the Separation Date, except as provided or referenced in this Agreement. The amounts and benefits payable to the Officer under this Agreement shall be in lieu of any amounts or benefits otherwise provided under any severance plan or policy of Grainger.
|
4.
|
Stock Options, Restricted Stock Units and Performance Shares.
The Officer will be eligible to exercise all vested stock options pursuant to the terms of the W.W. Grainger, Inc. 2010 Incentive Plan and companion agreements. Options will continue to vest through the Termination Date, with any remaining unvested options forfeiting as of the same Termination Date. Thereafter, all options must be exercised on or before the expiration date of each option or within three (3) months of the Officer’s Termination Date, whichever should occur first. The Officer further understands and agrees that the non-competition provisions of restricted stock unit and/or stock option agreements to which the Officer is a party, which provisions are incorporated herein by reference, including without limitation the W.W. Grainger, Inc. Unfair Competition Agreement dated April 24, 2013, and the W.W. Grainger, Inc. Performance Share Agreement dated January 1, 2013 (collectively, the “non-competition provisions”), will remain in full force and effect, and are in addition to and not superseded by any other obligation set forth in this Agreement. The Officer acknowledges and agrees that, for purposes of such agreements, the Officer’s employment with Grainger shall be considered terminated on the Termination Date hereunder, and the term “Date of Termination” as used in the Unfair Competition Agreement dated April 24, 2013, shall mean the Termination Date hereunder. The Officer understands that he will not be eligible for any further grants of stock options beyond those he has already received.
|
5.
|
General Release and Waiver of Claims.
In exchange and in consideration for the promises, obligations, and agreements undertaken by Grainger herein, which the Officer agrees and acknowledges are adequate and sufficient consideration, the Officer, on behalf of himself, his spouse, agents, representatives, attorneys, assigns, heirs, executors, administrators, and other personal representatives, releases and forever discharges Grainger, the Affiliates, and all of their officers, employees, directors, agents, attorneys, personal representatives, predecessors, successors, and assigns (hereinafter collectively referred to as the “Releasees”) from any and all claims of any kind which he has, or might have, as of the date of this Agreement; or which are based on any facts which exist or existed on or before the date of this Agreement. The claims the Officer is releasing include, but are not limited to, all claims relating in any way to his employment at Grainger or his separation from that employment; and all claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the Equal Pay Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Federal Rehabilitation Act, the Age Discrimination in Employment Act (“ADEA”), the Older Worker Benefit Protection Act, the Illinois Human Rights Act, the Illinois Wage Payment and Collection Act, or any other federal, state or local law relating to employment, discrimination, retaliation, or wages, or under the common law of any state (including, without limitation, claims relating to contracts, wrongful discharge, retaliatory discharge, defamation, intentional or negligent infliction of emotional distress, and wrongful termination of benefits). The Officer also releases and forever discharges Grainger and all other Releasees from any and all other demands, claims, causes of action, obligations, agreements, promises, representations, damages, suits, and liabilities whatsoever, both known and unknown, in law or in equity, which he has or might have as of the date of this Agreement. The Officer understands that this Section 5 of this Agreement contains a complete and
general release
of any claim that he now has against Grainger and all other Releasees, or could ever have against Grainger and all other Releasees, based on any fact, event, or omission that has occurred up to the time at which he signs the Agreement.
|
6.
|
Covenant Not to Sue.
The Officer agrees not to pursue or permit to be filed or pursued against Grainger or any Releasee, any claim or action before any federal, state, or local, administrative, legislative or judicial body based on any claim or liability described in the foregoing section, or otherwise related in any way to the Officer’s employment with Grainger, and understands that the purpose of this waiver and release is to dispose of, with finality, any claims that the Officer may have against Grainger and all other Releasees so that there will be no disputes or controversies concerning any matters following the Resignation Date. The Officer has no such claim or lawsuit outstanding at this time, and the Officer does not know of any such potential claim or lawsuit that may be asserted by the Officer or any other person in connection with the Officer’s employment with Grainger. The Officer understands that the terms of this section do not apply to a challenge to the knowing and voluntary nature of this release with respect to claims under ADEA.
|
7.
|
Unfair Competition.
|
a.
|
The Officer acknowledges that in connection with the performance of his duties for Grainger, he has created, used or accessed confidential and trade secret information of Grainger and the Affiliates (as further described in Section 11 below). The Officer further acknowledges that his employment with or other work on behalf of a Competitor (defined in Section 7(b) below) would necessarily and inevitably lead to his unauthorized use or disclosure of such confidential and trade secret information. Accordingly, the Officer agrees that for a period beginning on the date hereof and continuing until the second anniversary of the Termination Date, and within one hundred (100) miles of any branch, office or distribution center of Grainger or an Affiliate to which he was assigned either physically or electronically within two years prior to ceasing active employment with the Company, as well as on behalf of any Competitor specifically identified on Exhibit A, anywhere in the nation (the “Restricted Area”), he will not directly or indirectly, whether as executive, officer, director, owner, shareholder, partner, associate, consultant, advisor, contractor, joint venturer, manager, agent, representative or otherwise, work for a Competitor at said location or within the above designated 100 mile radius in any capacity that would involve:
|
i.
|
the same or substantially similar functions or responsibilities to those the Officer performed for Grainger within two years of the Separation Date; or
|
ii.
|
supervision over the same or substantially similar responsibilities to those the Officer performed for Grainger within two years of the Separation Date; or
|
iii.
|
assisting a Competitor in decisions that involve or affect the same or a substantially similar area of operations to those the Officer was involved in with Grainger within two years of the Separation Date.
|
b.
|
A “Competitor” is any person or legal entity or branch, office or operation thereof (a “Firm”) that engages in business that is competitive with the business activities of Grainger through, but not limited to: (i) selling maintenance, repair and operating (MRO) supplies to North American or applicable Global businesses; (ii) providing indirect materials management services to North American or applicable Global businesses; (iii) aggregating information regarding indirect materials for the purpose of conducting business-to-business Internet commerce with North American or applicable Global businesses; or (iv) indirect materials procurement services to North American or applicable Global businesses. Without limiting the generality of the foregoing, each of the Firms identified on Exhibit A hereto constitutes a Competitor.
|
c.
|
A Firm shall not be deemed a Competitor unless the aggregate revenue of such Firm for its most recently completed fiscal year that is attributable to the categories of products and services set forth in clauses (i) through (iv) of Section 7(b) above equals more than 5% of the aggregate amount of consolidated revenue that Grainger derived from such categories of products and services during its most recently completed fiscal year.
|
d.
|
The Officer may at any time, or from time to time, request Grainger to advise the Officer in writing whether or not Grainger considers a specified Firm to be a Competitor. Any such request shall be made by written notice to Grainger that includes: (i) the name of the specific business unit for which the Officer proposes to work; (ii) the name or names of any parent companies of such business unit; (iii) a description of the specific services which the Officer proposes to perform for such business unit; (iv) a statement as to why the Officer believes that the performance of such services will not adversely affect Grainger’s legitimate protectible interests; and (v) the requested date of Grainger’s response (which date shall be at least 30 days after the date of Grainger’s receipt of the Officer’s request). Grainger agrees to consider any such request in good faith and to respond to such request before the requested date, but in no event later than 45 days after Grainger’s receipt of the officer’s request.
|
e.
|
The Officer specifically recognizes and affirms that Section 7(a) is a material and important term of this Agreement. If any court of competent jurisdiction determines that the covenant set forth in Section 7(a), or any part thereof, would be unenforceable due to the stated duration or geographical scope of such covenant, such court shall have the power to reduce the duration or scope of such provision, as the case may be, and, as so reduced, such provision shall then be enforceable. If the court does not modify such provision as aforeseaid, or if the provision is otherwise held or found invalid or unenforceable for any reason whatsoever, then (without limiting any other remedies which may be available to Grainger under this Agreement or otherwise, including, without limitation, Section 13 hereof), Grainger shall be entitled to cease making payments and furnishing benefits to the Officer pursuant to this Agreement and shall be further entitled to receive from the Officer reimbursement of all Separation Payments and other payments and benefits theretofore furnished to the Employee pursuant to this Agreement.
|
8.
|
Non-Disparagement.
The Officer agrees to take no action in derogation or disparagement of Grainger or the Affiliates, or their respective businesses or strategic interests, or the Releasees. The Officer further agrees not to discuss in a negative manner or otherwise negatively comment on Grainger or any Affiliate, or their respective businesses or strategic interests, or the Releasees, in public, for publication on electronic media (including but not limited to chat rooms, message boards, or the like), in similar public forums, or otherwise, other than communication of publicly available information. In turn, Grainger agrees that its Senior Officers will make no public statements nor sanction any action in derogation or disparagement of the Officer.
|
9.
|
Non-Interference with Business Relationships.
The Officer agrees not to interfere with the employment of any Grainger employee or otherwise with the business relationships of Grainger, and to the extent required to enforce this promise, agrees not to induce, directly or indirectly, any Grainger customer or supplier to breach any contract with Grainger, and further agrees not to solicit, attempt to hire, or hire, directly or indirectly, any Grainger employee, or request, induce or advise any such employee to leave the employment of Grainger at any time before the Termination Date and for one year thereafter. Should the Officer wish to hire a Grainger employee in contravention of this Section 9, or to perform work which is precluded by the Officer’s non-competition obligations set forth in Section 7 hereof, the Officer understands that he may request that Grainger agree that the Officer may perform such work or offer employment to such employee, and that with Grainger’s prior written agreement, which it may withhold at its sole discretion, the Officer may do so.
|
10.
|
Return of Property: Business Expenses
. The Officer shall promptly account for and return to Grainger all Grainger property, including but not limited to proprietary information, which is in the Officer’s possession or control. This property includes (but is not limited to) Officer’s Grainger work computer along with related drives and peripherals, correspondence, files, reports, minutes, plans, records, surveys, diagrams, computer print-outs, floppy disks, manuals, client/customer information and documentation, and any company research, goals, objectives, recommendations, proposals or other information relating to Grainger, its business, or its clients or customers, which is not generally known to the public, and which the Officer acquired in the course of his employment with Grainger. Notwithstanding, Officer shall be permitted to retain his Grainger cell phone along with his current telephone number. The Officer further agrees that all business expenses incurred prior to the Separation Date that are reimbursable in accordance with Grainger’s normal policies and procedures have been reimbursed to the Officer or submitted for reimbursement, and that other than as specifically provided in this Agreement, the Officer will not incur any additional business expenses after the Separation Date unless previously authorized and approved in writing by Grainger.
|
11.
|
Confidential Information.
The Officer agrees to refrain from ever disclosing to anyone outside the employment of Grainger any confidential or trade secret information, whether in oral, written and/or electronic form, including but not limited to information that (a) relates to Grainger’s or the Affiliates’ past, present and future research, development, technical and non-technical data and designs, finances, marketing, products, services, customers, suppliers, and other business activities of any kind or (b) has been identified, either orally or in writing, as confidential by Grainger or any Affiliate; provided that this limitation shall not apply to information that is part of the public domain through no breach of this Agreement or is acquired from a third party not under similar nondisclosure obligations to Grainger or such Affiliate. The Officer acknowledges that his obligations under any confidentiality or nondisclosure or similar agreements or provisions that the Officer previously executed will remain in full force and effect. Further, through the Termination Date, the Officer agrees to fully comply with all policies of Grainger regarding confidential or trade secret information.
|
12.
|
Cooperation with Company.
The Officer agrees, during the term of this Agreement as well as during the 12 month period immediately thereafter, to both make himself available and to provide reasonable cooperation to Grainger or its attorneys to assist Grainger or serve as a witness in connection with any matter, litigation or potential litigation in which the Officer may have knowledge, information, or expertise. The Officer also agrees to provide Grainger or its designated representatives, upon request, with information and assistance about programs, processes, and projects related to the Officer’s job responsibilities while employed by Grainger; to answer any questions relating to the work to which the Officer was assigned; and to otherwise provide reasonable cooperation to Grainger regarding matters relating to this Agreement and the Officer’s employment with Grainger. Grainger will reimburse the Officer for any reasonable expenses he incurs in activities which he undertakes at Grainger’s request pursuant to this Section 12.
|
13.
|
Breach of Agreement; Misconduct.
The Officer understands and agrees that if, after receiving all or any part of the payments and benefits described herein, the Officer breaches this Agreement, or commits or is discovered to have committed any act of embezzlement, fraud or theft with respect to the property of Grainger, or deliberately causes or is discovered to have deliberately caused, any loss, damage, injury or other endangerment to Grainger’s property, reputation or past, present, or future directors, officers or employees, Grainger reserves the right to demand repayment of all such payments and benefits. Grainger shall further be released from any future payment then or thereafter otherwise due and shall discontinue any and all benefit coverage (other than retiree health coverage, vested benefits under the PST and SPSP, and COBRA coverage if otherwise available). To the extent permitted by law, the Officer further understands and agrees that Grainger reserves the right to pursue all other available remedies in an effort to preserve its legitimate business interests. The Officer also agrees to indemnify and hold harmless Grainger from any loss, cost, damage, or expense, including attorneys’ fees, which Grainger may incur because of the Officer’s violation of this Agreement as determined by a Court of competent jurisdiction. Notwithstanding the above, nothing contained within this Agreement prevents either Party from pursuing a claim in either equity or law should there be a good faith belief that a breach of this Agreement has occurred. The Officer understands that this Section 13 does not apply to a challenge to the knowing and voluntary nature of this release with respect to claims under ADEA.
|
14.
|
Supersedes Other Agreements.
Other than any vested rights that the Officer may have under employee benefit plans subject to ERISA, the Officer understands that this Agreement supersedes any and all obligations (written or oral) which Grainger otherwise might have to the Officer for compensation or other expectations of remuneration or benefit on the Officer’s part. The Officer specifically acknowledges that all of Grainger’s obligations under the Change in Control Employment Agreement entered into between Grainger and the Officer (the “Change in Control Agreement”) shall become null and void as of the Resignation Date. Notwithstanding the above, all provisions contained within any Grainger Non-Competition Agreement, Stock Option, Special RSU, Option Grant or Performance Share Agreement entered into between the Officer and Grainger, or other Grainger Governance shall remain in full force and effect as originally executed and be incorporated by reference as being materials parts of this Agreement.
|
15.
|
References.
At the Officer’s request, Grainger will provide appropriate favorable references to prospective future employers of the Officer. Those references will be provided on behalf of Grainger by Jim Ryan or his designee on behalf of Grainger, with the specific content of such references to be mutually agreed between Grainger and the Officer in the future.
|
16.
|
Continuation After Death.
The Officer understands that in the event of the Officer’s death, Grainger’s obligations under this Agreement will extend to the Officer’s beneficiaries, heirs, executors, administrators, personal representatives and assigns.
|
17.
|
Agreement Not Assignable.
The Officer may not assign, and the Officer represents that he has not assigned, this Agreement or any rights or Grainger’s obligations under this Agreement to any other person.
|
18.
|
Entire Understanding.
The Officer understands and agrees that this Agreement, including Exhibit A hereto, contains the entire understanding between the parties and may not be amended except by mutual agreement in an amendment executed by both parties.
|
19.
|
Severability.
The provisions of this Agreement are declared to be severable, which means that if any provision of this Agreement or the application thereof is found to be invalid, the invalidity shall not affect other provisions or applications of this Agreement, which will be given effect without the invalid provisions or applications. In the event that a court of competent jurisdiction concludes that any term, provision or section of this Agreement is invalid or unenforceable (and, in the case of Section 7(a) of this Agreement, such provision is not modified by the court to be enforceable as described in Section 7(e) hereof), then said term, provision, or section shall be deemed eliminated from this Agreement to the extent necessary and in order to permit the remaining portions of the Agreement to be enforced. Any such eliminations shall not affect Grainger’s entitlement, if any, to receive, pursuant to Sections 7(e) and 13 hereof, amounts paid and benefits provided to the Officer under this Agreement.
|
20.
|
Confidentiality of Agreement.
The Officer represents and agrees to keep the terms, amount and fact of this Agreement completely confidential, and that the Officer will not disclose any information concerning this Agreement to anyone; provided, however, that this section will not prevent the Officer from disclosing information concerning this Agreement to the Officer’s attorneys, accountants, financial or tax advisors, spouse, a designated Grainger official, or as required by law. Notwithstanding, in accordance with U.S. Treasury Regulation 1.6011-4(b)(3)(iii), each party (and each employee, representative, or other agent of each party) to this Agreement may disclose to any and all persons, without limitation of any kind, the tax treatment, tax structure, and all materials of any kind provided to the other party relating to such tax treatment and tax structure.
|
21.
|
Jurisdiction and Governing Law.
The Officer acknowledges that for the purpose of this Agreement as well as his employment with Grainger, he is an Illinois employee. This Agreement shall in all respects be interpreted, enforced and governed by and under the laws of the State of Illinois, without regard to its conflicts of law principles.
|
22.
|
Voluntary Agreement.
The Officer acknowledges that the payments and benefits that Grainger is providing hereunder exceed the compensation and benefits otherwise payable to the Officer or on the Officer’s behalf and that such Separation Payments and benefits are provided by Grainger in exchange for execution of this Agreement. The Officer acknowledges that he was given twenty-one (21) days to consider the terms of this Agreement, that the Officer may revoke this Agreement at any time within seven (7) days after the date that the Officer signs it, and that he has been advised to and has had the opportunity to seek out counsel of his own choice. Any revocation must be communicated in writing, via personal delivery or overnight mail, to Henry F. Galatz, Labor Counsel, W.W. Grainger, Inc., 100 Grainger Parkway, Lake Forest, Illinois 60045. The Officer further understands that this Agreement does not take effect until after the expiration of the seven (7) day period for revocation. All referenced Separation Payments and applicable benefits identified in this Agreement will automatically cease on the 21
st
day should the Officer not return a fully executed copy of this Agreement to Grainger within the specified 21-day consideration period. The Officer has read this Agreement and understands all of its terms.
|
By:
|
/s/ Joseph C. High
|
•
|
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 (more than 50% ownership)
|
|
|
|
|
|
Name of Company
|
|
Where Organized
|
Acklands - Grainger Inc.
|
|
Canada
|
American Fabory Corporation
|
|
Delaware
|
BMF Finance B.V.
|
|
Netherlands
|
BMF Fundco B.V.
|
|
Netherlands
|
BMF Management Services B.V.
|
|
Netherlands
|
BMFGH Holding B.V.
|
|
Netherlands
|
Borstlap International B.V.
|
|
Netherlands
|
Combori N.V.
|
|
Belgium
|
CV Noordoever
|
|
Netherlands
|
Dayton Electric Manufacturing Co.
|
|
Illinois
|
Dutch Industrial Fasteners B.V.
|
|
Netherlands
|
E & R de Mexico S de RL de CV
|
|
Mexico
|
E & R Industrial Sales, Inc.
|
|
Michigan
|
E & R Office Supply, Inc.
|
|
Michigan
|
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 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.
|
|
People's Republic of China
|
Fabory Slovakia SRO
|
|
Slovakia
|
Fabory Spain S.L.U.
|
|
Spain
|
Fabory SRL
|
|
Romania
|
Fabory U.S.A., Ltd.
|
|
Delaware
|
Fabory UK Holdings Ltd.
|
|
United Kingdom
|
Fabory UK Ltd.
|
|
United Kingdom
|
FFSA S.A.
|
|
France
|
Fixbolt (Suhzou) Co., Ltd. Taicang
|
|
People's Republic of China
|
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
|
|
People's Republic of China
|
Grainger Colombia Holding Company, LLC
|
|
Delaware
|
Grainger Colombia S.A.S.
|
|
Colombia
|
Grainger Dominicana SRL
|
|
Dominican Republic
|
Grainger Global Holdings, Inc.
|
|
Delaware
|
Grainger Global Trading (Shanghai) Company Limited
|
|
People's Republic of China
|
Grainger Guam L.L.C.
|
|
Guam
|
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 Singapore Pte., Ltd.
|
|
Singapore
|
Grainger Trinidad, Inc.
|
|
Delaware
|
Grainger, S.A. de C.V.
|
|
Mexico
|
GWW Germany Online GmbH
|
|
Germany
|
GWW Investments C.V.
|
|
Netherlands
|
GWW UK Online LTD
|
|
England and Wales
|
Hamos België BVBA
|
|
Belgium
|
I S One, Inc.
|
|
Michigan
|
Imperial Supplies Holdings, Inc.
|
|
Delaware
|
Imperial Supplies LLC
|
|
Delaware
|
Inbema N.V.
|
|
Curaçao Netherlands Antilles
|
India Pacific Brands
|
|
Mauritius
|
Klaassen Fasteners BVBA
|
|
Belgium
|
LN Participacoes Ltda.
|
|
Brazil
|
Metric Fasteners Corporation
|
|
Delaware
|
MonotaRO Co., Ltd.
|
|
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
|
NAVIMRO Co., Ltd.
|
|
Republic of Korea (South Korea)
|
Pimentel Fasteners B.V.
|
|
Netherlands
|
Pro Tool Point Supply, Inc.
|
|
Illinois
|
PSS West, Inc.
|
|
California
|
Safety Registry Services, LLC
|
|
Delaware
|
Safety Solutions, Inc.
|
|
Ohio
|
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.
|
|
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, 2014
|
|
|
|
/s/ R. L. Jadin
|
R. L. Jadin
|
Senior Vice President and Chief Financial Officer
|
February 27, 2014
|