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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Commission File Number 0-255
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
GRAYBAR ELECTRIC COMPANY, INC
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13 - 0794380
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105
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(Address of principal executive offices) (Zip Code)
POST OFFICE BOX 7231, ST. LOUIS, MO 63177
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(Mailing Address) (Zip Code)
Registrant's telephone number, including area code: (314) 727 - 3900
----------------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Common Stock Outstanding at April 30, 1994: 4,368,368
------------------
(Number of Shares)
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PART I
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 1994 DECEMBER 31, 1993
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 27,257 $ 17,332
-------------- -----------------
Trade receivables 256,270 256,634
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Merchandise inventory 195,045 167,927
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Other current assets 10,560 10,099
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Total current assets 489,132 451,992
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PROPERTY
Land 17,239 16,812
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Buildings and permanent fixtures 192,936 190,005
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Capital equipment leases 30,416 29,612
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Less-Accumulated depreciation 99,488 99,494
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Net property 141,103 136,935
DEFERRED FEDERAL INCOME TAXES 14,667 14,446
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OTHER ASSETS 7,465 7,139
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$652,367 $610,512
============== =================
CURRENT LIABILITIES
Notes payable to banks $109,219 $ 82,194
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Current portion of long-term debt 10,353 11,000
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Trade accounts payable 214,360 193,843
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Income taxes 3,144 519
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Other accrued taxes 6,260 6,375
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Accrued payroll and benefit costs 13,870 27,643
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Dividends payable -- 4,910
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Other payables and accruals 13,353 5,589
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Total current liabilities 370,559 332,073
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POSTRETIREMENT BENEFITS LIABILITY 73,000 73,000
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LONG TERM DEBT 65,343 63,621
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</TABLE>
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<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 1994 DECEMBER 31, 1993
-------------- -----------------
<S> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
<CAPTION>
SHARES
------
1994 1993
---- ----
Issued to voting trustees 9,533 9,533
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In treasury, at cost (974) (378)
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Outstanding 8,559 9,155 171 183
----------- ----------- -------------- -----------------
Common:
------
Stated value $20 per share
Authorized 5,000,000 shares
<CAPTION>
SHARES
------
1994 1993
---- ----
Issued to voting trustees 4,246,319 4,239,403
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Issued to shareholders 241,113 240,991
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In treasury, at cost (92,808) (25,507)
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Outstanding 4,394,624 4,454,887 87,892 89,098
----------- ----------- -------------- -----------------
Common shares subscribed 946 1,088
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Retained earnings 55,352 52,486
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Less-Subscriptions receivable 896 1,037
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TOTAL SHAREHOLDERS' EQUITY 143,465 141,818
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$652,367 $610,512
============== =================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
QUARTER ENDED
MARCH 31, 1994 MARCH 31, 1993
-------------- --------------
<S> <C> <C>
GROSS SALES, NET OF RETURNS AND ALLOWANCES $510,302 $458,266
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Less - Cash discounts 1,866 1,880
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NET SALES 508,436 456,386
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COST OF MERCHANDISE SOLD 412,925 372,292
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Gross profit 95,511 84,094
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 82,725 74,119
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DEPRECIATION AND AMORTIZATION 3,730 3,541
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Income from operations 9,056 6,434
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OTHER INCOME, net 752 590
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INTEREST EXPENSE 2,461 2,685
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Income before provision for income taxes
and cumulative effect of accounting change 7,347 4,339
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PROVISION FOR INCOME TAXES
Current 3,380 1,702
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Deferred (221) (54)
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Total provision for income taxes 3,159 1,648
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INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 4,188 2,691
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CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN
ACCOUNTING FOR POSTRETIREMENT BENEFITS -- (45,000)
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NET INCOME (LOSS) $ 4,188 $(42,309)
============== ==============
INCOME PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NOTE 2) $ .95 $ .60
-------------- --------------
NET INCOME (LOSS) PER SHARE OF COMMON STOCK (NOTE 2) $ .95 $ (9.45)
============== ==============
DIVIDENDS
Preferred - $.25 per share $ 3 $ 3
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Common - $.30 per share 1,319 1,366
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$ 1,322 $ 1,369
============== ==============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Income before cumulative effect of accounting change $ 4,188 $ 2,691
------------ ------------
Adjustments to reconcile income before cumulative effect of
accounting change to cash used by operations:
Depreciation and amortization 3,730 3,541
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Deferred income taxes (221) (54)
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Changes in assets and liabilities:
Trade receivables 364 12,098
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Merchandise inventory (27,118) (23,618)
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Other current assets (461) 1,258
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Other assets (326) (221)
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Trade accounts payable 20,517 (7,484)
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Accrued payroll and benefit costs (13,773) (13,412)
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Other accrued liabilities 10,274 3,264
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(7,014) (24,628)
------------ ------------
Net cash used by operations (2,826) (21,937)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 32 64
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Capital expenditures for property (3,799) (3,037)
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Net cash used by investing activities (3,767) (2,973)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in notes payable to banks 27,025 40,502
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Repayment of long-term debt (767) (805)
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Principal payments under capital equipment leases (2,289) (2,277)
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Sale of common stock 139 5,852
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Purchase of treasury stock (1,358) (614)
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Dividends paid (6,232) (5,907)
------------ ------------
Net cash flow provided by financing activities 16,518 36,751
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NET INCREASE IN CASH 9,925 11,841
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CASH, BEGINNING OF YEAR 17,332 16,538
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CASH, END OF FIRST QUARTER $ 27,257 $ 28,379
============ ============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AND OTHER INFORMATION
-------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
NOTE 1
- ------
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, the quarterly report includes all
adjustments, consisting of normal recurring accruals, necessary for
the fair presentation of the financial statements presented. Such
interim financial information is subject to year-end adjustments and
independent audit.
Results for interim periods are not necessarily indicative of
results to be expected for the full year.
NOTE 2
- ------
<TABLE>
<CAPTION>
THREE MONTHS 1994 THREE MONTHS 1993
----------------- -----------------
<S> <C> <C>
Earnings for Three Months Before
Cumulative Effect of Accounting Change $ 4,188 $ 2,691
----------------- -----------------
Cumulative Effect on Prior Years of Change
in Accounting for Postretirement Benefits -- (45,000)
----------------- -----------------
Earnings (Loss) for Three Months $ 4,188 $ (42,309)
----------------- -----------------
Dividends on Preferred Stock 3 3
----------------- -----------------
Available for Common Stock $ 4,185 $ (42,312)
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Average Common Shares Outstanding 4,424,680 4,476,362
----------------- -----------------
Earnings Per Share Before Cumulative
Effect of Accounting Change $ .95 $ .60
----------------- -----------------
Earnings (Loss) Per Share $ .95 $ (9.45)
----------------- -----------------
</TABLE>
6
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MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
RESULTS OF OPERATIONS
- ---------------------
Net sales in the first three months of 1994 were 11.4% higher
than in the first three months of 1993. The higher net sales resulted
from improvements in the market sectors of the economy in which the
Company operates.
Gross profit in the first three months of 1994 increased $11,417
(13.6%) compared to the first three months of 1993 primarily due to
increased sales in the electrical and communication markets together
with a generally higher gross profit rate in those markets.
The increase in selling, general and administrative expenses in
the first three months of 1994 compared to the first three months of
1993 occurred largely because of adjustments in personnel complement
and adjustments in compensation and related expenses.
Interest charges decreased slightly in the first three months of
1994 compared to the first three months of 1993 primarily due to a
reduction in the principal balances of certain elements of long-term
debt.
The combined effect of the increases in gross profits and other
income and the decrease in interest charges, together with increases
in selling, general and administrative expenses and depreciation and
amortization, resulted in an increase in pretax earnings prior to the
cumulative effect of the accounting change of $3,008 in the first
three months of 1994 compared to the same period in 1993.
The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions", on January 1, 1993 on the immediate recognition
basis. The after-tax impact of the accounting change decreased first
quarter 1993 earnings $45,000, or $10.05 per share.
7
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MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
The financial condition of the Company continues to be strong.
At March 31, 1994, current assets exceeded current liabilities by
$118,573, down $1,346 from December 31, 1993. The current assets at
March 31, 1994 were sufficient to meet the cash needs required to pay
current liabilities. The Company does not have any plans or
commitments which would require significant amounts of additional
working capital.
At March 31, 1994, the Company had available to it unused lines
of credit amounting to $139,000. These lines are available to meet
short-term cash requirements of the Company. Bank borrowings
outstanding during 1994 through March 31 ranged from a minimum of
$72,000 to a maximum of $120,000.
The Company has funded its capital requirements from operations,
stock issuances to its employees and long term debt. During the first
three months of 1994, cash used by operations amounted to $2,826 which
was $19,111 less than the cash used by operations in the first three
months of 1993. Cash provided from the sale of common stock and
proceeds received on stock subscriptions amounted to $139 in the first
three months of 1994. Additional cash of approximately $399 will be
provided in the remainder of 1994 as a result of payments to be made
for stock subscribed to by employees under the 1992 Common Stock
Purchase Plan.
8
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PART II: OTHER INFORMATION
----------------------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished in accordance with provisions of Item 7
of Regulation S-K.
(2) None
(4) None
(11) None
(15) None
(18) None
(19) None
(20) None
(23) None
(24) None
(25) None
(28) None
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
for which this report is filed.
9
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
May 12, 1994 GRAYBAR ELECTRIC COMPANY, INC.
----------------
(Date)
/S/ E. A. McGRATH
------------------------------
E. A. McGRATH
PRESIDENT
/S/ J. R. SEATON
------------------------------
J. R. SEATON
VICE PRESIDENT
AND COMPTROLLER
10
