<PAGE> 1
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 June 30, 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
------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
POST OFFICE BOX 7231, ST. LOUIS, MO 63177
------------------------------------------------------------------------
(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 July 31, 1994: 4,351,833
--------------------
(Number of Shares)
<PAGE> 2
PART I
------
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
JUNE 30, 1994 DECEMBER 31, 1993
--------------------- -------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 33,800 $ 17,332
--------------------- -------------------------
Trade receivables 290,596 256,634
--------------------- -------------------------
Merchandise inventory 207,708 167,927
--------------------- -------------------------
Other current assets 10,997 10,099
--------------------- -------------------------
Total current assets 543,101 451,992
--------------------- -------------------------
PROPERTY
Land 17,327 16,812
--------------------- -------------------------
Buildings and permanent fixtures 195,407 190,005
--------------------- -------------------------
Capital equipment leases 30,416 29,612
--------------------- -------------------------
Less-Accumulated depreciation 102,941 99,494
--------------------- -------------------------
Net property 140,209 136,935
--------------------- -------------------------
DEFERRED FEDERAL INCOME TAXES 14,901 14,446
--------------------- -------------------------
OTHER ASSETS 7,936 7,139
--------------------- -------------------------
$ 706,147 $ 610,512
===================== =========================
CURRENT LIABILITIES
Notes payable to banks $ 80,420 $ 82,194
--------------------- -------------------------
Current portion of long-term debt 13,083 11,000
--------------------- -------------------------
Trade accounts payable 250,839 193,843
--------------------- -------------------------
Income taxes 2,861 519
--------------------- -------------------------
Other accrued taxes 6,275 6,375
--------------------- -------------------------
Accrued payroll and benefit costs 19,335 27,643
--------------------- -------------------------
Dividends payable -- 4,910
--------------------- -------------------------
Other payables and accruals 17,758 5,589
--------------------- -------------------------
Total current liabilities 390,571 332,073
--------------------- -------------------------
POSTRETIREMENT BENEFITS LIABILITY 73,375 73,000
--------------------- -------------------------
LONG TERM DEBT 94,715 63,621
--------------------- -------------------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
JUNE 30, 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
------------- -------------
In treasury, at cost (1,156) (378)
------------- -------------
Outstanding 8,377 9,155 168 183
------------- ------------- ----------------- ---------------------
Common:
------
Stated value $20 per share
Authorized 5,000,000 shares
<CAPTION>
SHARES
------
1994 1993
---- ----
Issued to voting trustees 4,252,618 4,239,403
------------- -------------
Issued to shareholders 241,241 240,991
------------- -------------
In treasury, at cost (135,183) (25,507)
------------- -------------
Outstanding 4,358,676 4,454,887 87,174 89,098
------------- ------------- ----------------- ---------------------
Common shares subscribed 814 1,088
----------------- ---------------------
Retained earnings 60,098 52,486
----------------- ---------------------
Less-Subscriptions receivable 768 1,037
----------------- ---------------------
TOTAL SHAREHOLDERS' EQUITY 147,486 141,818
----------------- ---------------------
$ 706,147 $ 610,512
================= =====================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
3
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
QUARTER ENDED
JUNE 30, 1994 JUNE 30, 1993
--------------------- ---------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 591,050 $ 512,000
--------------------- ---------------------
Less - Cash discounts 2,114 2,101
--------------------- ---------------------
NET SALES 588,936 509,899
--------------------- ---------------------
COST OF MERCHANDISE SOLD 485,025 422,211
--------------------- ---------------------
Gross profit 103,911 87,688
--------------------- ---------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 86,672 78,392
--------------------- ---------------------
DEPRECIATION AND AMORTIZATION 3,911 3,622
--------------------- ---------------------
Income from operations 13,328 5,674
--------------------- ---------------------
OTHER INCOME, net 247 342
--------------------- ---------------------
INTEREST EXPENSE 2,945 2,812
--------------------- ---------------------
Income before provision for income taxes
and cumulative effect of accounting change 10,630 3,204
--------------------- ---------------------
PROVISION FOR INCOME TAXES
Current 4,806 1,321
--------------------- ---------------------
Deferred (234) (102)
--------------------- ---------------------
Total provision for income taxes 4,572 1,219
--------------------- ---------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 6,058 1,985
--------------------- ---------------------
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN
ACCOUNTING FOR POSTRETIREMENT BENEFITS -- --
--------------------- ---------------------
NET INCOME 6,058 1,985
===================== =====================
INCOME PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ 1.39 $ .44
--------------------- ---------------------
NET INCOME PER SHARE OF COMMON STOCK $ 1.39 $ .44
===================== =====================
DIVIDENDS
Preferred - $.25 per share $ 1 $ 2
--------------------- ---------------------
Common - $.30 per share 1,311 1,357
--------------------- ---------------------
$ 1,312 $ 1,359
===================== =====================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
4
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1994 JUNE 30, 1993
--------------------- ---------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 1,101,352 $ 970,266
--------------------- ---------------------
Less - Cash discounts 3,980 3,981
--------------------- ---------------------
NET SALES 1,097,372 966,285
--------------------- ---------------------
COST OF MERCHANDISE SOLD 897,950 794,503
--------------------- ---------------------
Gross profit 199,422 171,782
--------------------- ---------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 169,397 152,511
--------------------- ---------------------
DEPRECIATION AND AMORTIZATION 7,641 7,163
--------------------- ---------------------
Income from operations 22,384 12,108
--------------------- ---------------------
OTHER INCOME, net 999 932
--------------------- ---------------------
INTEREST EXPENSE 5,406 5,497
--------------------- ---------------------
Income before provision for income taxes
and cumulative effect of accounting change 17,977 7,543
--------------------- ---------------------
PROVISION FOR INCOME TAXES
Current 8,186 3,023
--------------------- ---------------------
Deferred (455) (156)
--------------------- ---------------------
Total provision for income taxes 7,731 2,867
--------------------- ---------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 10,246 4,676
--------------------- ---------------------
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN
ACCOUNTING FOR POSTRETIREMENT BENEFITS -- (45,000)
--------------------- ---------------------
NET INCOME (LOSS) 10,246 (40,324)
===================== =====================
INCOME PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NOTE 2) $ 2.33 $ 1.04
--------------------- ---------------------
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
(NOTE 2) $ 2.33 $ (8.96)
===================== =====================
DIVIDENDS
Preferred - $.50 per share $ 4 $ 5
--------------------- ---------------------
Common - $.60 per share 2,630 2,723
--------------------- ---------------------
$ 2,634 $ 2,728
===================== =====================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1994 1993
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Income before cumulative effect of accounting change $ 10,246 $ 4,676
-------------- --------------
Adjustments to reconcile income before cumulative effect of
accounting change to cash used by operations:
Depreciation and amortization 7,641 7,163
-------------- --------------
Deferred income taxes (455) (156)
-------------- --------------
Changes in assets and liabilities:
Trade receivables (33,962) (3,854)
-------------- --------------
Merchandise inventory (39,781) (10,046)
-------------- --------------
Other current assets (898) 1,607
-------------- --------------
Other assets (797) 112
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Trade accounts payable 56,996 5,096
-------------- --------------
Accrued payroll and benefit costs (8,308) (9,918)
-------------- --------------
Other accrued liabilities 14,786 7,026
-------------- --------------
(4,778) (2,970)
-------------- --------------
Net cash provided by operations 5,468 1,706
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 103 61
-------------- --------------
Capital expenditures for property (6,887) (7,257)
-------------- --------------
Net cash used by investing activities (6,784) (7,196)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable to banks (1,774) 14,502
-------------- --------------
Proceeds from long-term debt 35,000 10,000
-------------- --------------
Repayment of long-term debt (3,665) (1,589)
-------------- --------------
Principal payments under capital equipment leases (2,289) (2,277)
-------------- --------------
Sale of common stock 265 5,999
-------------- --------------
Purchase of treasury stock (2,209) (1,198)
-------------- --------------
Dividends paid (7,544) (7,266)
-------------- --------------
Net cash flow provided by financing activities 17,784 18,171
-------------- --------------
NET INCREASE IN CASH 16,468 12,681
-------------- --------------
CASH, BEGINNING OF YEAR 17,332 16,538
-------------- --------------
CASH, END OF SECOND QUARTER $ 33,800 $ 29,219
============== ==============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
6
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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.
<TABLE>
Note 2
- - ------
<CAPTION>
SIX MONTHS 1994 SIX MONTHS 1993
------------------- -------------------
<S> <C> <C>
Earnings for Six Months Before
Cumulative Effect of Accounting Change $ 10,246 $ 4,676
------------------- -------------------
Cumulative Effect on Prior Years of Change
in Accounting for Postretirement Benefits -- (45,000)
------------------- -------------------
Earnings (Loss) for Six Months $ 10,246 $ (40,324)
------------------- -------------------
Dividends on Preferred Stock 4 5
------------------- -------------------
Available for Common Stock $ 10,242 $ (40,329)
------------------- -------------------
Average Common Shares Outstanding 4,398,034 4,502,496
------------------- -------------------
Earnings Per Share Before Cumulative
Effect of Accounting Change $ 2.33 $ 1.04
------------------- -------------------
Earnings (Loss) Per Share $ 2.33 $ (8.96)
------------------- -------------------
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
RESULTS OF OPERATIONS
- - ---------------------
Net sales in the first six months of 1994 were 13.6% higher than
in the first six 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 six months of 1994 increased $27,640
(16.1%) compared to the first six months of 1993 primarily due to
increased sales in the electrical and communication markets.
The increase in selling, general and administrative expenses in
the first six months of 1994 compared to the first six 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 six months of
1994 compared to the first six 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 $10,434 in the first six
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 six
months 1993 earnings $45,000, or $9.99 per share.
8
<PAGE> 9
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 June 30, 1994, current assets exceeded current liabilities by
$152,530, up $32,611 from December 31, 1993. The current assets at
June 30, 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 June 30, 1994, the Company had available to it unused lines of
credit amounting to $121,000. These lines are available to meet short-
term cash requirements of the Company. Bank borrowings outstanding
during 1994 through June 30 ranged from a minimum of $69,000 to a
maximum of $132,000.
The Company has funded its capital requirements from operations,
stock issuances to its employees and long term debt. In May, 1994,
the Company received the proceeds from a ten-year note for $35,000 at
a fixed interest rate of 6.25% with principal payable in five equal
annual installments in each of the years 2000 through 2004. The note
agreement has various covenants which limit the Company's ability to
make investments, pay dividends, incur debt, dispose of property, and
issue equity securities. The Company is also required to maintain
certain financial ratios as defined in the agreement. During the
first six months of 1994, cash provided by operations amounted to
$5,468 which was $3,762 more than the cash provided by operations in
the first six months of 1993. Cash provided from the sale of common
stock and proceeds received on stock subscriptions amounted to $265 in
the first six months of 1994. Additional cash of approximately $273
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.
9
<PAGE> 10
PART II: OTHER INFORMATION
----------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders occurred on June 9,
1994. All of the nominees named in the Information Statement
filed with the Commission and mailed to shareholders in
accordance with the provisions of Regulation 14-C were
elected. The names of the nominees elected follow; all
received 4,130,406 votes for and 1,636 votes against.
1. J. R. Hade
2. C. L. Hall
3. R. H. Haney
4. G. W. Harper
5. F. L. Hipp
6. E. A. McGrath
7. R. L. Mygrant
8. R. D. Offenbacher
9. I. Orloff
10. R. A. Reynolds
11. J. R. Seaton
12. A. A. Thompson
13. G. S. Tulloch, Jr.
14. J. F. Van Pelt
15. J. W. Wolf
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.
10
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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.
August 11, 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
11
