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) | ||
Not Applicable | ||
(Former name, former address and former fiscal year; if changed since last report) |
TABLE OF CONTENTS | ||
Page No. | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | Financial Statements (Unaudited). | |
Condensed Consolidated Statements of Earnings for the Three and Six Months Ended June 30, 2017 and 2016 | ||
Condensed Consolidated Statements of Comprehensive Earnings for the Three and Six Months Ended June 30, 2017 and 2016 | ||
Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 | ||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 | ||
Notes to Condensed Consolidated Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | |
Item 4. | Controls and Procedures. | |
PART II | OTHER INFORMATION | |
Item 1. | Legal Proceedings. | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | |
Item 6. | Exhibits. | |
Signatures | ||
EXHIBITS |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 2,615,269 | $ | 2,563,668 | $ | 5,156,398 | $ | 5,070,206 | |||||||
Cost of merchandise sold | 1,575,313 | 1,523,609 | 3,097,250 | 2,985,094 | |||||||||||
Gross profit | 1,039,956 | 1,040,059 | 2,059,148 | 2,085,112 | |||||||||||
Warehousing, marketing and administrative expenses | 807,891 | 734,470 | 1,531,595 | 1,462,431 | |||||||||||
Operating earnings | 232,065 | 305,589 | 527,553 | 622,681 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 465 | 162 | 658 | 327 | |||||||||||
Interest expense | (19,905 | ) | (16,806 | ) | (36,884 | ) | (30,531 | ) | |||||||
Loss from equity method investment | (6,121 | ) | (5,427 | ) | (14,495 | ) | (11,815 | ) | |||||||
Other non-operating income and (expense) | 692 | (538 | ) | 1,037 | (98 | ) | |||||||||
Total other expense | (24,869 | ) | (22,609 | ) | (49,684 | ) | (42,117 | ) | |||||||
Earnings before income taxes | 207,196 | 282,980 | 477,869 | 580,564 | |||||||||||
Income taxes | 100,237 | 103,535 | 188,057 | 209,475 | |||||||||||
Net earnings | 106,959 | 179,445 | 289,812 | 371,089 | |||||||||||
Less: Net earnings attributable to noncontrolling interest | 9,038 | 6,769 | 17,147 | 11,700 | |||||||||||
Net earnings attributable to W.W. Grainger, Inc. | $ | 97,921 | $ | 172,676 | $ | 272,665 | $ | 359,389 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.68 | $ | 2.81 | $ | 4.64 | $ | 5.81 | |||||||
Diluted | $ | 1.67 | $ | 2.79 | $ | 4.61 | $ | 5.77 | |||||||
Weighted average number of shares outstanding: | |||||||||||||||
Basic | 58,012,731 | 60,891,298 | 58,363,416 | 61,278,981 | |||||||||||
Diluted | 58,287,312 | 61,301,545 | 58,741,262 | 61,699,603 | |||||||||||
Cash dividends paid per share | $ | 1.28 | $ | 1.22 | $ | 2.50 | $ | 2.39 |
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||
Net earnings | $ | 106,959 | $ | 179,445 | $ | 289,812 | $ | 371,089 | ||||||
Other comprehensive earnings: | ||||||||||||||
Foreign currency translation adjustments, net of reclassification (see Note 5) | 46,543 | (6,915 | ) | 75,846 | 44,575 | |||||||||
Postretirement benefit plan reclassification, net of tax benefit of $878, $631, and $1,757, $1,262, respectively | (1,400 | ) | (1,009 | ) | (2,798 | ) | (2,018 | ) | ||||||
Other | — | 352 | (12 | ) | 656 | |||||||||
Comprehensive earnings, net of tax | 152,102 | 171,873 | 362,848 | 414,302 | ||||||||||
Less: Comprehensive earnings attributable to noncontrolling interest | ||||||||||||||
Net earnings | 9,038 | 6,769 | 17,147 | 11,700 | ||||||||||
Foreign currency translation adjustments | (1,186 | ) | 8,729 | 4,346 | 14,433 | |||||||||
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ | 144,250 | $ | 156,375 | $ | 341,355 | $ | 388,169 |
(Unaudited) | |||||||
ASSETS | June 30, 2017 | December 31, 2016 | |||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 275,065 | $ | 274,146 | |||
Accounts receivable (less allowances for doubtful | |||||||
accounts of $32,174 and $26,690, respectively) | 1,369,626 | 1,223,096 | |||||
Inventories – net | 1,397,804 | 1,406,470 | |||||
Prepaid expenses and other assets | 106,659 | 81,766 | |||||
Prepaid income taxes | 37,193 | 34,751 | |||||
Total current assets | 3,186,347 | 3,020,229 | |||||
PROPERTY, BUILDINGS AND EQUIPMENT | 3,410,237 | 3,411,502 | |||||
Less: Accumulated depreciation and amortization | 2,018,041 | 1,990,611 | |||||
Property, buildings and equipment – net | 1,392,196 | 1,420,891 | |||||
DEFERRED INCOME TAXES | 79,264 | 64,775 | |||||
GOODWILL | 536,580 | 527,150 | |||||
INTANGIBLES - NET | 592,473 | 586,126 | |||||
OTHER ASSETS | 75,021 | 75,136 | |||||
TOTAL ASSETS | $ | 5,861,881 | $ | 5,694,307 |
(Unaudited) | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | June 30, 2017 | December 31, 2016 | |||||
CURRENT LIABILITIES | |||||||
Short-term debt | $ | 129,066 | $ | 386,140 | |||
Current maturities of long-term debt | 29,232 | 19,966 | |||||
Trade accounts payable | 692,689 | 650,092 | |||||
Accrued compensation and benefits | 197,073 | 212,525 | |||||
Accrued contributions to employees’ profit sharing plans | 48,905 | 54,948 | |||||
Accrued expenses | 291,226 | 290,207 | |||||
Income taxes payable | 22,387 | 15,059 | |||||
Total current liabilities | 1,410,578 | 1,628,937 | |||||
LONG-TERM DEBT (less current maturities) | 2,267,872 | 1,840,946 | |||||
DEFERRED INCOME TAXES AND TAX UNCERTAINTIES | 135,270 | 126,101 | |||||
EMPLOYMENT-RELATED AND OTHER NON-CURRENT LIABILITIES | 199,965 | 192,555 | |||||
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; 109,659,219 shares issued | 54,830 | 54,830 | |||||
Additional contributed capital | 1,034,980 | 1,030,256 | |||||
Retained earnings | 7,239,159 | 7,113,559 | |||||
Accumulated other comprehensive losses | (203,604 | ) | (272,294 | ) | |||
Treasury stock, at cost – 51,968,546 and 50,854,905 shares, respectively | (6,402,037 | ) | (6,128,416 | ) | |||
Total W.W. Grainger, Inc. shareholders’ equity | 1,723,328 | 1,797,935 | |||||
Noncontrolling interest | 124,868 | 107,833 | |||||
Total shareholders' equity | 1,848,196 | 1,905,768 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 5,861,881 | $ | 5,694,307 |
Six Months Ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings | $ | 289,812 | $ | 371,089 | |||
Provision for losses on accounts receivable | 12,769 | 8,282 | |||||
Deferred income taxes and tax uncertainties | (7,339 | ) | 4,565 | ||||
Depreciation and amortization | 128,195 | 113,496 | |||||
Net losses (gains) from sales of assets and non-cash charges | 12,537 | (15,564 | ) | ||||
Stock-based compensation | 20,030 | 21,135 | |||||
Losses from equity method investment | 14,495 | 11,815 | |||||
Change in operating assets and liabilities – net of business acquisitions: | |||||||
Accounts receivable | (136,844 | ) | (98,394 | ) | |||
Inventories | 29,936 | 8,733 | |||||
Prepaid expenses and other assets | (24,232 | ) | (6,143 | ) | |||
Trade accounts payable | 36,817 | 43,338 | |||||
Other current liabilities | (18,989 | ) | (112,256 | ) | |||
Current income taxes payable | 6,360 | (1,368 | ) | ||||
Accrued employment-related benefits cost | 3,655 | 3,877 | |||||
Other – net | 4,976 | (9,512 | ) | ||||
Net cash provided by operating activities | 372,178 | 343,093 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Additions to property, buildings and equipment | (131,147 | ) | (105,717 | ) | |||
Proceeds from sales of assets | 69,758 | 43,119 | |||||
Equity method investment | (13,300 | ) | (10,340 | ) | |||
Other – net | (146 | ) | (597 | ) | |||
Net cash used in investing activities | (74,835 | ) | (73,535 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net (decrease) increase in commercial paper | (269,841 | ) | 19,888 | ||||
Borrowings under lines of credit | 30,374 | 18,501 | |||||
Payments against lines of credit | (18,036 | ) | (19,306 | ) | |||
Proceeds from issuance of long-term debt | 415,672 | 393,284 | |||||
Payments of long-term debt | (7,799 | ) | (129,981 | ) | |||
Proceeds from stock options exercised | 27,064 | 26,191 | |||||
Payments for employee taxes withheld from stock awards | (16,719 | ) | (16,704 | ) | |||
Excess tax benefits from stock-based compensation | — | 9,770 | |||||
Purchase of treasury stock | (313,562 | ) | (412,647 | ) | |||
Cash dividends paid | (151,637 | ) | (147,480 | ) | |||
Net cash used in financing activities | (304,484 | ) | (258,484 | ) | |||
Exchange rate effect on cash and cash equivalents | 8,060 | 14,787 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 919 | 25,861 | |||||
Cash and cash equivalents at beginning of year | 274,146 | 290,136 | |||||
Cash and cash equivalents at end of period | $ | 275,065 | $ | 315,997 |
June 30, 2017 | December 31, 2016 | ||||||
Outstanding lines of credit | $ | 29,160 | $ | 16,392 | |||
Outstanding commercial paper | 99,906 | 369,748 | |||||
$ | 129,066 | $ | 386,140 |
June 30, 2017 | December 31, 2016 | ||||||
4.60% senior notes due 2045 | $ | 1,000,000 | $ | 1,000,000 | |||
3.75% senior notes due 2046 | 400,000 | 400,000 | |||||
4.20% senior notes due 2047 | 400,000 | — | |||||
British pound term loan and revolving credit facility | 192,771 | 187,506 | |||||
Euro term loan and revolving credit facility | 131,364 | 120,900 | |||||
Canadian dollar revolving credit facility | 111,865 | 100,521 | |||||
Other | 85,373 | 71,109 | |||||
2,321,373 | 1,880,036 | ||||||
Less current maturities | (29,232 | ) | (19,966 | ) | |||
Debt issuance costs and discounts | (24,269 | ) | (19,124 | ) | |||
$ | 2,267,872 | $ | 1,840,946 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 1,897 | $ | 2,060 | $ | 3,794 | $ | 4,119 | |||||||
Interest cost | 2,148 | 2,463 | 4,297 | 4,927 | |||||||||||
Expected return on assets | (2,857 | ) | (2,528 | ) | (5,714 | ) | (5,056 | ) | |||||||
Amortization of unrecognized (gains) losses | (656 | ) | 32 | (1,311 | ) | 64 | |||||||||
Amortization of prior service credits | (1,622 | ) | (1,672 | ) | (3,244 | ) | (3,344 | ) | |||||||
Net periodic (benefits) costs | $ | (1,090 | ) | $ | 355 | $ | (2,178 | ) | $ | 710 |
Three Months Ended June 30, 2017 | |||||||||||||||
United States | Canada | Other Businesses | Total | ||||||||||||
Total net sales | $ | 1,999,153 | $ | 189,113 | $ | 526,560 | $ | 2,714,826 | |||||||
Intersegment net sales | (98,507 | ) | 10 | (1,060 | ) | (99,557 | ) | ||||||||
Net sales to external customers | $ | 1,900,646 | $ | 189,123 | $ | 525,500 | $ | 2,615,269 | |||||||
Segment operating earnings (losses) | $ | 312,289 | $ | (27,727 | ) | $ | (14,222 | ) | $ | 270,340 |
Three Months Ended June 30, 2016 | |||||||||||||||
United States | Canada | Other Businesses | Total | ||||||||||||
Total net sales | $ | 1,978,542 | $ | 194,418 | $ | 474,166 | $ | 2,647,126 | |||||||
Intersegment net sales | (82,442 | ) | (50 | ) | (966 | ) | (83,458 | ) | |||||||
Net sales to external customers | $ | 1,896,100 | $ | 194,368 | $ | 473,200 | $ | 2,563,668 | |||||||
Segment operating earnings (losses) | $ | 348,938 | $ | (27,741 | ) | $ | 29,724 | $ | 350,921 |
Six Months Ended June 30, 2017 | |||||||||||||||
United States | Canada | Other Businesses | Total | ||||||||||||
Total net sales | $ | 3,952,597 | $ | 375,254 | $ | 1,023,967 | $ | 5,351,818 | |||||||
Intersegment net sales | (193,579 | ) | (3 | ) | (1,838 | ) | (195,420 | ) | |||||||
Net sales to external customers | $ | 3,759,018 | $ | 375,251 | $ | 1,022,129 | $ | 5,156,398 | |||||||
Segment operating earnings (losses) | $ | 624,759 | $ | (44,456 | ) | $ | 17,285 | $ | 597,588 |
Six Months Ended June 30, 2016 | |||||||||||||||
United States | Canada | Other Businesses | Total | ||||||||||||
Total net sales | $ | 3,944,809 | $ | 373,189 | $ | 919,500 | $ | 5,237,498 | |||||||
Intersegment net sales | (164,941 | ) | (86 | ) | (2,265 | ) | (167,292 | ) | |||||||
Net sales to external customers | $ | 3,779,868 | $ | 373,103 | $ | 917,235 | $ | 5,070,206 | |||||||
Segment operating earnings (losses) | $ | 680,795 | $ | (40,088 | ) | $ | 51,508 | $ | 692,215 |
United States | Canada | Other Businesses | Total | ||||||||||||
Segment assets: | |||||||||||||||
June 30, 2017 | $ | 2,334,275 | $ | 289,060 | $ | 563,315 | $ | 3,186,650 | |||||||
December 31, 2016 | $ | 2,275,009 | $ | 286,035 | $ | 494,067 | $ | 3,055,111 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating earnings: | |||||||||||||||
Total operating earnings for operating segments | $ | 270,340 | $ | 350,921 | $ | 597,588 | $ | 692,215 | |||||||
Unallocated expenses and eliminations | (38,275 | ) | (45,332 | ) | (70,035 | ) | (69,534 | ) | |||||||
Total consolidated operating earnings | $ | 232,065 | $ | 305,589 | $ | 527,553 | $ | 622,681 |
June 30, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
Total assets for operating segments | $ | 3,186,650 | $ | 3,055,111 | |||
Other current and non-current assets | 2,509,003 | 2,464,656 | |||||
Unallocated assets | 166,228 | 174,540 | |||||
Total consolidated assets | $ | 5,861,881 | $ | 5,694,307 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net earnings attributable to W.W. Grainger, Inc. as reported | $ | 97,921 | $ | 172,676 | $ | 272,665 | $ | 359,389 | |||||||
Distributed earnings available to participating securities | (427 | ) | (576 | ) | (973 | ) | (1,202 | ) | |||||||
Undistributed earnings available to participating securities | (217 | ) | (970 | ) | (1,159 | ) | (2,092 | ) | |||||||
Numerator for basic earnings per share – Undistributed and distributed earnings available to common shareholders | 97,277 | 171,130 | 270,533 | 356,095 | |||||||||||
Undistributed earnings allocated to participating securities | 217 | 970 | 1,159 | 2,092 | |||||||||||
Undistributed earnings reallocated to participating securities | (216 | ) | (964 | ) | (1,152 | ) | (2,078 | ) | |||||||
Numerator for diluted earnings per share – Undistributed and distributed earnings available to common shareholders | $ | 97,278 | $ | 171,136 | $ | 270,540 | $ | 356,109 | |||||||
Denominator for basic earnings per share – weighted average shares | 58,012,731 | 60,891,298 | 58,363,416 | 61,278,981 | |||||||||||
Effect of dilutive securities | 274,581 | 410,247 | 377,846 | 420,622 | |||||||||||
Denominator for diluted earnings per share – weighted average shares adjusted for dilutive securities | 58,287,312 | 61,301,545 | 58,741,262 | 61,699,603 | |||||||||||
Earnings per share two-class method | |||||||||||||||
Basic | $ | 1.68 | $ | 2.81 | $ | 4.64 | $ | 5.81 | |||||||
Diluted | $ | 1.67 | $ | 2.79 | $ | 4.61 | $ | 5.77 |
United States | Canada | |||
2017 Forecast (July) | 2017 Forecast (April) | 2017 Forecast (July) | 2017 Forecast (April) | |
Business Investment | 4.3% | 4.4% | 1.1% | 0.7% |
Business Inventory | 0.6% | 1.5% | —% | — |
Exports | 2.7% | 3.0% | 1.2% | 1.9% |
Industrial Production | 2.0% | 2.3% | 3.9% | 2.3% |
GDP | 2.3% | 2.4% | 2.5% | 2.3% |
Oil Prices | — | — | $49/barrel | $53/barrel |
Source: Global Insight (April & July 2017) |
Three Months Ended June 30, | |||||||||||||||
Percent Increase/(Decrease) | As a Percent of Net Sales | ||||||||||||||
2017 (A) | 2016 (A) | 2017 | 2016 | ||||||||||||
Net sales | $ | 2,615 | $ | 2,564 | 2 | % | 100.0 | % | 100.0 | % | |||||
Cost of merchandise sold | 1,575 | 1,524 | 3 | % | 60.2 | 59.4 | |||||||||
Gross profit | 1,040 | 1,040 | — | % | 39.8 | 40.6 | |||||||||
Operating expenses | 808 | 734 | 10 | % | 30.9 | 28.7 | |||||||||
Operating earnings | 232 | 306 | (24 | )% | 8.9 | 11.9 | |||||||||
Other expense | 25 | 23 | 10 | % | 1.0 | 0.9 | |||||||||
Income taxes | 100 | 104 | (3 | )% | 3.8 | 4.0 | |||||||||
Noncontrolling interest | 9 | 7 | 34 | % | 0.3 | 0.3 | |||||||||
Net earnings attributable to W.W. Grainger, Inc. | $ | 98 | $ | 173 | (43 | )% | 3.7 | % | 6.7 | % |
Percent Increase/(Decrease) | |
Volume | 7 |
Foreign exchange | (1) |
Holiday timing | (1) |
Price | (3) |
Total | 2% |
• | $13 million in restructuring in the U.S., primarily related to contact centers and asset write-downs offset by $13 million in gains on the sales of branches. |
• | $17 million in restructuring due to announced branch closures and asset write-downs in Canada. |
• | $42 million in Other Businesses, primarily related to the wind-down of Colombia. |
Three Months Ended | |||||
June 30, | |||||
2017 | 2016 | % | |||
Operating earnings reported | $232,065 | $305,589 | (24 | )% | |
Branch gains (United States) | (13,438) | (15,376) | |||
Restructuring (United States) | 13,541 | 6,024 | |||
Restructuring (Canada) | 20,485 | 8,055 | |||
Inventory reserve adjustment (Canada) | — | 9,847 | |||
Restructuring (Other Businesses) | 41,510 | — | |||
Restructuring (Unallocated expense) | — | 8,947 | |||
Subtotal | 62,098 | 17,497 | |||
Operating earnings adjusted | $294,163 | $323,086 | (9 | )% |
Percent Increase/(Decrease) | |
Volume | 5 |
Intercompany sales to Zoro | 1 |
Holiday timing | (1) |
Price | (4) |
Total | 1% |
Percent Increase/(Decrease) | |
Wildfire impact | 2 |
Volume | 2 |
Price | (1) |
Holiday timing | (1) |
Foreign exchange | (5) |
Total | (3)% |
Percent Increase/(Decrease) | |
Price/volume | 14 |
Foreign exchange | (3) |
Total | 11% |
Six Months Ended June 30, | |||||||||||||||
Percent Increase/(Decrease) | As a Percent of Net Sales | ||||||||||||||
2017 (A) | 2016 (A) | 2017 | 2016 | ||||||||||||
Net sales | $ | 5,156 | $ | 5,070 | 2 | % | 100.0 | % | 100.0 | % | |||||
Cost of merchandise sold | 3,097 | 2,985 | 4 | % | 60.1 | 58.9 | |||||||||
Gross profit | 2,059 | 2,085 | (1 | )% | 39.9 | 41.1 | |||||||||
Operating expenses | 1,532 | 1,462 | 5 | % | 29.7 | 28.8 | |||||||||
Operating earnings | 528 | 623 | (15 | )% | 10.2 | 12.3 | |||||||||
Other expense | 50 | 42 | 18 | % | 1.0 | 0.8 | |||||||||
Income taxes | 188 | 209 | (10 | )% | 3.6 | 4.1 | |||||||||
Noncontrolling interest | 17 | 12 | 47 | % | 0.3 | 0.2 | |||||||||
Net earnings attributable to W.W. Grainger, Inc. | $ | 273 | $ | 359 | (24 | )% | 5.3 | % | 7.1 | % |
Percent Increase/(Decrease) | |
Volume | 6 |
Foreign exchange | (1) |
Price | (3) |
Total | 2% |
• | $17 million in restructuring in the U.S., primarily related to contact centers and asset write-downs offset by $23 million in gain on sales of branches. |
• | $18 million in restructuring due to announced branch closures and asset write-downs in Canada. |
• | $42 million in Other Businesses, primarily related to the wind-down of Colombia. |
Six Months Ended | |||||
June 30, | |||||
2017 | 2016 | % | |||
Operating earnings reported | $527,553 | $622,681 | (15 | )% | |
Branch gains (United States) | (22,826) | (15,380) | |||
Restructuring (United States) | 16,607 | 22,435 | |||
Restructuring (Canada) | 21,572 | 11,132 | |||
Inventory reserve adjustment (Canada) | — | 9,847 | |||
Restructuring (Other Businesses) | 41,510 | — | |||
Restructuring (Unallocated expense) | — | 8,947 | |||
Subtotal | 56,863 | 36,981 | |||
Operating earnings adjusted | $584,416 | $659,662 | (11 | )% |
Percent Increase/(Decrease) | |
Volume | 4 |
Intercompany sales to Zoro | 1 |
Seasonal sales | (1) |
Price | (4) |
Total | 0% |
Percent Increase/(Decrease) | |
Volume | 3 |
Wildfire impact | 1 |
Foreign exchange | (1) |
Price | (2) |
Total | 1% |
Percent Increase/(Decrease) | |
Volume | 14 |
Foreign exchange | (3) |
Total | 11% |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
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 | |
Apr. 1 – Apr. 30 | 346,244 | $208.88 | 346,244 | 4,866,239 | |
May 1 – May 31 | 262,722 | $181.59 | 262,722 | 4,603,517 | |
June 1 – June 30 | 171,242 | $174.99 | 171,242 | 4,432,275 | |
Total | 780,208 | $192.25 | 780,208 |
(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 April 6, 2015. The program has no specified expiration date. Activity is reported on a trade date basis. |
W.W. Grainger, Inc. | |||
(Registrant) | |||
Date: | July 27, 2017 | By: | /s/ R. L. Jadin |
R. L. Jadin, Senior Vice President and Chief Financial Officer | |||
Date: | July 27, 2017 | By: | /s/ E. R. Tapia |
E. R. Tapia, Vice President and Controller |
EXHIBIT NO. | DESCRIPTION | |
4.1 | Third Supplemental Indenture, dated as of May 22, 2017, between W.W. Grainger, Inc., and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to W.W. Grainger, Inc's Current Report of Form 8-K on May 22, 2017, and incorporated herein by reference). | |
4.2 | Form of 4.20% Senior Notes due 2047 (included in Exhibit 4.1) (filed as Exhibit 4.1 to W. W. Grainger, Inc's Current report on Form 8-K on May 22, 2017, and incorporated herein by reference). | |
10.1 | Summary Description of the Company Management Incentive Program (updated).* | |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
• | 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 |
▪ | Repricing all products in a timely manner; |
▪ | Renegotiating key contracts with quality and speed; |
▪ | Increasing volume (as measured by Cost Of Goods Sold, or COGS increase); |
▪ | Managing expenses (as measured by expense to COGS); |
▪ | Achieving earnings (as measured by ROIC); and |
▪ | Completing cost productivity plan and executing against that plan on time. |
1. | I have reviewed this Quarterly Report on Form 10-Q 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/ D.G. Macpherson |
Name: | D.G. Macpherson |
Title: | Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q 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/ D.G. Macpherson |
D.G. Macpherson |
Chief Executive Officer |
July 27, 2017 |
/s/ R. L. Jadin |
R. L. Jadin |
Senior Vice President and Chief Financial Officer |
July 27, 2017 |
DOCUMENT AND ENTITY INFORMATION |
6 Months Ended |
---|---|
Jun. 30, 2017
shares
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Document and Entity Information [Abstract] | |
Entity Registrant Name | GRAINGER W W INC |
Entity Central Index Key | 0000277135 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2017 |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Entity Common Stock, Shares Outstanding | 57,690,673 |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Statement [Abstract] | ||||
Net sales | $ 2,615,269 | $ 2,563,668 | $ 5,156,398 | $ 5,070,206 |
Cost of merchandise sold | 1,575,313 | 1,523,609 | 3,097,250 | 2,985,094 |
Gross profit | 1,039,956 | 1,040,059 | 2,059,148 | 2,085,112 |
Warehousing, marketing and administrative expenses | 807,891 | 734,470 | 1,531,595 | 1,462,431 |
Operating earnings | 232,065 | 305,589 | 527,553 | 622,681 |
Other income (expense): | ||||
Interest income | 465 | 162 | 658 | 327 |
Interest expense | (19,905) | (16,806) | (36,884) | (30,531) |
Loss from equity method investment | (6,121) | (5,427) | (14,495) | (11,815) |
Other non-operating income and (expense) | 692 | (538) | 1,037 | (98) |
Total other expense | (24,869) | (22,609) | (49,684) | (42,117) |
Earnings before income taxes | 207,196 | 282,980 | 477,869 | 580,564 |
Income taxes | 100,237 | 103,535 | 188,057 | 209,475 |
Net earnings | 106,959 | 179,445 | 289,812 | 371,089 |
Less: Net earnings attributable to noncontrolling interest | 9,038 | 6,769 | 17,147 | 11,700 |
Net earnings attributable to W.W. Grainger, Inc. | $ 97,921 | $ 172,676 | $ 272,665 | $ 359,389 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 1.68 | $ 2.81 | $ 4.64 | $ 5.81 |
Diluted (in dollars per share) | $ 1.67 | $ 2.79 | $ 4.61 | $ 5.77 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 58,012,731 | 60,891,298 | 58,363,416 | 61,278,981 |
Diluted (in shares) | 58,287,312 | 61,301,545 | 58,741,262 | 61,699,603 |
Cash dividends paid per share (in dollars per share) | $ 1.28 | $ 1.22 | $ 2.50 | $ 2.39 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 106,959 | $ 179,445 | $ 289,812 | $ 371,089 |
Other comprehensive earnings: | ||||
Foreign currency translation adjustments, net of reclassification (see Note 5) | 46,543 | (6,915) | 75,846 | 44,575 |
Postretirement benefit plan reclassification, net of tax benefit of $878, $631, and $1,757, $1,262, respectively | (1,400) | (1,009) | (2,798) | (2,018) |
Other | 0 | 352 | (12) | 656 |
Comprehensive earnings, net of tax | 152,102 | 171,873 | 362,848 | 414,302 |
Less: Comprehensive earnings attributable to noncontrolling interest | ||||
Net earnings | 9,038 | 6,769 | 17,147 | 11,700 |
Foreign currency translation adjustments | (1,186) | 8,729 | 4,346 | 14,433 |
Comprehensive earnings attributable to W.W. Grainger, Inc. | $ 144,250 | $ 156,375 | $ 341,355 | $ 388,169 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (PARENTHETICALS) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax benefit from postretirement benefit plan reclassification adjustment | $ 878 | $ 631 | $ 1,757 | $ 1,262 |
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICALS) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 32,174 | $ 26,690 |
Cumulative preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Cumulative preferred stock, shares authorized (in shares) | 12,000,000 | 12,000,000 |
Cumulative preferred stock, shares issued (in shares) | 0 | 0 |
Cumulative preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 109,659,219 | 109,659,219 |
Treasury stock, shares at cost (in shares) | 51,968,546 | 50,854,905 |
BACKGROUND AND BASIS OF PRESENTATION |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | BACKGROUND AND BASIS OF PRESENTATION W.W. Grainger, Inc. is a broad-line distributor of maintenance, repair and operating (MRO) supplies, and other related products and services used by businesses and institutions. W.W. Grainger, Inc.’s operations are primarily in the United States (U.S.) and Canada, with a presence in Europe, Asia and Latin America. In this report, the words “Company” or “Grainger” mean W.W. Grainger, Inc. and its subsidiaries. The Condensed Consolidated Financial Statements of the Company and the related notes are unaudited and should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). The Condensed Consolidated Balance Sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited financial information reflects all adjustments (primarily consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the statements contained herein. Certain amounts in the Condensed Consolidated Statements of Cash Flows, as previously reported, have been reclassified to conform to the 2017 presentation. In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Stock Based Compensation: Improvements to Employee Share-Based Payment Accounting, which became effective January 1, 2017. As a result, the Company reclassified $16.7 million of employee taxes paid from cash flows from operating activities to cash flows from financing activities in the Consolidated Statements of Cash Flows for the six months ended June 30, 2016. |
NEW ACCOUNTING STANDARDS |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities. This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under the fair value options and the presentation and disclosure requirements for financial instruments. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. Certain provisions for the new guidance can be adopted early. The Company is evaluating the impact of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of this ASU. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. The ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company is evaluating the impact of this ASU. In February 2017, the FASB issued ASU 2017-05, Other Income - Gain and Losses from the Derecognition of Nonfinancial Assets. This ASU 2017-05 clarifies the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The ASU is effective at the same time as ASU 2014-09. Therefore, for public entities, the amendments are effective for fiscal years and interim periods beginning after December 15, 2017. The Company is evaluating the impact of this ASU. In March 2017, the FASB issued ASU 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The amendments in this ASU should be applied retrospectively for the presentation of the net periodic postretirement cost components in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the impact of this ASU. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The ASU should be applied prospectively on and after the effective date. The Company is evaluating the impact of this ASU. REVENUE RECOGNITION STANDARDS In July 2015, FASB announced a one-year delay in the effective date of ASU 2014-09, Revenue from Contracts with Customers. This ASU will now be effective for interim and fiscal years beginning after December 15, 2017. The standard will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In March 2016, the FASB issued ASU 2016-08, Revenue from Contract with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This ASU reduces the potential for diversity in practice arising from inconsistent application of principal versus agent guidance as well as reduce the cost and complexity during the transition and on an ongoing basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. This ASU clarifies the identification of performance obligations and the licensing implementation guidelines, while retaining the related principles of those areas. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. This ASU includes technical corrections and improvements to Topic 606 and other Topics amended by Update 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. The effective dates of ASU 2016-08, ASU 2016-10 and ASU 2016-20 are consistent with ASU 2014-09. The Company has elected not to early adopt these ASUs. The standard permits the use of either the full retrospective or the modified retrospective adoption method. The Company is planning to elect the modified retrospective method and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity as of January 1, 2018. These ASUs require expanded qualitative and quantitative disclosures of revenue and cash flows emerging from contracts with customers. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. Based on initial reviews, the standard is not expected to have a material impact on the Company's Consolidated Financial Statements. |
DIVIDEND |
6 Months Ended |
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Jun. 30, 2017 | |
Dividends [Abstract] | |
DIVIDEND | DIVIDEND On July 26, 2017, the Company’s Board of Directors declared a quarterly dividend of $1.28 per share, payable September 1, 2017, to shareholders of record on August 14, 2017. |
GOODWILL AND OTHER INTANGIBLE ASSETS (Notes) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Grainger had approximately $1.1 billion of goodwill and intangible assets as of June 30, 2017 and December 31, 2016, or 19% and 20% of total assets, respectively. Goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. To detect these events, Grainger periodically performs qualitative assessments of factors such as reporting units' historical and current performance, strategic initiatives and overall economic factors and assumptions regarding future performance, to determine if it is more likely than not that the goodwill and intangible assets might be impaired and whether it is necessary to perform the two-step quantitative impairment test. Grainger’s quarterly qualitative assessment did not indicate the presence of impairment triggering events for goodwill and intangible assets as of June 30, 2017. The Company considered the restructuring actions discussed in Note 5 below to determine if it were more likely than not that the goodwill of its Canada reporting unit was impaired and concluded that the two-step quantitative impairment test was not necessary as of June 30, 2017. However, as Canada’s improvement plan evolves, volume growth, price increases and execution of market pricing programs and productivity initiatives may have a significant impact on the reporting unit’s cash flows. Changes in assumptions regarding future performance of the Company’s reporting units and their ability to execute on growth initiatives and productivity improvements, along with cost increases outpacing price increases and operating margin declines, may have a significant impact on performance. Likewise, unfavorable economic environment or other factors and changes in market conditions may occur in key markets the Company’s reporting units operate and future impairments of the goodwill and intangible assets may result. |
RESTRUCTURING RESERVES |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING RESERVES | RESTRUCTURING RESERVES The Company continues to evaluate performance and take restructuring actions to reduce costs in the U.S., and to streamline and focus on profitability in Canada and Other Businesses. Total restructuring and related charges for the Company were $62 million and $57 million in the three and six months ended June 30, 2017, respectively, net of gains on sale of branches of $13 million and $23 million for the same periods. Total restructuring and other charges for the Company were $17 million and $37 million in the three and six months ended June 30, 2016, respectively, net of gains on sale of branches of $15 million for the same periods. Approximately 80% and 50% of the charges in the six months ended June 30, 2017 and 2016, respectively, were non-cash. The total amount the Company expects to incur in connection with these restructuring activities is an additional $17 million, approximately, through 2018. The current year net charges are primarily comprised of the following: U.S. Through the first half of 2017, the Company continued initiatives to take cost out in the U.S., including contact centers consolidation and other actions resulting in $13 million and $17 million restructuring charges, primarily related to involuntary employee termination costs and asset write-down in the three and six months ended June 30, 2017, respectively. These restructuring activities are expected to be completed in 2018. Canada In May 2017, the Company announced the closures of 59 underperforming branches and other actions in Canada, resulting in $20 million of restructuring charges, primarily related to involuntary employee termination costs, facility closures and asset write-downs. The branch closures are expected to occur in 2017 through early 2018. Other Businesses In May 2017, the Company announced plans to wind-down its operations in Colombia, expected to be completed in 2018. As a result, the Company recorded total charges of $26 million related to involuntary employee termination costs, asset write-downs and other exit costs. In addition, $16 million of accumulated foreign currency translation losses from the consolidation of this business unit was reclassified from Accumulated other comprehensive earnings (losses) to the Consolidated Statement of Earnings and is reported in Warehousing, marketing and administrative expenses. The Company cannot recognize the tax benefit associated with the Colombia exit. Company Involuntary Employee Termination Costs The total of involuntary employee termination costs related to the restructuring in the U.S. and Canada are included in Warehousing, marketing and administrative expenses and were approximately $13 million and $17 million in the three and six months ended June 30, 2017, respectively, and approximately $9 million and $25 million in the three and six months ended June 30, 2016, respectively. The severance reserve balance as of June 30, 2017 and December 31, 2016 was approximately $26 million and $23 million, respectively, and is included in Accrued compensation and benefits, with the majority expected to be paid through 2017 and early 2018. |
SHORT-TERM AND LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHORT-TERM AND LONG-TERM DEBT | SHORT-TERM AND LONG-TERM DEBT The following summarizes information concerning short-term debt (in thousands of dollars):
As of June 30, 2017 and December 31, 2016, there was $100 million and $370 million, respectively, of commercial paper outstanding. A portion of the proceeds from the May 2017 bond issuance (see below) were used to redeem outstanding commercial paper. Long-term debt consisted of the following (in thousands of dollars):
On May 22, 2017, the Company issued $400 million of unsecured 4.20% Senior Notes (4.20% Notes) that mature on May 15, 2047. The 4.20% Notes require no principal payments until the maturity date and interest is payable semi-annually on May 15 and November 15, beginning on November 15, 2017. Prior to November 15, 2046, the Company may redeem the 4.20% Notes in whole at any time or gradually at a “make-whole” redemption price. This redemption price is calculated by reference to the then-current yield on a U.S. treasury security with a maturity comparable to the remaining term of the 4.20% Notes plus 20 basis points, together with accrued and unpaid interest, if any, at the redemption date. Additionally, if the Company experiences specific kinds of changes in control, it will be required to make an offer to purchase the 4.20% Notes at 101% of their principal amount plus accrued and unpaid interest, if any, at the date of purchase. Costs and discounts of approximately $5.8 million associated with the issuance of the 4.20% Notes, representing underwriting fees and other expenses, have been recorded as a contra-liability within Long-term debt and will be amortized to interest expense over the term of the 4.20% Notes. The estimated fair value of the Company’s 4.20% Notes, 3.75% Senior Notes due 2046 (3.75% Notes) and 4.60% Senior Notes due 2045 (4.60% Notes) was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as level 2 inputs within the fair value hierarchy. The fair value of the 4.20% Notes was approximately $410 million as of June 30, 2017. The fair value of the 3.75% Notes was approximately $384 million and $371 million as of June 30, 2017 and December 31, 2016, respectively. The fair value of the 4.60% Notes was approximately $1.1 billion as of June 30, 2017 and December 31, 2016, respectively. The carrying value of other long-term debt approximates fair value due to their variable interest rates. |
EMPLOYEE BENEFITS - POSTRETIREMENT |
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Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFITS - POSTRETIREMENT | EMPLOYEE BENEFITS - POSTRETIREMENT The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its U.S. employees (and their dependents) hired prior to January 1, 2013, should they elect to maintain such coverage upon retirement. Covered employees become eligible for participation when they qualify for retirement while working for the Company. Participation in the plan is voluntary and requires participants to make contributions toward the cost of the plan, as determined by the Company. The net periodic benefit costs charged to operating expenses, which are valued at the measurement date of January 1 and recognized evenly throughout the year, consisted of the following components (in thousands of dollars):
The Company has established a Group Benefit Trust to fund the plan and process benefit payments. The funding of the trust is an estimated amount which is intended to allow the maximum deductible contribution under the Internal Revenue Code of 1986 (IRC), as amended. There are zero minimum funding requirements and the Company did not make contributions to the trust during the six months ended June 30, 2017. The Company intends to follow its practice of funding the maximum deductible amounts under the IRC. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two reportable segments: the U.S. and Canada. The U.S. operating segment reflects the results of the Company's U.S. business. The Canada operating segment reflects the results for Acklands – Grainger Inc. and its subsidiaries (Acklands-Grainger), the Company’s Canadian business. Other businesses include MonotaRO in Japan, Zoro in the U.S. and certain Company business operations in Europe, Asia and Latin America. Other businesses do not meet the definition of a reportable segment. Operating segments generate revenue almost exclusively through the distribution of maintenance, repair and operating supplies, as service revenues account for less than 1% of total revenues for each operating segment. Following is a summary of segment results (in thousands of dollars):
Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars):
Assets for reportable segments include net accounts receivable and first-in, first-out inventory which are reported to the Company's Chief Operating Decision Maker. Other current and non-current assets include all other assets of the reportable segments. Unallocated expenses and unallocated assets primarily relate to the Company headquarter's support services, which are not part of any business segment, as well as intercompany eliminations. Unallocated expenses include payroll and benefits, depreciation and other costs associated with headquarters-related support services. Unallocated assets include non-operating cash and cash equivalents, certain prepaid expenses and property, buildings and equipment-net. Intersegment net sales for the U.S. segment increased by $16 million and $29 million for the three and six months ended June 30, 2017, respectively, compared to the prior year, driven by increased sales from the U.S. business to Zoro. Zoro's primary source of inventory is the U.S. business' supply chain network. |
EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in thousands of dollars, except for share and per share amounts):
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CONTINGENCIES AND LEGAL MATTERS |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS From time to time the Company is involved in various legal and administrative proceedings that are incidental to its business, including claims related to product liability, general negligence, contract disputes, environmental issues, wage and hour laws, intellectual property, employment practices, regulatory compliance or other matters and actions brought by employees, consumers, competitors, suppliers or governmental entities. As a government contractor selling to federal, state and local governmental entities, the Company is also subject to governmental or regulatory inquiries or audits or other proceedings, including those related to pricing compliance. It is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position or results of operations. |
NEW ACCOUNTING STANDARDS (Policies) |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
New Accounting Standards, Policy | In January 2016, the FASB issued ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities. This change to the financial instrument model primarily affects the accounting for equity investments, financial liabilities under the fair value options and the presentation and disclosure requirements for financial instruments. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. Certain provisions for the new guidance can be adopted early. The Company is evaluating the impact of this ASU. In February 2016, the FASB issued ASU 2016-02, Leases. This ASU improves transparency and comparability related to the accounting and reporting of leasing arrangements. The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of this ASU. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2017. The ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. This ASU is not expected to have a material impact on the Company's Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies how an entity is required to test goodwill for impairment. The effective date of this ASU is for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted. The Company is evaluating the impact of this ASU. In February 2017, the FASB issued ASU 2017-05, Other Income - Gain and Losses from the Derecognition of Nonfinancial Assets. This ASU 2017-05 clarifies the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and to add guidance for partial sales of nonfinancial assets. Subtopic 610-20, which was issued in May 2014 as a part of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The ASU is effective at the same time as ASU 2014-09. Therefore, for public entities, the amendments are effective for fiscal years and interim periods beginning after December 15, 2017. The Company is evaluating the impact of this ASU. In March 2017, the FASB issued ASU 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The amendments in this ASU should be applied retrospectively for the presentation of the net periodic postretirement cost components in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the impact of this ASU. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this ASU are effective for public entities for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. The ASU should be applied prospectively on and after the effective date. The Company is evaluating the impact of this ASU. REVENUE RECOGNITION STANDARDS In July 2015, FASB announced a one-year delay in the effective date of ASU 2014-09, Revenue from Contracts with Customers. This ASU will now be effective for interim and fiscal years beginning after December 15, 2017. The standard will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In March 2016, the FASB issued ASU 2016-08, Revenue from Contract with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net). This ASU reduces the potential for diversity in practice arising from inconsistent application of principal versus agent guidance as well as reduce the cost and complexity during the transition and on an ongoing basis. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. This ASU clarifies the identification of performance obligations and the licensing implementation guidelines, while retaining the related principles of those areas. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. This ASU includes technical corrections and improvements to Topic 606 and other Topics amended by Update 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU 2014-09. The effective dates of ASU 2016-08, ASU 2016-10 and ASU 2016-20 are consistent with ASU 2014-09. The Company has elected not to early adopt these ASUs. The standard permits the use of either the full retrospective or the modified retrospective adoption method. The Company is planning to elect the modified retrospective method and recognize the cumulative effect of initially applying the new standard as an adjustment to the opening balance of equity as of January 1, 2018. These ASUs require expanded qualitative and quantitative disclosures of revenue and cash flows emerging from contracts with customers. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes and financial statement disclosures. Based on initial reviews, the standard is not expected to have a material impact on the Company's Consolidated Financial Statements. |
GOODWILL AND OTHER INTANGIBLE ASSETS (Policies) |
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Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets, Policy | Goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. To detect these events, Grainger periodically performs qualitative assessments of factors such as reporting units' historical and current performance, strategic initiatives and overall economic factors and assumptions regarding future performance, to determine if it is more likely than not that the goodwill and intangible assets might be impaired and whether it is necessary to perform the two-step quantitative impairment test. Grainger’s quarterly qualitative assessment did not indicate the presence of impairment triggering events for goodwill and intangible assets as of June 30, 2017. The Company considered the restructuring actions discussed in Note 5 below to determine if it were more likely than not that the goodwill of its Canada reporting unit was impaired and concluded that the two-step quantitative impairment test was not necessary as of June 30, 2017. However, as Canada’s improvement plan evolves, volume growth, price increases and execution of market pricing programs and productivity initiatives may have a significant impact on the reporting unit’s cash flows. Changes in assumptions regarding future performance of the Company’s reporting units and their ability to execute on growth initiatives and productivity improvements, along with cost increases outpacing price increases and operating margin declines, may have a significant impact on performance. Likewise, unfavorable economic environment or other factors and changes in market conditions may occur in key markets the Company’s reporting units operate and future impairments of the goodwill and intangible assets may result. |
SHORT-TERM AND LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-Term Debt Instruments | The following summarizes information concerning short-term debt (in thousands of dollars):
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Schedule of Long-Term Debt Instruments | Long-term debt consisted of the following (in thousands of dollars):
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EMPLOYEE BENEFITS - POSTRETIREMENT (Tables) |
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Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Costs Charged to Operating Expenses | The net periodic benefit costs charged to operating expenses, which are valued at the measurement date of January 1 and recognized evenly throughout the year, consisted of the following components (in thousands of dollars):
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Results | Following is a summary of segment results (in thousands of dollars):
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Schedule of Reconciliation of Operating Earnings from Segment to Consolidated | Following are reconciliations of segment information with the consolidated totals per the financial statements (in thousands of dollars):
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Schedule of Reconciliation of Assets from Segment to Consolidated |
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Earnings per Share under Two-Class Method | The following table sets forth the computation of basic and diluted earnings per share under the two-class method (in thousands of dollars, except for share and per share amounts):
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BACKGROUND AND BASIS OF PRESENTATION - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Employee taxes paid from cash flows | $ 16,719 | $ 16,704 |
DIVIDEND - Narrative (Details) |
Jul. 26, 2017
$ / shares
|
---|---|
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Dividend declared (in dollars per share) | $ 1.28 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Billions |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill and intangible assets | $ 1.1 | $ 1.1 |
Goodwill and intangible assets, percent of total assets | 19.00% | 20.00% |
SHORT-TERM AND LONG-TERM DEBT - Schedule of Short-Term Debt Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Short-term Debt [Line Items] | ||
Outstanding short-term debt | $ 129,066 | $ 386,140 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Outstanding short-term debt | 29,160 | 16,392 |
Commercial Paper [Member] | ||
Short-term Debt [Line Items] | ||
Outstanding short-term debt | $ 99,906 | $ 369,748 |
EMPLOYEE BENEFITS - POSTRETIREMENT - Schedule of Net Periodic Benefit Costs Charged to Operating Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||||
Service cost | $ 1,897 | $ 2,060 | $ 3,794 | $ 4,119 |
Interest cost | 2,148 | 2,463 | 4,297 | 4,927 |
Expected return on assets | (2,857) | (2,528) | (5,714) | (5,056) |
Amortization of unrecognized (gains) losses | (656) | 32 | (1,311) | 64 |
Amortization of prior service credits | (1,622) | (1,672) | (3,244) | (3,344) |
Net periodic (benefits) costs | $ (1,090) | $ 355 | $ (2,178) | $ 710 |
SEGMENT INFORMATION - Narrative (Details) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
segment
|
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments | segment | 2 | |
Service revenues, percent of total revenues | 1.00% | |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Intersegment sales increase | $ | $ 16 | $ 29 |
SEGMENT INFORMATION - Schedule of Reconciliation of Operating Earnings from Segment to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Segment Reporting Information [Line Items] | ||||
Total consolidated operating earnings | $ 232,065 | $ 305,589 | $ 527,553 | $ 622,681 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated operating earnings | 270,340 | 350,921 | 597,588 | 692,215 |
Eliminations and Unallocated in Consolidation [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated operating earnings | $ (38,275) | $ (45,332) | $ (70,035) | $ (69,534) |
SEGMENT INFORMATION - Schedule of Reconciliation of Assets from Segment to Consolidated (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total consolidated assets | $ 5,861,881 | $ 5,694,307 |
Segment Balances Before Intersegment Eliminations and Consolidation Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | 3,186,650 | 3,055,111 |
Segment Reconciling Items [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | 2,509,003 | 2,464,656 |
Eliminations and Unallocated in Consolidation [Member] | ||
Segment Reporting Information [Line Items] | ||
Total consolidated assets | $ 166,228 | $ 174,540 |
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