|
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)
|
|||||
|
Title of Each Class
|
Trading Symbol
|
Name of Each Exchange on Which Registered
|
Common Stock
|
GWW
|
New York Stock Exchange
|
|
TABLE OF CONTENTS
|
Page
|
||||
|
||||||
|
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 ACCOUNTANT FEES AND SERVICES
|
|||||
|
PART IV
|
|
||||
Item 15:
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|||||
Item 16:
|
FORM 10-K SUMMARY
|
|||||
Signatures
|
|
|
|
|
||
|
|
|
|
|
|
|
Approximate Market Share
|
|
Distribution Centers (DCs)1
|
|
Branches1
|
|
Approximate Number of Customers Served (thousands)2
|
United States
|
7%
|
|
17
|
|
282
|
|
1,000
|
Canada
|
4%
|
|
5
|
|
53
|
|
50
|
Other businesses
|
|
|
|
|
|
|
|
Endless assortment businesses
|
2%
|
|
4
|
|
—
|
|
2,600
|
International high-touch solutions businesses
|
1%
|
|
6
|
|
119
|
|
150
|
TOTAL
|
4%
|
|
32
|
|
454
|
|
3,800
|
Order Origination
|
|
Order Fulfillment
|
||||
Digital channels:
|
|
|
Direct-to-customer:
|
|
||
Website
|
30
|
%
|
|
Ship to Customer
|
70
|
%
|
EDI/ePro
|
25
|
%
|
|
KeepStock®
|
17
|
%
|
KeepStock®
|
16
|
%
|
|
Subtotal
|
87
|
%
|
Subtotal
|
71
|
%
|
|
Branch Pick-up
|
13
|
%
|
Non-digital channels:
|
|
|
Total
|
100
|
%
|
|
Branch
|
10
|
%
|
|
|
|
|
Phone
|
19
|
%
|
|
|
|
|
Subtotal
|
29
|
%
|
|
|
|
|
Total
|
100
|
%
|
|
|
|
Name and Age
|
Positions and Offices Held and Principal Occupation and Employment During the Past Five Years
|
Kathleen S. Carroll (51)
|
Senior Vice President and Chief Human Resources Officer, a position assumed in December 2018. Previously, Ms. Carroll served as Executive Vice President, Chief Human Resources Officer of First Midwest Bancorp, Inc., a diversified financial services company, from 2017 to 2018. Prior to that role, Ms. Carroll was employed at Aon Corporation, a global insurance brokerage and consulting company, between 2006 and 2017, in various human resources roles, culminating in her position as Vice President, Global Head of Talent Acquisition.
|
John L. Howard (62)
|
Senior Vice President and General Counsel, a position assumed in January 2000. Previously, Mr. Howard served in several roles of increasing responsibility at Tenneco, Inc., a global conglomerate. Prior to those roles, Mr. Howard held a variety of legal positions in the federal government, including Associate Deputy Attorney General in the U.S. Department of Justice and in The White House as Counsel to the Vice President.
|
D.G. Macpherson (52)
|
Chairman of the Board, a position assumed in October 2017, and Chief Executive Officer, a position assumed in October 2016 at which time he was also appointed to the Board of Directors. Previously, Mr. Macpherson served as Chief Operating Officer, a position assumed in 2015, Senior Vice President and Group President, Global Supply Chain and International, a position assumed in 2013, 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.
|
Deidra C. Merriwether (51)
|
Senior Vice President and President, North American Sales & Service, a position assumed in November 2019. Previously, Ms. Merriwether served as Senior Vice President, U.S. Direct Sales and Strategic Initiatives, a position assumed in September 2017, Vice President, Pricing and Indirect Procurement, a position assumed in 2016, and as a Vice President in Finance from 2013 to 2016. Prior to joining Grainger in September 2013, Ms. Merriwether held various positions as a Vice President, including positions of increasing responsibility at Sears Holdings Corporation, a broadline retailer, PriceWaterhouseCoopers, a global professional services firm, and Eli Lilly & Company, a global pharmaceutical company, across Finance, Procurement and Operations, lastly serving as Chief Operating Officer, Retail Formats, at Sears Holdings Corporation.
|
Thomas B. Okray (57)
|
Senior Vice President and Chief Financial Officer, a position assumed in May 2018. Prior to joining Grainger, Mr. Okray served as Executive Vice President, Chief Financial Officer of Advance Auto Parts, Inc., a leading automotive aftermarket parts provider in North America, a position assumed in 2016. Previously, Mr. Okray served as Vice President, Finance, Global Customer Fulfillment, of Amazon.com, Inc., an online retailer, from January 2016 to October 2016, as Vice President, Finance, North American Operations of Amazon, from June 2015 to January 2016, and was employed by General Motors Company, a global automotive company, from July 1989 to June 2015, in a variety of finance and supply chain related roles, culminating in his position as CFO, Global Product Development, Purchasing & Supply Chain, from January 2010 to June 2015.
|
Paige K. Robbins (51)
|
Senior Vice President, Grainger Technology, Merchandising, Marketing, and Strategy, a position assumed in November 2019. Previously, Ms. Robbins served as Senior Vice President and Chief Merchandising, Marketing, Digital, Strategy Officer, a position assumed in May 2019, as Senior Vice President and Chief Digital Officer, a position assumed in September 2017, and as Senior Vice President, Global Supply Chain, Branch Network, Contact Centers and Corporate Strategy, a position assumed in 2016. Since joining Grainger in September 2010, Ms. Robbins has held various positions as a Vice President, including in the areas of Global Supply Chain and Logistics.
|
Eric R. Tapia (43)
|
Vice President and Controller, a position assumed in October 2016. Mr. Tapia served as Vice President, Internal Audit, from 2010 to 2016. Mr. Tapia is a Certified Public Accountant (CPA) and before joining Grainger in 2010 was an audit partner with KPMG.
|
Location
|
|
Facility and Use (7)
|
|
Size in Square Feet (in thousands)
|
|
U.S. (1)
|
|
282 branch locations
|
|
6,348
|
|
U.S. (2)
|
|
17 DCs
|
|
9,660
|
|
U.S. (3)
|
|
Other facilities
|
|
3,970
|
|
Canada (4)
|
|
53 branch locations
|
|
686
|
|
Canada (5)
|
|
5 DCs
|
|
968
|
|
Canada
|
|
Other facilities
|
|
578
|
|
Other businesses (6)
|
|
Other facilities
|
|
5,034
|
|
Chicago area (2)
|
|
Headquarters and general offices
|
|
947
|
|
|
|
Total Square Feet
|
|
28,191
|
|
(1)
|
Consists of 246 stand-alone, 34 onsite and 2 will-call express locations, of which 202 are owned and 80 are leased. These branches range in size from approximately 500 to 109,000 square feet.
|
(2)
|
These facilities are primarily owned and range in size from approximately 45,000 to 1.5 million square feet.
|
(3)
|
These facilities include both owned and leased locations and primarily consist of storage facilities, office space and call centers.
|
(4)
|
Consists of 34 stand-alone and 19 onsite locations, of which 18 are owned and 35 are leased. These branches range in size from approximately 500 to 70,000 square feet.
|
(5)
|
These facilities are primarily owned and range in size from approximately 40,000 to 540,000 square feet.
|
(6)
|
These facilities include owned and leased locations in North America, Japan and Europe.
|
(7)
|
Owned facilities are not subject to any mortgages.
|
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
|
112,700
|
$301.83
|
112,700
|
3,284,920
|
|
shares
|
Nov. 1 – Nov. 30
|
126,183
|
$320.04
|
126,183
|
3,158,737
|
|
shares
|
Dec. 1 – Dec. 31
|
81,184
|
$319.32
|
80,144
|
3,078,593
|
|
shares
|
Total
|
320,067 (D)
|
|
319,027
|
|
|
(A)
|
There were no shares withheld to satisfy tax withholding obligations.
|
(B)
|
Average price paid per share includes any commissions paid.
|
(C)
|
Purchases were made pursuant to a share repurchase program approved by Grainger's Board of Directors and announced on April 24, 2019 (2019 Program). The 2019 Program authorizes the repurchase of up to 5 million shares with no expiration date.
|
(D)
|
The difference of 1,040 shares between the Total Number of Shares Purchased and the Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs represents shares purchased by the administrator and record keeper of the W.W. Grainger, Inc. Employees Profit Sharing Plan for the benefit of the employees who participate in the plan.
|
|
December 31,
|
|||||||||||||||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
W.W. Grainger, Inc.
|
$
|
100
|
|
$
|
81
|
|
$
|
95
|
|
$
|
99
|
|
$
|
121
|
|
$
|
148
|
|
Dow Jones US Industrial Suppliers Total Stock Market Index
|
100
|
|
81
|
|
102
|
|
114
|
|
105
|
|
139
|
|
||||||
S&P 500 Stock Index
|
100
|
|
101
|
|
114
|
|
138
|
|
132
|
|
174
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(In millions of dollars, except for per share amounts)
|
||||||||||||||||||
Net sales
|
$
|
11,486
|
|
|
$
|
11,221
|
|
|
$
|
10,425
|
|
|
$
|
10,137
|
|
|
$
|
9,973
|
|
Gross profit
|
4,397
|
|
|
4,348
|
|
|
4,098
|
|
|
4,115
|
|
|
4,231
|
|
|||||
Operating earnings
|
1,262
|
|
|
1,158
|
|
|
1,035
|
|
|
1,113
|
|
|
1,294
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc. (herein referred to as Net earnings)
|
849
|
|
|
782
|
|
|
586
|
|
|
606
|
|
|
769
|
|
|||||
Net earnings per basic share
|
15.39
|
|
|
13.82
|
|
|
10.07
|
|
|
9.94
|
|
|
11.69
|
|
|||||
Net earnings per diluted share
|
15.32
|
|
|
13.73
|
|
|
10.02
|
|
|
9.87
|
|
|
11.58
|
|
|||||
Total current assets
|
3,555
|
|
|
3,557
|
|
|
3,206
|
|
|
3,020
|
|
|
3,049
|
|
|||||
Property, building and equipment, net
|
1,400
|
|
|
1,352
|
|
|
1,392
|
|
|
1,421
|
|
|
1,431
|
|
|||||
Long-term debt (less current maturities)
|
1,914
|
|
|
2,090
|
|
|
2,248
|
|
|
1,841
|
|
|
1,388
|
|
|||||
Total shareholders' equity
|
2,060
|
|
|
2,093
|
|
|
1,828
|
|
|
1,906
|
|
|
2,353
|
|
|||||
Operating cash flow
|
1,042
|
|
|
1,057
|
|
|
1,057
|
|
|
1,024
|
|
|
1,036
|
|
|||||
Cash dividends paid per share
|
$
|
5.68
|
|
|
$
|
5.36
|
|
|
$
|
5.06
|
|
|
$
|
4.83
|
|
|
$
|
4.59
|
|
|
For the Years Ended December 31,
|
|||||||||||||||
|
|
|
|
|
Percent Increase/(Decrease) from Prior Year
|
As a Percent of Net Sales
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|||||||
Net sales
|
$
|
11,486
|
|
|
$
|
11,221
|
|
|
2
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
7,089
|
|
|
6,873
|
|
|
3
|
%
|
|
61.7
|
%
|
|
61.3
|
%
|
||
Gross profit
|
4,397
|
|
|
4,348
|
|
|
1
|
%
|
|
38.3
|
%
|
|
38.7
|
%
|
||
Selling, general and administrative expenses
|
3,135
|
|
|
3,190
|
|
|
(2
|
)%
|
|
27.3
|
%
|
|
28.4
|
%
|
||
Operating earnings
|
1,262
|
|
|
1,158
|
|
|
9
|
%
|
|
11.0
|
%
|
|
10.3
|
%
|
||
Other expense, net
|
53
|
|
|
77
|
|
|
(31
|
)%
|
|
0.5
|
%
|
|
0.7
|
%
|
||
Income taxes
|
314
|
|
|
258
|
|
|
22
|
%
|
|
2.7
|
%
|
|
2.3
|
%
|
||
Net earnings
|
895
|
|
|
823
|
|
|
9
|
%
|
|
7.8
|
%
|
|
7.3
|
%
|
||
Noncontrolling interest
|
46
|
|
|
41
|
|
|
12
|
%
|
|
0.4
|
%
|
|
0.4
|
%
|
||
Net earnings attributable to W.W. Grainger, Inc.
|
$
|
849
|
|
|
$
|
782
|
|
|
8
|
%
|
|
7.4
|
%
|
|
7.0
|
%
|
|
Percent Increase (Decrease)
|
Volume
|
2.0%
|
Price
|
0.5
|
Intersegment sales to Zoro (included in other businesses)
|
0.5
|
Other
|
(0.5)
|
Total
|
2.5%
|
|
Percent (Decrease)/Increase
|
Volume
|
(19.0)%
|
Price
|
2.0
|
Foreign Exchange
|
(2.0)
|
Total
|
(19.0)%
|
|
For the Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land, buildings, structures and improvements
|
$
|
47
|
|
|
$
|
69
|
|
Furniture, fixtures, machinery and equipment
|
131
|
|
|
137
|
|
||
Subtotal
|
178
|
|
|
206
|
|
||
Capitalized software
|
43
|
|
|
33
|
|
||
Total
|
$
|
221
|
|
|
$
|
239
|
|
|
Corporate
|
|
Senior Unsecured
|
|
Short-term
|
Moody's
|
A3
|
|
A3
|
|
P2
|
S&P
|
A+
|
|
A+
|
|
A1
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total Amounts Committed
|
|
Less than 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More than 5 Years
|
||||||||||
Debt obligations
|
$
|
2,181
|
|
|
$
|
246
|
|
|
$
|
129
|
|
|
$
|
6
|
|
|
$
|
1,800
|
|
Interest on debt
|
2,035
|
|
|
81
|
|
|
157
|
|
|
156
|
|
|
1,641
|
|
|||||
Operating lease obligations
|
239
|
|
|
63
|
|
|
100
|
|
|
46
|
|
|
30
|
|
|||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Uncompleted additions to
property, buildings and equipment
|
88
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Commitments to purchase
inventory
|
498
|
|
|
498
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other goods and services
|
317
|
|
|
177
|
|
|
112
|
|
|
28
|
|
|
—
|
|
|||||
Other liabilities
|
103
|
|
|
81
|
|
|
5
|
|
|
4
|
|
|
13
|
|
|||||
Total
|
$
|
5,461
|
|
|
$
|
1,234
|
|
|
$
|
503
|
|
|
$
|
240
|
|
|
$
|
3,484
|
|
(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
|
(1)
|
Financial Statements: see "Item 8: Financial Statements and Supplementary Data," on page 31 hereof, for a list of financial statements. Management's Annual Report on Internal Control Over Financial Reporting.
|
(2)
|
Financial Statement Schedules: the schedules listed in Rule 5-04 of Regulation S-X have been omitted because they are either not applicable or the required information is shown in the consolidated financial statements or notes thereto.
|
(3)
|
Exhibits Required by Item 601 of Regulation S-K: the information required by this Item 15(a)(3) of Form 10-K is set forth on the Exhibit Index that follows the Signatures page 64 of the Form 10-K.
|
Page
|
|
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,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
11,486
|
|
|
$
|
11,221
|
|
|
$
|
10,425
|
|
Cost of goods sold
|
7,089
|
|
|
6,873
|
|
|
6,327
|
|
|||
Gross profit
|
4,397
|
|
|
4,348
|
|
|
4,098
|
|
|||
Selling, general and administrative expenses
|
3,135
|
|
|
3,190
|
|
|
3,063
|
|
|||
Operating earnings
|
1,262
|
|
|
1,158
|
|
|
1,035
|
|
|||
Other (income) expense:
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
79
|
|
|
82
|
|
|
86
|
|
|||
Other, net
|
(26
|
)
|
|
(5
|
)
|
|
13
|
|
|||
Total other expense, net
|
53
|
|
|
77
|
|
|
99
|
|
|||
Earnings before income taxes
|
1,209
|
|
|
1,081
|
|
|
936
|
|
|||
Income taxes
|
314
|
|
|
258
|
|
|
313
|
|
|||
Net earnings
|
895
|
|
|
823
|
|
|
623
|
|
|||
Less: Net earnings attributable to noncontrolling interest
|
46
|
|
|
41
|
|
|
37
|
|
|||
Net earnings attributable to W.W. Grainger, Inc.
|
$
|
849
|
|
|
$
|
782
|
|
|
$
|
586
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
15.39
|
|
|
$
|
13.82
|
|
|
$
|
10.07
|
|
Diluted
|
$
|
15.32
|
|
|
$
|
13.73
|
|
|
$
|
10.02
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|||
Basic
|
54.7
|
|
|
56.1
|
|
|
57.7
|
|
|||
Diluted
|
54.9
|
|
|
56.5
|
|
|
58.0
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net earnings
|
$
|
895
|
|
|
$
|
823
|
|
|
$
|
623
|
|
Other comprehensive earnings (losses):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of
reclassification (see Note 5 and Note 12)
|
26
|
|
|
(41
|
)
|
|
93
|
|
|||
Postretirement benefit plan re-measurement, net of tax expense $29 million (see Note 8 and Note 12)
|
—
|
|
|
—
|
|
|
47
|
|
|||
Postretirement benefit plan reclassification, net of tax benefit of $2 million, $3 million and $1 million, respectively
|
(6
|
)
|
|
(7
|
)
|
|
2
|
|
|||
Total other comprehensive earnings (losses)
|
20
|
|
|
(48
|
)
|
|
142
|
|
|||
Comprehensive earnings, net of tax
|
915
|
|
|
775
|
|
|
765
|
|
|||
Less: Comprehensive earnings (losses) attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|||
Net earnings
|
46
|
|
|
41
|
|
|
37
|
|
|||
Foreign currency translation adjustments
|
3
|
|
|
3
|
|
|
4
|
|
|||
Total comprehensive earnings (losses) attributable to noncontrolling interest
|
49
|
|
|
44
|
|
|
41
|
|
|||
Comprehensive earnings attributable to W.W. Grainger, Inc.
|
$
|
866
|
|
|
$
|
731
|
|
|
$
|
724
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
895
|
|
|
$
|
823
|
|
|
$
|
623
|
|
|
|
|
|
|
|
||||||
Provision for losses on accounts receivable
|
12
|
|
|
7
|
|
|
16
|
|
|||
Deferred income taxes and tax uncertainties
|
4
|
|
|
7
|
|
|
(5
|
)
|
|||
Depreciation and amortization
|
229
|
|
|
257
|
|
|
264
|
|
|||
Impairment of goodwill, intangible and other assets
|
123
|
|
|
156
|
|
|
28
|
|
|||
Net (gains) losses from sales of assets and business divestitures
|
(6
|
)
|
|
(6
|
)
|
|
28
|
|
|||
Stock-based compensation
|
40
|
|
|
47
|
|
|
33
|
|
|||
Subtotal
|
402
|
|
|
468
|
|
|
364
|
|
|||
Change in operating assets and liabilities
|
|
|
|
|
|
||||||
Accounts receivable
|
(42
|
)
|
|
(79
|
)
|
|
(103
|
)
|
|||
Inventories
|
(106
|
)
|
|
(129
|
)
|
|
(5
|
)
|
|||
Prepaid expenses and other assets
|
(33
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
Trade accounts payable
|
32
|
|
|
(51
|
)
|
|
72
|
|
|||
Accrued liabilities
|
(84
|
)
|
|
18
|
|
|
113
|
|
|||
Income taxes – net
|
(3
|
)
|
|
36
|
|
|
4
|
|
|||
Other non-current liabilities
|
(19
|
)
|
|
(27
|
)
|
|
(6
|
)
|
|||
Net cash provided by operating activities
|
1,042
|
|
|
1,057
|
|
|
1,057
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Additions to property, buildings, equipment and intangibles
|
(221
|
)
|
|
(239
|
)
|
|
(237
|
)
|
|||
Proceeds from sales of assets
|
17
|
|
|
86
|
|
|
120
|
|
|||
Equity method proceeds (investment)
|
2
|
|
|
(13
|
)
|
|
(35
|
)
|
|||
Other – net
|
—
|
|
|
—
|
|
|
6
|
|
|||
Net cash used in investing activities
|
(202
|
)
|
|
(166
|
)
|
|
(146
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
||||
Net decrease in commercial paper
|
—
|
|
|
—
|
|
|
(370
|
)
|
|||
Borrowings under lines of credit
|
20
|
|
|
26
|
|
|
74
|
|
|||
Payments against lines of credit
|
(15
|
)
|
|
(31
|
)
|
|
(43
|
)
|
|||
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
401
|
|
|||
Payments of long-term debt
|
(42
|
)
|
|
(96
|
)
|
|
(39
|
)
|
|||
Proceeds from stock options exercised
|
49
|
|
|
181
|
|
|
47
|
|
|||
Payments for employee taxes withheld from stock awards
|
(11
|
)
|
|
(12
|
)
|
|
(28
|
)
|
|||
Purchases of treasury stock
|
(700
|
)
|
|
(425
|
)
|
|
(605
|
)
|
|||
Cash dividends paid
|
(328
|
)
|
|
(316
|
)
|
|
(304
|
)
|
|||
Other – net
|
4
|
|
|
3
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(1,023
|
)
|
|
(670
|
)
|
|
(867
|
)
|
|||
Exchange rate effect on cash and cash equivalents
|
5
|
|
|
(10
|
)
|
|
9
|
|
|||
NET CHANGE IN CASH AND CASH EQUIVALENTS:
|
(178
|
)
|
|
211
|
|
|
53
|
|
|||
Cash and cash equivalents at beginning of year
|
538
|
|
|
327
|
|
|
274
|
|
|||
Cash and cash equivalents at end of year
|
$
|
360
|
|
|
$
|
538
|
|
|
$
|
327
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash payments for interest (net of amounts capitalized)
|
$
|
84
|
|
|
$
|
86
|
|
|
$
|
78
|
|
Cash payments for income taxes
|
$
|
322
|
|
|
$
|
229
|
|
|
$
|
335
|
|
|
Common Stock
|
Additional Contributed Capital
|
Retained Earnings
|
Accumulated Other Comprehensive Earnings (Losses)
|
Treasury Stock
|
Noncontrolling
Interest
|
Total
|
||||||||||||||
Balance at January 1, 2017
|
$
|
55
|
|
$
|
1,030
|
|
$
|
7,113
|
|
$
|
(273
|
)
|
$
|
(6,128
|
)
|
$
|
108
|
|
$
|
1,905
|
|
Stock based compensation
|
—
|
|
10
|
|
—
|
|
—
|
|
60
|
|
—
|
|
70
|
|
|||||||
Purchases of treasury stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(608
|
)
|
—
|
|
(608
|
)
|
|||||||
Net earnings
|
—
|
|
—
|
|
586
|
|
—
|
|
—
|
|
37
|
|
623
|
|
|||||||
Other comprehensive earnings (losses)
|
—
|
|
—
|
|
—
|
|
138
|
|
—
|
|
4
|
|
142
|
|
|||||||
Capital contribution
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Cash dividends paid ($5.06 per share)
|
—
|
|
1
|
|
(294
|
)
|
—
|
|
—
|
|
(11
|
)
|
(304
|
)
|
|||||||
Balance at December 31, 2017
|
$
|
55
|
|
$
|
1,041
|
|
$
|
7,405
|
|
$
|
(135
|
)
|
$
|
(6,676
|
)
|
$
|
138
|
|
$
|
1,828
|
|
Stock based compensation
|
—
|
|
92
|
|
—
|
|
—
|
|
122
|
|
—
|
|
214
|
|
|||||||
Purchases of treasury stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(412
|
)
|
—
|
|
(412
|
)
|
|||||||
Net earnings
|
—
|
|
—
|
|
782
|
|
—
|
|
—
|
|
41
|
|
823
|
|
|||||||
Other comprehensive earnings (losses)
|
—
|
|
—
|
|
—
|
|
(51
|
)
|
—
|
|
3
|
|
(48
|
)
|
|||||||
Capital contribution
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
|
|||||||
Reclassification due to the adoption of ASU 2018-02
|
—
|
|
—
|
|
(15
|
)
|
15
|
|
—
|
|
—
|
|
—
|
|
|||||||
Cash dividends paid ($5.36 per share)
|
—
|
|
1
|
|
(303
|
)
|
—
|
|
—
|
|
(14
|
)
|
(316
|
)
|
|||||||
Balance at December 31, 2018
|
$
|
55
|
|
$
|
1,134
|
|
$
|
7,869
|
|
$
|
(171
|
)
|
$
|
(6,966
|
)
|
$
|
172
|
|
$
|
2,093
|
|
Stock based compensation
|
—
|
|
46
|
|
—
|
|
—
|
|
33
|
|
—
|
|
79
|
|
|||||||
Purchases of treasury stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(700
|
)
|
—
|
|
(700
|
)
|
|||||||
Net earnings
|
—
|
|
—
|
|
849
|
|
—
|
|
—
|
|
46
|
|
895
|
|
|||||||
Other comprehensive earnings (losses)
|
—
|
|
—
|
|
—
|
|
17
|
|
—
|
|
3
|
|
20
|
|
|||||||
Capital contribution
|
—
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
|||||||
Cash dividends paid ($5.68 per share)
|
—
|
|
—
|
|
(313
|
)
|
—
|
|
—
|
|
(16
|
)
|
(329
|
)
|
|||||||
Balance at December 31, 2019
|
$
|
55
|
|
$
|
1,182
|
|
$
|
8,405
|
|
$
|
(154
|
)
|
$
|
(7,633
|
)
|
$
|
205
|
|
$
|
2,060
|
|
Buildings, structures and improvements
|
10 to 30 years
|
Furniture, fixtures, machinery and equipment
|
3 to 10 years
|
|
As of
|
||||||||
|
December 31, 2019
|
|
|
|
December 31, 2018
|
|
|
||
Land
|
$
|
332
|
|
|
|
$
|
318
|
|
|
Building, structures and improvements
|
1,329
|
|
|
|
1,338
|
|
|
||
Furniture, fixtures, machinery and equipment
|
1,832
|
|
|
|
1,785
|
|
|
||
Property, buildings and equipment
|
$
|
3,493
|
|
|
|
$
|
3,441
|
|
|
Less: Accumulated depreciation and amortization
|
2,093
|
|
|
|
2,089
|
|
|
||
Property, buildings and equipment, net
|
$
|
1,400
|
|
|
|
$
|
1,352
|
|
|
|
|
United States
|
|
Canada
|
|
Other businesses
|
|
Total
|
||||||||
Balance at January 1, 2018
|
|
$
|
192
|
|
|
$
|
130
|
|
|
$
|
222
|
|
|
$
|
544
|
|
Impairment
|
|
—
|
|
|
—
|
|
|
(105
|
)
|
|
(105
|
)
|
||||
Translation
|
|
—
|
|
|
(10
|
)
|
|
(5
|
)
|
|
(15
|
)
|
||||
Balance at December 31, 2018
|
|
192
|
|
|
120
|
|
|
112
|
|
|
424
|
|
||||
Translation
|
|
—
|
|
|
6
|
|
|
(1
|
)
|
|
5
|
|
||||
Balance at December 31, 2019
|
|
$
|
192
|
|
|
$
|
126
|
|
|
$
|
111
|
|
|
$
|
429
|
|
|
|
United States
|
|
Canada
|
|
Other businesses
|
|
Total
|
||||||||
Cumulative goodwill impairment charges, December 31, 2019 (1)
|
|
$
|
—
|
|
|
$
|
32
|
|
|
$
|
152
|
|
|
$
|
184
|
|
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Weighted average life
|
|
Gross carrying amount
|
|
Accumulated amortization/ impairment
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization/impairment
|
|
Net carrying amount
|
||||||||||||
Customer lists and relationships
|
13.2 years
|
|
$
|
401
|
|
|
$
|
301
|
|
|
$
|
100
|
|
|
$
|
410
|
|
|
$
|
204
|
|
|
$
|
206
|
|
Trademarks, trade names and other
|
14.1 years
|
|
36
|
|
|
20
|
|
|
16
|
|
|
24
|
|
|
15
|
|
|
9
|
|
||||||
Non-amortized trade names and other
|
—
|
|
100
|
|
|
38
|
|
|
62
|
|
|
133
|
|
|
34
|
|
|
99
|
|
||||||
Capitalized software
|
4.2 years
|
|
626
|
|
|
500
|
|
|
126
|
|
|
657
|
|
|
511
|
|
|
146
|
|
||||||
Total intangible assets
|
8.2 years
|
|
$
|
1,163
|
|
|
$
|
859
|
|
|
$
|
304
|
|
|
$
|
1,224
|
|
|
$
|
764
|
|
|
$
|
460
|
|
Year
|
|
Expense
|
|||||
2020
|
|
$
|
72
|
|
|||
2021
|
|
55
|
|
||||
2022
|
|
38
|
|
||||
2023
|
|
13
|
|
||||
2024
|
|
12
|
|
||||
Thereafter
|
|
52
|
|
||||
Total
|
|
$
|
242
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Lines of Credit
|
|
|
|
||||
Outstanding at December 31
|
$
|
55
|
|
|
$
|
49
|
|
Maximum month-end balance during the year
|
$
|
56
|
|
|
$
|
138
|
|
Weighted average interest rate during the year
|
2.32
|
%
|
|
2.29
|
%
|
||
Weighted average interest rate at December 31
|
2.44
|
%
|
|
2.35
|
%
|
||
|
|
|
|
||||
Commercial Paper
|
|
|
|
||||
Outstanding at December 31
|
$
|
—
|
|
|
$
|
—
|
|
Maximum month-end balance during the year
|
$
|
—
|
|
|
$
|
90
|
|
Weighted average interest rate during the year
|
—
|
%
|
|
1.80
|
%
|
|
As of December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Carrying Value
|
|
Fair Value (1)
|
|
Carrying Value
|
|
Fair Value (1)
|
||||||||
4.60% senior notes due 2045
|
$
|
1,000
|
|
|
$
|
1,194
|
|
|
$
|
1,000
|
|
|
$
|
1,026
|
|
3.75% senior notes due 2046
|
400
|
|
|
416
|
|
|
400
|
|
|
357
|
|
||||
4.20% senior notes due 2047
|
400
|
|
|
449
|
|
|
400
|
|
|
383
|
|
||||
British pound term loan
|
170
|
|
|
170
|
|
|
174
|
|
|
174
|
|
||||
Euro term loan
|
123
|
|
|
123
|
|
|
126
|
|
|
126
|
|
||||
Canadian dollar revolving credit facility
|
46
|
|
|
46
|
|
|
44
|
|
|
44
|
|
||||
Other
|
42
|
|
|
42
|
|
|
49
|
|
|
49
|
|
||||
Subtotal
|
2,181
|
|
|
2,440
|
|
|
2,193
|
|
|
2,159
|
|
||||
Less current maturities
|
(246
|
)
|
|
(246
|
)
|
|
(81
|
)
|
|
(81
|
)
|
||||
Debt issuance costs and discounts, net of amortization
|
(21
|
)
|
|
(21
|
)
|
|
(22
|
)
|
|
(22
|
)
|
||||
Long-term debt (less current maturities)
|
$
|
1,914
|
|
|
$
|
2,173
|
|
|
$
|
2,090
|
|
|
$
|
2,056
|
|
•
|
In May 2017, $400 million payable in 30 years and carries a 4.20% interest rate, payable semiannually.
|
•
|
In May 2016, $400 million payable in 30 years and carries a 3.75% interest rate, payable semiannually.
|
•
|
In June 2015, $1 billion payable in 30 years and carries a 4.60% interest rate, payable semiannually.
|
Year
|
|
Payment Amount
|
|
|
2020
|
|
$
|
246
|
|
2021
|
|
129
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
2024
|
|
6
|
|
|
Thereafter
|
|
1,800
|
|
|
Total
|
|
$
|
2,181
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
SG&A
|
|
|
|
|
|
||||||
Service cost
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
7
|
|
Other income (expense)
|
|
|
|
|
|
||||||
Interest cost
|
7
|
|
|
7
|
|
|
8
|
|
|||
Expected return on assets
|
(12)
|
|
(13
|
)
|
|
(12
|
)
|
||||
Amortization of prior service credit
|
(10)
|
|
(10
|
)
|
|
(7
|
)
|
||||
Amortization of unrecognized gains
|
(4)
|
|
(3
|
)
|
|
(2
|
)
|
||||
Net periodic (benefits) costs
|
$
|
(15
|
)
|
|
$
|
(13
|
)
|
|
$
|
(6
|
)
|
|
2019
|
|
2018
|
||||
Benefit obligation at beginning of year
|
$
|
190
|
|
|
$
|
208
|
|
Service cost
|
4
|
|
|
6
|
|
||
Interest cost
|
7
|
|
|
7
|
|
||
Plan participants' contributions
|
3
|
|
|
3
|
|
||
Actuarial (gains)
|
5
|
|
|
(26
|
)
|
||
Benefits paid
|
(9
|
)
|
|
(9
|
)
|
||
Prescription drug rebates
|
—
|
|
|
1
|
|
||
Benefit obligation at end of year
|
$
|
200
|
|
|
$
|
190
|
|
|
|
|
|
||||
Plan assets available for benefits at beginning of year
|
$
|
176
|
|
|
$
|
189
|
|
Actual (losses) returns on plan assets
|
28
|
|
|
(8
|
)
|
||
Plan participants' contributions
|
3
|
|
|
3
|
|
||
Prescription drug rebates
|
—
|
|
|
1
|
|
||
Benefits paid
|
(9
|
)
|
|
(9
|
)
|
||
Plan assets available for benefits at end of year
|
198
|
|
|
176
|
|
||
Noncurrent postretirement benefit obligation
|
$
|
2
|
|
|
$
|
14
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Prior service credit
|
$
|
61
|
|
|
$
|
71
|
|
Unrecognized gains
|
44
|
|
|
37
|
|
||
Deferred tax (liability)
|
(26
|
)
|
|
(26
|
)
|
||
Net accumulated gains
|
$
|
79
|
|
|
$
|
82
|
|
|
For the Years Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate
|
4.08
|
%
|
|
3.44
|
%
|
|
4.00
|
%
|
Long-term rate of return on plan assets, net of tax
|
7.13
|
%
|
|
7.13
|
%
|
|
7.13
|
%
|
Initial healthcare cost trend rate
|
|
|
|
|
|
|||
Pre age 65
|
6.31
|
%
|
|
6.56
|
%
|
|
6.81
|
%
|
Post age 65
|
NA
|
|
|
NA
|
|
|
9.36
|
%
|
Catastrophic drug benefit
|
NA
|
|
|
12.50
|
%
|
|
NA
|
|
Ultimate healthcare cost trend rate
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Year ultimate healthcare cost trend rate reached
|
2026
|
|
|
2026
|
|
|
2026
|
|
HRA credit inflation index for grandfathered retirees
|
2.50
|
%
|
|
2.50
|
%
|
|
NA
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate
|
3.01
|
%
|
|
4.08
|
%
|
|
3.44
|
%
|
Expected long-term rate of return on plan assets, net of tax
|
4.00
|
%
|
|
7.13
|
%
|
|
7.13
|
%
|
Initial healthcare cost trend rate
|
|
|
|
|
|
|||
Pre age 65
|
6.06
|
%
|
|
6.31
|
%
|
|
6.56
|
%
|
Post age 65
|
NA
|
|
|
NA
|
|
|
NA
|
|
Catastrophic drug benefit
|
NA
|
|
|
11.50
|
%
|
|
12.50
|
%
|
Ultimate healthcare cost trend rate
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Year ultimate healthcare cost trend rate reached
|
2026
|
|
|
2026
|
|
|
2026
|
|
HRA credit inflation index for grandfathered retirees
|
2.50
|
%
|
|
2.50
|
%
|
|
2.50
|
%
|
|
2019
|
|
2018
|
||||
Registered investment companies:
|
|
|
|
||||
Vanguard Federal Money Market Fund
|
$
|
109
|
|
|
$
|
—
|
|
Fidelity Government Money Market Fund
|
95
|
|
|
—
|
|
||
Fidelity Spartan U.S. Equity Index Fund
|
—
|
|
|
80
|
|
||
Vanguard 500 Index Fund
|
—
|
|
|
93
|
|
||
Vanguard Total International Stock
|
—
|
|
|
26
|
|
||
Plan Assets
|
204
|
|
|
199
|
|
||
Less: trust liabilities
|
(6
|
)
|
|
(23
|
)
|
||
Plan assets available for benefits
|
$
|
198
|
|
|
$
|
176
|
|
Year
|
|
Estimated Gross Benefit Payments
|
||
2020
|
|
$
|
9
|
|
2021
|
|
10
|
|
|
2022
|
|
11
|
|
|
2023
|
|
12
|
|
|
2024
|
|
12
|
|
|
2025-2029
|
|
62
|
|
|
Total
|
|
$
|
116
|
|
|
|
As of December 31, 2019
|
||
ROU Assets
|
|
|
||
Other assets
|
|
$
|
223
|
|
|
|
|
||
Operating lease liabilities
|
|
|
||
Accrued expenses
|
|
58
|
|
|
Other non-current liabilities
|
|
171
|
|
|
Total operating lease liabilities
|
|
$
|
229
|
|
|
|
Twelve Months Ended December 31, 2019
|
||
Weighted average remaining lease term
|
|
5 years
|
|
|
Weighted average incremental borrowing rate
|
|
2.3
|
%
|
|
Cash paid for operating leases
|
|
$
|
67
|
|
ROU assets obtained in exchange for operating lease obligations
|
|
$
|
88
|
|
|
|
Maturity of operating lease liabilities
|
||
2020
|
|
$
|
63
|
|
2021
|
|
55
|
|
|
2022
|
|
45
|
|
|
2023
|
|
30
|
|
|
2024
|
|
16
|
|
|
Thereafter
|
|
30
|
|
|
Total lease payments
|
|
239
|
|
|
Less interest
|
|
(10
|
)
|
|
Present value of lease liabilities
|
|
$
|
229
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
|
Shares
|
Weighted
Average Price Per Share
|
||||||||||||
Beginning nonvested units
|
343,814
|
|
$
|
245.38
|
|
|
352,919
|
|
$
|
226.31
|
|
|
373,403
|
|
$
|
221.77
|
|
|||
Issued
|
96,823
|
|
$
|
299.25
|
|
|
141,775
|
|
$
|
284.98
|
|
|
129,378
|
|
$
|
222.53
|
|
|||
Canceled
|
(36,224
|
)
|
$
|
253.22
|
|
|
(56,393
|
)
|
$
|
245.08
|
|
|
(47,488
|
)
|
$
|
229.36
|
|
|||
Vested
|
(78,289
|
)
|
$
|
247.96
|
|
|
(94,487
|
)
|
$
|
233.75
|
|
|
(102,374
|
)
|
$
|
203.51
|
|
|||
Ending nonvested units
|
326,124
|
|
$
|
259.88
|
|
|
343,814
|
|
$
|
245.38
|
|
|
352,919
|
|
$
|
226.31
|
|
|||
Fair value of shares vested
|
$
|
19
|
|
|
|
$
|
22
|
|
|
|
$
|
21
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||
|
Outstanding Common Stock
|
Treasury Stock
|
|
Outstanding Common Stock
|
Treasury Stock
|
|
Outstanding Common Stock
|
Treasury Stock
|
||||||
Balance at beginning of period
|
55,862,360
|
|
53,796,859
|
|
|
56,328,863
|
|
53,330,356
|
|
|
58,804,314
|
|
50,854,905
|
|
Exercise of stock options
|
232,052
|
|
(232,052
|
)
|
|
930,258
|
|
(930,258
|
)
|
|
407,542
|
|
(407,542
|
)
|
Settlement of restricted stock units, net of 26,107, 39,075 and 36,585 shares retained, respectively
|
52,182
|
|
(52,182
|
)
|
|
80,988
|
|
(80,988
|
)
|
|
103,331
|
|
(103,331
|
)
|
Settlement of performance share units, net of 6,737, 1,027 and 9,334 shares retained, respectively
|
14,027
|
|
(14,027
|
)
|
|
1,911
|
|
(1,911
|
)
|
|
13,978
|
|
(13,978
|
)
|
Purchase of treasury shares
|
(2,473,093
|
)
|
2,473,093
|
|
|
(1,479,660
|
)
|
1,479,660
|
|
|
(3,000,302
|
)
|
3,000,302
|
|
Balance at end of period
|
53,687,528
|
|
55,971,691
|
|
|
55,862,360
|
|
53,796,859
|
|
|
56,328,863
|
|
53,330,356
|
|
|
Foreign Currency Translation and Other
|
Defined Postretirement Benefit Plan
|
Other Employment-related Benefit Plans
|
Total
|
Foreign Currency Translation Attributable to Noncontrolling Interests
|
AOCE Attributable to W.W. Grainger, Inc.
|
||||||||||||
Balance at January 1, 2017, net of tax
|
$
|
(316
|
)
|
$
|
25
|
|
$
|
(5
|
)
|
$
|
(296
|
)
|
$
|
(23
|
)
|
$
|
(273
|
)
|
Other comprehensive earnings (loss) before reclassifications, net of tax
|
75
|
|
86
|
|
1
|
|
162
|
|
4
|
|
158
|
|
||||||
Amounts reclassified to Net earnings
|
18
|
|
(38
|
)
|
—
|
|
(20
|
)
|
—
|
|
(20
|
)
|
||||||
Net current period activity
|
$
|
93
|
|
$
|
48
|
|
$
|
1
|
|
$
|
142
|
|
$
|
4
|
|
$
|
138
|
|
Balance at December 31, 2017, net of tax
|
$
|
(223
|
)
|
$
|
73
|
|
$
|
(4
|
)
|
$
|
(154
|
)
|
$
|
(19
|
)
|
$
|
(135
|
)
|
Other comprehensive earnings (loss) before reclassifications, net of tax
|
(43
|
)
|
4
|
|
(1
|
)
|
(40
|
)
|
3
|
|
(43
|
)
|
||||||
Amounts reclassified to Net earnings
|
2
|
|
(10
|
)
|
—
|
|
(8
|
)
|
—
|
|
(8
|
)
|
||||||
Amounts reclassified to Retained earnings
|
—
|
|
15
|
|
—
|
|
15
|
|
—
|
|
15
|
|
||||||
Net current period activity
|
$
|
(41
|
)
|
$
|
9
|
|
$
|
(1
|
)
|
$
|
(33
|
)
|
$
|
3
|
|
$
|
(36
|
)
|
Balance at December 31, 2018, net of tax
|
$
|
(264
|
)
|
$
|
82
|
|
$
|
(5
|
)
|
$
|
(187
|
)
|
$
|
(16
|
)
|
$
|
(171
|
)
|
Other comprehensive earnings (loss) before reclassifications, net of tax
|
25
|
|
8
|
|
(3
|
)
|
30
|
|
3
|
|
27
|
|
||||||
Amounts reclassified to Net earnings
|
1
|
|
(11
|
)
|
—
|
|
(10
|
)
|
—
|
|
(10
|
)
|
||||||
Net current period activity
|
26
|
|
(3
|
)
|
(3
|
)
|
20
|
|
3
|
|
17
|
|
||||||
Balance at December 31, 2019, net of tax
|
$
|
(238
|
)
|
$
|
79
|
|
$
|
(8
|
)
|
$
|
(167
|
)
|
$
|
(13
|
)
|
$
|
(154
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
U.S.
|
$
|
1,226
|
|
|
$
|
1,163
|
|
|
$
|
971
|
|
Foreign
|
(17
|
)
|
|
(82
|
)
|
|
(35
|
)
|
|||
Total
|
$
|
1,209
|
|
|
$
|
1,081
|
|
|
$
|
936
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current income tax expense:
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
199
|
|
|
$
|
166
|
|
|
$
|
248
|
|
U.S. State
|
44
|
|
|
32
|
|
|
29
|
|
|||
Foreign
|
58
|
|
|
47
|
|
|
22
|
|
|||
Total current
|
301
|
|
|
245
|
|
|
299
|
|
|||
Deferred income tax expense
|
13
|
|
|
13
|
|
|
14
|
|
|||
Total income tax expense
|
$
|
314
|
|
|
$
|
258
|
|
|
$
|
313
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued expenses
|
$
|
86
|
|
|
$
|
35
|
|
Foreign operating loss carryforwards
|
67
|
|
|
64
|
|
||
Accrued employment-related benefits
|
49
|
|
|
49
|
|
||
Tax credit carryforward
|
22
|
|
|
22
|
|
||
Other
|
12
|
|
|
11
|
|
||
Deferred tax assets
|
236
|
|
|
181
|
|
||
Less valuation allowance
|
(72
|
)
|
|
(72
|
)
|
||
Deferred tax assets, net of valuation allowance
|
$
|
164
|
|
|
$
|
109
|
|
Deferred tax liabilities:
|
|
|
|
||||
Property, buildings and equipment
|
(134
|
)
|
|
(44
|
)
|
||
Intangibles
|
(83
|
)
|
|
(105
|
)
|
||
Prepaids
|
(6
|
)
|
|
(6
|
)
|
||
Other
|
(6
|
)
|
|
(8
|
)
|
||
Deferred tax liabilities
|
(229
|
)
|
|
(163
|
)
|
||
Net deferred tax liability
|
$
|
(65
|
)
|
|
$
|
(54
|
)
|
|
|
|
|
||||
The net deferred tax asset (liability) is classified as follows:
|
|
|
|
||||
Noncurrent assets
|
$
|
11
|
|
|
$
|
12
|
|
Noncurrent liabilities
|
(76
|
)
|
|
(66
|
)
|
||
Net deferred tax liability
|
$
|
(65
|
)
|
|
$
|
(54
|
)
|
|
For the Years Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Balance at beginning of period
|
$
|
(72
|
)
|
|
$
|
(84
|
)
|
Increases primarily related to foreign NOLs
|
(9
|
)
|
|
(3
|
)
|
||
Releases related to foreign NOLs
|
10
|
|
|
16
|
|
||
Increase related to U.S. foreign tax credits
|
(1
|
)
|
|
(1
|
)
|
||
Balance at end of period
|
$
|
(72
|
)
|
|
$
|
(72
|
)
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Federal income tax
|
$
|
254
|
|
|
$
|
227
|
|
|
$
|
327
|
|
State income taxes, net of federal income tax benefit
|
36
|
|
|
32
|
|
|
20
|
|
|||
Clean energy credit
|
—
|
|
|
(20
|
)
|
|
(38
|
)
|
|||
Foreign rate difference
|
25
|
|
|
20
|
|
|
10
|
|
|||
Goodwill impairment
|
—
|
|
|
20
|
|
|
—
|
|
|||
U.S. tax legislation impact
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Excess tax benefits from stock-based compensation
|
(2
|
)
|
|
(15
|
)
|
|
(14
|
)
|
|||
Other - net
|
1
|
|
|
(6
|
)
|
|
11
|
|
|||
Income tax expense
|
$
|
314
|
|
|
$
|
258
|
|
|
$
|
313
|
|
Effective tax rate
|
26.0
|
%
|
|
23.9
|
%
|
|
33.5
|
%
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
37
|
|
|
$
|
45
|
|
|
$
|
59
|
|
Additions for tax positions related to the current year
|
3
|
|
|
4
|
|
|
4
|
|
|||
Additions for tax positions of prior years
|
1
|
|
|
3
|
|
|
5
|
|
|||
Reductions for tax positions of prior years
|
(1
|
)
|
|
(5
|
)
|
|
(13
|
)
|
|||
Reductions due to statute lapse
|
(10
|
)
|
|
(9
|
)
|
|
(5
|
)
|
|||
Settlements, audit payments, refunds - net
|
(2
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|||
Balance at end of year
|
$
|
28
|
|
|
$
|
37
|
|
|
$
|
45
|
|
|
2019
|
||||||||||||||||||
|
United States
|
|
Canada
|
|
Total Reportable Segments
|
|
Other businesses
|
|
Total
|
||||||||||
Total net sales
|
$
|
8,815
|
|
|
$
|
529
|
|
|
$
|
9,344
|
|
|
$
|
2,651
|
|
|
$
|
11,995
|
|
Intersegment net sales
|
(505
|
)
|
|
—
|
|
|
(505
|
)
|
|
(4
|
)
|
|
(509
|
)
|
|||||
Net sales to external customers
|
$
|
8,310
|
|
|
$
|
529
|
|
|
$
|
8,839
|
|
|
$
|
2,647
|
|
|
11,486
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating earnings
|
$
|
1,391
|
|
|
$
|
3
|
|
|
$
|
1,394
|
|
|
$
|
(9
|
)
|
|
$
|
1,385
|
|
|
2018
|
||||||||||||||||||
|
United States
|
|
Canada
|
|
Total Reportable Segments
|
|
Other businesses
|
|
Total
|
||||||||||
Total net sales
|
$
|
8,588
|
|
|
$
|
653
|
|
|
$
|
9,241
|
|
|
$
|
2,441
|
|
|
$
|
11,682
|
|
Intersegment net sales
|
(457
|
)
|
|
—
|
|
|
(457
|
)
|
|
(4
|
)
|
|
(461
|
)
|
|||||
Net sales to external customers
|
$
|
8,131
|
|
|
$
|
653
|
|
|
$
|
8,784
|
|
|
$
|
2,437
|
|
|
$
|
11,221
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating earnings
|
$
|
1,338
|
|
|
$
|
(49
|
)
|
|
$
|
1,289
|
|
|
$
|
8
|
|
|
$
|
1,297
|
|
|
2017
|
||||||||||||||||||
|
United States
|
|
Canada
|
|
Total Reportable Segments
|
|
Other businesses
|
|
Total
|
||||||||||
Total net sales
|
$
|
7,960
|
|
|
$
|
753
|
|
|
$
|
8,713
|
|
|
$
|
2,120
|
|
|
$
|
10,833
|
|
Intersegment net sales
|
(404
|
)
|
|
—
|
|
|
(404
|
)
|
|
(4
|
)
|
|
(408
|
)
|
|||||
Net sales to external customers
|
$
|
7,556
|
|
|
$
|
753
|
|
|
$
|
8,309
|
|
|
$
|
2,116
|
|
|
$
|
10,425
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating earnings
|
$
|
1,200
|
|
|
$
|
(77
|
)
|
|
$
|
1,123
|
|
|
$
|
56
|
|
|
$
|
1,179
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating earnings:
|
|
|
|
|
|
||||||
Total operating earnings for reportable segments
|
$
|
1,394
|
|
|
$
|
1,289
|
|
|
$
|
1,123
|
|
Other businesses
|
(9
|
)
|
|
8
|
|
|
56
|
|
|||
Unallocated expenses
|
(123
|
)
|
|
(139
|
)
|
|
(144
|
)
|
|||
Total consolidated operating earnings
|
$
|
1,262
|
|
|
$
|
1,158
|
|
|
$
|
1,035
|
|
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
United States
|
$
|
2,668
|
|
|
$
|
2,496
|
|
|
$
|
2,310
|
|
Canada
|
173
|
|
|
188
|
|
|
279
|
|
|||
Assets for reportable segments
|
$
|
2,841
|
|
|
$
|
2,684
|
|
|
$
|
2,589
|
|
Other current and noncurrent assets
|
3,003
|
|
|
2,879
|
|
|
3,033
|
|
|||
Unallocated assets
|
161
|
|
|
310
|
|
|
182
|
|
|||
Total consolidated assets
|
$
|
6,005
|
|
|
$
|
5,873
|
|
|
$
|
5,804
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
United States
|
$
|
148
|
|
|
$
|
166
|
|
|
$
|
169
|
|
Canada
|
17
|
|
|
19
|
|
|
19
|
|
|||
Depreciation and amortization for reportable segments
|
$
|
165
|
|
|
$
|
185
|
|
|
$
|
188
|
|
Other businesses and unallocated
|
45
|
|
|
49
|
|
|
53
|
|
|||
Total consolidated depreciation and amortization
|
$
|
210
|
|
|
$
|
234
|
|
|
$
|
241
|
|
|
|
|
|
|
|
||||||
Additions to long-lived assets
|
|
|
|
|
|
||||||
United States
|
$
|
168
|
|
|
$
|
200
|
|
|
$
|
187
|
|
Canada
|
9
|
|
|
7
|
|
|
8
|
|
|||
Additions to long-lived assets for reportable segments
|
$
|
177
|
|
|
$
|
207
|
|
|
$
|
195
|
|
Other businesses and unallocated
|
72
|
|
|
39
|
|
|
67
|
|
|||
Total consolidated additions to long-lived assets
|
$
|
249
|
|
|
$
|
246
|
|
|
$
|
262
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue by geographic location:
|
|
|
|
|
|
||||||
United States
|
$
|
8,865
|
|
|
$
|
8,613
|
|
|
$
|
7,948
|
|
Canada
|
539
|
|
|
658
|
|
|
761
|
|
|||
Other foreign countries
|
2,082
|
|
|
1,950
|
|
|
1,716
|
|
|||
|
$
|
11,486
|
|
|
$
|
11,221
|
|
|
$
|
10,425
|
|
|
|
|
|
|
|
||||||
Long-lived segment assets by geographic location:
|
|
|
|
|
|
||||||
United States
|
$
|
1,268
|
|
|
$
|
1,140
|
|
|
$
|
1,098
|
|
Canada
|
152
|
|
|
136
|
|
|
199
|
|
|||
Other foreign countries
|
327
|
|
|
202
|
|
|
247
|
|
|||
|
$
|
1,747
|
|
|
$
|
1,478
|
|
|
$
|
1,544
|
|
|
|
2019 Quarter Ended
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
Net sales
|
|
$
|
2,799
|
|
|
$
|
2,893
|
|
|
$
|
2,947
|
|
|
$
|
2,847
|
|
|
$
|
11,486
|
|
COGS
|
|
1,704
|
|
|
1,772
|
|
|
1,848
|
|
|
1,765
|
|
|
7,089
|
|
|||||
Gross profit
|
|
1,095
|
|
|
1,121
|
|
|
1,099
|
|
|
1,082
|
|
|
4,397
|
|
|||||
SG&A
|
|
732
|
|
|
741
|
|
|
761
|
|
|
901
|
|
|
3,135
|
|
|||||
Operating earnings
|
|
363
|
|
|
380
|
|
|
338
|
|
|
181
|
|
|
1,262
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc.
|
|
$
|
253
|
|
|
$
|
260
|
|
|
$
|
233
|
|
|
$
|
103
|
|
|
$
|
849
|
|
Earnings per share - basic
|
|
$
|
4.50
|
|
|
$
|
4.69
|
|
|
$
|
4.27
|
|
|
$
|
1.89
|
|
|
$
|
15.39
|
|
Earnings per share - diluted
|
|
$
|
4.48
|
|
|
$
|
4.67
|
|
|
$
|
4.25
|
|
|
$
|
1.88
|
|
|
$
|
15.32
|
|
|
|
2018 Quarter Ended
|
||||||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
|
Total
|
||||||||||
Net sales
|
|
$
|
2,766
|
|
|
$
|
2,861
|
|
|
$
|
2,831
|
|
|
$
|
2,763
|
|
|
$
|
11,221
|
|
COGS
|
|
1,674
|
|
|
1,750
|
|
|
1,752
|
|
|
1,697
|
|
|
6,873
|
|
|||||
Gross profit
|
|
1,092
|
|
|
1,111
|
|
|
1,079
|
|
|
1,066
|
|
|
4,348
|
|
|||||
SG&A
|
|
757
|
|
|
767
|
|
|
890
|
|
|
776
|
|
|
3,190
|
|
|||||
Operating earnings
|
|
335
|
|
|
344
|
|
|
189
|
|
|
290
|
|
|
1,158
|
|
|||||
Net earnings attributable to W.W. Grainger, Inc.
|
|
$
|
232
|
|
|
$
|
237
|
|
|
$
|
104
|
|
|
$
|
209
|
|
|
$
|
782
|
|
Earnings per share - basic
|
|
$
|
4.09
|
|
|
$
|
4.19
|
|
|
$
|
1.84
|
|
|
$
|
3.71
|
|
|
$
|
13.82
|
|
Earnings per share - diluted
|
|
$
|
4.07
|
|
|
$
|
4.16
|
|
|
$
|
1.82
|
|
|
$
|
3.68
|
|
|
$
|
13.73
|
|
W.W. GRAINGER, INC.
|
|
|
|
By:
|
/s/ D.G. Macpherson
|
|
D.G. Macpherson
|
|
Chairman and Chief Executive Officer
|
|
|
|
/s/ D.G. Macpherson
|
|
/s/ Brian P. Anderson
|
D.G. Macpherson
|
|
Brian P. Anderson
|
Chairman and Chief Executive Officer, Director
|
|
Director
|
(Principal Executive Officer)
|
|
|
|
|
/s/ V. Ann Hailey
|
/s/ Thomas B. Okray
|
|
V. Ann Hailey
|
Thomas B. Okray
|
|
Director
|
Senior Vice President
|
|
|
and Chief Financial Officer
|
|
/s/ Neil S. Novich
|
(Principal Financial Officer)
|
|
Neil S. Novich
|
|
|
Director
|
/s/ Eric R. Tapia
|
|
|
Eric R. Tapia
|
|
/s/ E. Scott Santi
|
Vice President and Controller
|
|
E. Scott Santi
|
(Principal Accounting Officer)
|
|
Director
|
|
|
|
|
|
/s/ Lucas E. Watson
|
|
|
Lucas E. Watson
|
|
|
Director
|
|
|
|
|
|
|
EXHIBIT INDEX (1)
|
||
EXHIBIT NO.
|
|
DESCRIPTION
|
|
Share Purchase Agreement, dated as of July 30, 2015, by and among Grainger, GWW UK Holdings Limited, Gregory Family Office Limited and Michael Gregory, incorporated by reference to Exhibit 2.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated July 31, 2015.
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|
|
Restated Articles of Incorporation, incorporated by reference to Exhibit 3(i) to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
|
|
|
By-laws, as amended on March 9, 2017, incorporated by reference to Exhibit 3.1.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated March 9, 2017.
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|
4.1
|
|
No instruments which define the rights of holders of W.W. Grainger, Inc.’s Industrial Development Revenue Bonds are filed herewith, pursuant to the exemption contained in Regulation S-K, Item 601(b)(4)(iii). W.W. Grainger, Inc. hereby agrees to furnish to the SEC, upon request, a copy of any such instrument.
|
|
Indenture, dated as of June 11, 2015, between W.W. Grainger, Inc. and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated June 11, 2015.
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|
|
First Supplemental Indenture, dated as of June 11, 2015, between W.W. Grainger, Inc. and U.S. Bank National Association, as trustee, and Form of 4.60% Senior Notes due 2045, incorporated by reference to Exhibit 4.2 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated June 11, 2015.
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|
|
Second Supplemental Indenture, dated as of May 16, 2016, between W.W. Grainger, Inc., and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated May 16, 2016.
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|
|
Third Supplemental Indenture, dated as of May 22, 2017, between W.W. Grainger, Inc., and U.S. Bank National Association, as trustee, incorporated by reference to Exhibit 4.1 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated May 22, 2017.
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|
|
Form of 3.75% Senior Notes due 2046 (included in Exhibit 4.4), incorporated by reference to Exhibit 4.2 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated May 16, 2016.
|
|
|
Form of 4.20% Senior Notes due 2047 (included in Exhibit 4.5), incorporated by reference to Exhibit 4.2 to W.W. Grainger, Inc.’s Current Report on Form 8-K dated May 22, 2017.
|
|
|
Description of Registrant's Securities Pursuant to Section 12 of the Securities Exchange Act of 1934.
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|
|
1990 Long-Term Stock Incentive Plan, as amended, incorporated by reference to Exhibit 10(a) to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.*
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|
|
Form of Indemnification Agreement between W.W. Grainger, Inc. and each of its directors and certain of its executive officers, incorporated by reference to Exhibit 10(b)(i) to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.*
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|
|
Frozen Executive Death Benefit Plan, as amended, incorporated by reference to Exhibit 10(b)(v) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.*
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|
|
First amendment to the Frozen Executive Death Benefit Plan, incorporated by reference to Exhibit 10(b)(v)(1) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008.*
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|
|
Second amendment to the Frozen Executive Death Benefit Plan, incorporated by reference to Exhibit 10(b)(iv)(2) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009.*
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|
|
Supplemental Profit Sharing Plan, as amended, incorporated by reference to Exhibit 10(viii) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003.*
|
|
|
Supplemental Profit Sharing Plan II, as amended, incorporated by reference to Exhibit 10(b)(ix) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.*
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|
|
Voluntary Salary and Incentive Deferral Plan, as amended, incorporated by reference to Exhibit 10(b)(xi) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.*
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|
|
Summary Description of the 2019 Directors Compensation Program.*
|
|
|
2005 Incentive Plan, as amended, incorporated by reference to Exhibit 10(d) to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.*
|
|
2010 Incentive Plan, incorporated by reference to Exhibit B of W.W. Grainger, Inc.’s Proxy Statement dated March 12, 2010.*
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|
|
Form of Stock Option Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xvi) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009.*
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|
|
Form of Stock Option Award and Restricted Stock Unit Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xvii) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009.*
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|
|
Form of Restricted Stock Unit Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xviii) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010.*
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|
|
Form of 2012 Performance Share Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xix) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012.*
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|
|
Summary Description of the 2020 Management Incentive Program.*
|
|
|
Incentive Program Recoupment Agreement, incorporated by reference to Exhibit 10(b)(xxv) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009.*
|
|
|
Form of Change in Control Employment Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xxvii) to W.W. Grainger, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2010.*
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|
|
Form of 2013 Performance Share Award Agreement between Grainger and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xxiii) to Grainger's Annual Report on Form 10-K for the year ended December 31, 2013.*
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|
|
Form of 2014 Performance Share Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10(b)(xxiv) to Grainger's Annual Report on Form 10-K for the year ended December 31, 2014.*
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|
|
Form of 2015 Performance Share Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.28 to W.W. Grainger, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2015.*
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|
|
W.W. Grainger, Inc. 2015 Incentive Plan, incorporated by reference to Exhibit B of W.W. Grainger, Inc.’s Proxy Statement dated March 13, 2015.*
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|
|
First Amendment to the W.W. Grainger, Inc. 2015 Incentive Plan, incorporated by reference to 10.1 of W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.*
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|
|
W.W. Grainger, Inc. 2015 Incentive Plan as Amended and Restated Effective October 31, 2018, incorporated by reference to Exhibit 10.1 to W.W. Grainger, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.*
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|
|
£180,000,000 Facilities Agreement, dated as of August 26, 2015, by and among GWW UK Holdings Ltd, W.W. Grainger, Inc., the lender parties thereto, Lloyds Bank PLC and Lloyds Securities Inc., as Arrangers, and Lloyds Bank PLC, as Agent, incorporated by reference to W.W. Grainger, Inc.’s Current Report on Form 8-K dated September 1, 2015.
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Form of Stock Option Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.1 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.*
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|
Form of Restricted Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.2 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.*
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Form of 2016 Performance Share Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.3 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.*
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Form of Stock Option Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.2 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.*
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Form of Restricted Stock Unit Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.3 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.*
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Form of 2017 Performance Share Award Agreement between W.W. Grainger, Inc. and certain of its executive officers, incorporated by reference to Exhibit 10.4 to W.W. Grainger, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.*
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|
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Separation Agreement and General Release by and between W.W. Grainger, Inc. and Ronald L. Jadin dated April 2, 2018, incorporated by reference to Exhibit 10.1 to W.W. Grainger, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.*
|
•
|
Encourage decision-making focused on growing the business profitably and efficiently, thus leading to improvements in shareholder value;
|
•
|
Influence participants to make decisions consistent with shareholders’ interests;
|
•
|
Align participant actions with relevant Company objectives; and,
|
•
|
Attract and retain the talent required to achieve the Company’s objectives.
|
Adjusted ROIC
|
Payout as a Percent of Target
|
< 14.3%
|
0%
|
28.1%
|
40%
|
29.5% to 29.8%
|
50%
|
31.3%
|
60%
|
45.1%
|
100%
|
Sales Growth =
|
Total Daily Sales, Current Year
|
-1
|
|
Total Daily Sales, Prior Year
|
Daily Sales Growth
|
Payout as a Percent of Target
|
< -10.6%
|
0%
|
3.2%
|
40%
|
4.5% to 4.9%
|
50%
|
6.0%
|
60%
|
19.8%
|
100%
|
1.
|
Full-Year Participation - Participants who were in incentive-eligible jobs for the full year will be eligible to receive a full award under the MIP, except as noted below.
|
2.
|
First-Year Participation (internal promotion or external hire) - Participants who are placed into an incentive eligible job on or before December 1 will be eligible to receive a pro-rata award based on the number of months in the eligible job. Participants placed in an eligible job after December 1 are not eligible to participate for that year.
|
3.
|
Changes in Target MIP Percentage - Participants whose target MIP percentage changes during the year due to promotion, demotion or reclassification of the current job will receive an award pro-rated based on the number of months at each MIP level.
|
4.
|
Transfer to Another Incentive Program - A Participant who changes jobs during the year such that the former and current jobs participate in different incentive programs will receive an award pro-rated based on the number of months in each eligible job.
|
5.
|
Transfer to a Non-Incentive Eligible Job - A Participant in an incentive-eligible job who transfers to a non-incentive-eligible job will receive a pro-rata award for the number of months in an eligible job. Payment will be made on the next incentive payment date.
|
6.
|
Voluntary Resignation - If a Participant’s resignation date is before December 31, no award will be paid for the current year. Subject to paragraphs 8 and 10 below, if a Participant’s resignation date is after December 31 and the Participant was in an eligible job on December 1 of that year, the Participant will be deemed to have earned that year's payment, if any. The Participant will receive a pro-rata payment based on the number of months in an incentive-eligible job that year on the next incentive payment date.
|
7.
|
Death, Retirement or Long-term Disability - A pro-rata award will be made for the current year to the Participant or his/her estate on the next incentive payment date. The salary used in the calculations will be the base salary as of their last day worked.
|
8.
|
Pro-rata Calculation - Participation in CMIP will be calculated in whole months with the 14th calendar day of the month as the cutoff. For example, if a Participant is in the job on the 14th day of the month, they will get credit for the whole month, if they are in the job on the 15th, they will get credit beginning the next month (e.g., transfer into an eligible job on January 15th - February 14th will get 11/12th MIP for the year, transfer into an eligible job on January 14th or earlier will get 12/12th MIP).
|
9.
|
Eligible Employees must be in good standing, as determined in the sole discretion of the CCOM, to be eligible for participation in the CMIP. Good standing includes not currently being on a performance improvement program.
|
C.
|
Termination of Employment; Engaging in Misconduct; Excess Payments; Restatement of Inaccurate Financial Results; Indemnification
|
1.
|
If (a) the Participant’s Employment is terminated by the Employer for whatever reason (other than by reason of job elimination), (b) the Employer does not renew an employment contract with a Participant, or (c) the Participant Engaged in Misconduct, or is believed to have Engaged in Misconduct, all awards will be forfeited.
|
2.
|
If a Participant Engaged in Misconduct or is believed to have Engaged in Misconduct, the Company shall be entitled to recover from the Participant, and Participant shall re-pay any cash sum received pursuant to the CMIP, in whole or in part, for any period of time, as the Company deems appropriate under the circumstances. Further, if the Participant (or former Participant) receives any amount in excess of what the Participant (or former Participant) should have received under the terms of the CMIP for any reason (including, without limitation, by reason of a mistake in calculations or administrative error), all as determined by the CCOM in its discretion, then the Company shall have the right to cancel the award, require the repayment of any excess cash distribution acquired pursuant to, or received in connection with, the CMIP or take any other action it deems appropriate under the circumstances with respect to recouping the excess payment.
|
3.
|
The Company shall have the discretion to recover awards that were paid or settled to the Participant at a time when she or he was an employee in the following instances:
|
a.
|
If the payment or settlement of awards would have been lower had the achievement of applicable financial performance goals been calculated based on such restated financial results, if the Participant Engaged in Misconduct; and/or
|
b.
|
In the case of materially inaccurate financial results, whether or not they result in a
|
c.
|
For any reason (including, without limitation, by reason of a mistake in calculations or administrative error), all as determined by the CCOM in its discretion.
|
4.
|
The rights and obligations of each Participant under the terms and conditions of his/her Employment shall be unaffected by his/her participation in the CMIP or any right he/she may have with the Company to participate in the CMIP. A Participant who participates in the CMIP waives any and all rights to compensation or damages in consequence of the termination of his/her Employment for any reason insofar as those rights arise or may arise from his/her forfeiture of an award under the CMIP as a result of such termination or from the loss or diminution in value of rights or entitlements he/she may have under the CMIP. If necessary, a Participant’s terms of Employment shall be varied accordingly.
|
5.
|
The exercise of the Company of its rights under this Section C shall not constitute the recovery of liquidated damages, nor shall the exercise of such rights be deemed its exclusive remedies, but shall be in addition to all other rights available at law or in equity. The Participant expressly agrees to indemnify and hold the Company and the Participant’s Employer harmless from any loss, cost, damage, or expense (including attorneys' fees) that the Company or the Employer may incur as a result of the Participant’s actions or in the Company’s and/or the Employer’s efforts to recover such previously made payments or value pursuant to this Section C.
|
(i)
|
has breached any contract or agreement with the Employer;
|
(ii)
|
has made any unauthorized disclosure of any of the trade secrets or confidential information of Employer;
|
(iii)
|
has committed an act of embezzlement, fraud or theft with respect to the property of Employer;
|
(iv)
|
has engaged in conduct which violates the company’s Business Conduct Guidelines, employee handbook, or any anti-corruption or bribery law (whether involving government officials or otherwise);
|
(v)
|
has deliberately disregarded the rules of the Employer in such a manner as to cause any loss, damage or injury to, or otherwise endanger the property, reputation or employees of the Employer;
|
(vi)
|
induced any employee, supplier, customer, agent or contractor of Employer or any other individual to take any action described in (i)-(v) above;
|
(vii)
|
intends to take any action described in (i)-(vi) above; or
|
(viii)
|
has taken any other action that the CCOM in its discretion determines to be detrimental;
|
Subsidiaries (over 50% ownership)
|
|
|
|
Subsidiary
|
Jurisdiction
|
2422626 Ontario Inc.
|
Ontario
|
971086 Ontario Inc.
|
Ontario
|
Acklands - Grainger Inc.
|
Canada
|
Apex Industrial Limited
|
Scotland
|
Ashlink Software Limited
|
England & Wales
|
Blackrock Tools Inc.
|
Ontario
|
BMF Finance B.V.
|
Netherlands
|
BMF Fundco B.V.
|
Netherlands
|
BMF Management Services B.V.
|
Netherlands
|
BMFGH Holding B.V.
|
Netherlands
|
Bogle and Timms Limited
|
England & Wales
|
Borstlap International B.V.
|
Netherlands
|
CJ Bent & Son Limited
|
England & Wales
|
Combori N.V.
|
Belgium
|
Cromwell Bearings and Transmission Services Limited
|
England & Wales
|
Cromwell Czech Republic s.r.o.
|
Czech Republic
|
Cromwell France SAS
|
France
|
Cromwell Group (Holdings) Limited
|
England & Wales
|
Cromwell Group (International) Limited
|
England & Wales
|
Cromwell Industrial Supplies Private Limited
|
India
|
Cromwell Logistics Limited
|
England & Wales
|
Cromwell Poland sp. z.o.o.
|
Poland
|
Cromwell Tools (Norwich) Limited
|
England & Wales
|
Cromwell Tools (Rochester) Limited
|
England & Wales
|
Cromwell Tools (Shanghai) Co. Ltd.
|
People’s Republic of China
|
Cromwell Tools (Thailand) Co. Ltd.
|
Thailand
|
Cromwell Tools Limited
|
England & Wales
|
Cromwell Tools SDN BHD
|
Malaysia
|
Cromwell Tools SRL
|
Romania
|
Cromwell-Siddle (Grimsby) Limited
|
England & Wales
|
Dayton Electric Manufacturing Co.
|
Illinois
|
E & R Industrial Sales, Inc.
|
Michigan
|
E&R Tooling and Solutions de Mexico, S. de R.L. de C.V.
|
Mexico
|
East Midlands Property Developments Limited
|
England & Wales
|
Fabory Asia B.V.
|
Netherlands
|
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 Sp. z.o.o.
|
Poland
|
Fabory Portugal Lda.
|
Portugal
|
Fabory Shanghai Co. Ltd.
|
People's Republic of China
|
Fabory Slovakia s.r.o.
|
Slovakia
|
Fabory Spain S.L.
|
Spain
|
Fabory SRL
|
Romania
|
Fabory UK Holdings Limited
|
England & Wales
|
Fabory UK Limited
|
England & Wales
|
FEC Distribution Specialties Inc.
|
Ontario
|
FFSA S.A.
|
France
|
Fixbolt (Suhzou) Co., Ltd. Taicang
|
People's Republic of China
|
Gamut Supply LLC
|
Delaware
|
GHC Specialty Brands, LLC
|
Wisconsin
|
GMMI LLC
|
Delaware
|
Grainger Asia Pacific K.K.
|
Japan
|
Grainger Brasil Comércio e Distribuição Ltda.
|
Brazil
|
Grainger Brasil Participações Ltda.
|
Brazil
|
Grainger Canada Holdings ULC
|
Alberta
|
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 Online Business Ltd
|
England and Wales
|
Grainger Global Trading (Shanghai) Company Limited
|
People's Republic of China
|
Grainger Guam L.L.C.
|
Guam
|
Grainger Industrial Supply India Private Limited
|
India
|
Grainger International Holdings B.V.
|
Netherlands
|
Grainger International, Inc.
|
Illinois
|
Grainger Management LLC
|
Illinois
|
Grainger Mexico LLC
|
Delaware
|
Grainger Panama S.A.
|
Panama
|
Grainger Panama Services S. de R.L.
|
Panama
|
Grainger Procurement Company LLC
|
Illinois
|
Grainger Registry Services, LLC
|
Delaware
|
Grainger Service Holding Company, Inc.
|
Delaware
|
Grainger Services International Inc.
|
Illinois
|
Grainger Singapore Pte. Ltd.
|
Singapore
|
Grainger, S.A. de C.V.
|
Mexico
|
GWW Investments C.V.
|
Netherlands
|
GWW UK Holdings Ltd.
|
England and Wales
|
Imperial Supplies Holdings, Inc.
|
Delaware
|
Imperial Supplies LLC
|
Delaware
|
Inbema N.V.
|
Curaçao Netherlands Antilles
|
India Pacific Brands
|
Mauritius
|
Industrial Supply Alliance Limited
|
England & Wales
|
John Smallman Limited
|
England & Wales
|
JSL Bearbreak Limited
|
England & Wales
|
Krusters 2000 Inc.
|
Ontario
|
LN Participações Ltda.
|
Brazil
|
Merlin Business Software Limited
|
England & Wales
|
MonotaRO Co., Ltd.
|
Japan
|
Mountain Ventures WWG IV, LLC
|
Delaware
|
Mountain Ventures WWG V, LLC
|
Delaware
|
Mountain Ventures WWG, LLC
|
Delaware
|
MRO Soluciones, S.A. de C.V.
|
Mexico
|
NAVIMRO Co., Ltd.
|
Republic of Korea (South Korea)
|
Norwell Engineering Limited
|
England & Wales
|
PT Cromwell Tools
|
Indonesia
|
PT MonotaRO Indonesia
|
Indonesia
|
Safety Registry Services, LLC
|
Delaware
|
Safety Solutions, Inc.
|
Ohio
|
Technical Tooling Limited
|
England & Wales
|
The Kennedy Group Limited
|
England & Wales
|
Tooling & Engineering Distributors (TED) Limited
|
Ireland
|
Turners (Ironmongers) Limited
|
England & Wales
|
Valentine Tools Limited
|
England & Wales
|
WFS (USA) Ltd.
|
South Carolina
|
WFS Enterprises Inc.
|
Ontario
|
WFS Holding Company, Inc.
|
Michigan
|
WFS Ltd.
|
Ontario
|
Windsor Factory Supply Inc.
|
Michigan
|
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 IP Holdings, LLC
|
Illinois
|
Zoro Shanghai
|
People's Republic of China
|
Zoro Tools Europe GmbH
|
Germany
|
Zoro Tools, Inc.
|
Delaware
|
Zoro UK Limited
|
England & Wales
|
Subsidiaries (50% and less ownership)
|
|
|
|
Subsidiary
|
Jurisdiction
|
Sterling Fabory India Private Ltd. (50%)
|
India
|
(1)
|
Registration Statement (Form S-3 No. 333-203444) of W. W. Grainger, Inc.
|
(2)
|
Registration Statement (Form S-4 No. 33-32091 and Post-Effective Amendment No.1) of W. W. Grainger, Inc.
|
(3)
|
Registration Statement (Form S-8 No. 33-43902) pertaining to the 1990 Long Term Stock Incentive Plan of W. W. Grainger, Inc.
|
(4)
|
Registration Statement (Form S-8 No. 333-166345) pertaining to the 2010 Incentive Plan of W. W. Grainger Inc.
|
(5)
|
Registration Statement (Form S-8 No. 333-203715) pertaining to the 2015 Incentive Plan of W. W. Grainger, Inc.
|
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;
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c)
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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
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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
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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
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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.
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By:
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/s/ D.G. Macpherson
|
Name:
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D.G. Macpherson
|
Title:
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Chairman and Chief Executive Officer
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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;
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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/ Thomas B. Okray
|
Name:
|
Thomas B. Okray
|
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/ D.G. Macpherson
|
D.G. Macpherson
|
Chairman and Chief Executive Officer
|
February 20, 2020
|
|
|
|
/s/ Thomas B. Okray
|
Thomas B. Okray
|
Senior Vice President and Chief Financial Officer
|
February 20, 2020
|