<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
COMMISSION FILE NUMBER 0-255
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 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
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
34 North Meramec Avenue, St. Louis, Missouri 63105
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Post Office Box 7231, St. Louis, Missouri 63177
- -------------------------------------------------------------------------------
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code: (314) 727-3900
-------------------
Securities registered pursuant to Section 12(b) of the Act: None
----------
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock - Par Value $20
Common Stock - Par Value $1 Per Share with a Stated Value
of $20
Voting Trust Certificates relating to such Shares of Common Stock of
the Registrant
Common Stock outstanding at March 27, 1995 - 4,564,371 Shares
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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (Paragraph 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
The aggregate stated value of the Common Stock outstanding and,
with respect to rights of disposition, beneficially owned by
nonaffiliates (as defined in Rule 405 under the Securities Act of
1933) of the registrant on March 27, 1995, was approximately
$91,287,420. Pursuant to a Voting Trust Agreement, dated as of April
15, 1987, approximately 95% of the outstanding shares of Common Stock
are held of record by four Voting Trustees who are each directors of
the registrant and who collectively exercise all voting rights with
respect to such shares. The registrant is 100% owned by its active
and retired employees, and there is no public trading market for the
registrant's Common Stock. The registrant has the option to
repurchase, at the price at which it was issued, each outstanding
share of Common Stock in the event of the owner's death, termination
of employment other than by retirement, or desire to dispose of such
shares. Historically all shares of Common Stock have been issued for
$20 per share, and the registrant has always exercised its repurchase
option and expects to continue to do so.
The documents listed below have been incorporated by reference
into the indicated Part of this Annual Report on Form 10-K:
(1) Annual Report to Shareholders Part II, Items 5-8 for the
fiscal year ended December 31, 1994.
(2) Information Statement relating Part III, Items 10-13 to the
1995 Annual Meeting of Shareholders.
<PAGE> 2
PART I
------
Item 1. Business
- ------- --------
Graybar Electric Company, Inc. (the "Company") is engaged
internationally in the distribution of electrical and communications
equipment and supplies primarily to contractors, industrial plants,
telephone companies, power utilities, and commercial users. All
products sold by the Company are purchased by the Company from others.
The Company was incorporated under the laws of the State of New
York on December 11, 1925 to take over the wholesale supply department
of Western Electric Company, Incorporated. The location and telephone
number of the principal executive offices of the Company are 34 North
Meramec Avenue, St. Louis, Missouri (314) 727-3900, and the mailing
address of the principal executive offices is P.O. Box 7231, St.
Louis, Missouri 63177.
Suppliers
- ---------
The Company acts as a distributor of the products of more than
1,000 manufacturers. The relationship of the Company with a number of
its principal suppliers goes back many years. It is customarily a
nonexclusive national or regional distributorship terminable upon 30
to 90 days notice by either party.
During 1994, the Company purchased a significant portion of its
products from its three largest suppliers. The termination by any of
these companies, within a short period of time, of a significant
number of their agreements with the Company might have an immediate
material adverse effect on the business of the Company, but the
Company believes that within a reasonable period of time it could find
alternate sources of supply adequate to alleviate such adverse effect.
2
<PAGE> 3
Products Distributed
- --------------------
The Company distributes more than 100,000 different products
and, therefore, is able to supply its customers with a wide variety of
electrical and communications products. The products distributed by
the Company consist primarily of wire, conduit, wiring devices,
tools, motor controls, transformers, lamps, lighting fixtures and
hardware, power transmission equipment, telephone station apparatus,
key systems, PBXs, data products for local area networks or wide
area networks, fiber optic products, and CATV products. These
products are sold to customers such as contractors (both industrial
and residential), industrial plants, telephone companies, private
and public utilities, and commercial users.
On December 31, 1994 and 1993, the Company had orders on hand
which totalled approximately $189,349,000 and $174,928,000,
respectively. The Company believes that the increase from 1993 to
1994 reflects the improvements in the market sectors of the economy in
which the Company operates. The Company expects that approximately
85% of the orders on hand at December 31, 1994 will be filled within
the twelve-month period ending December 31, 1995. Historically,
orders on hand for the Company's products have been firm, but
customers from time to time request cancellation and the Company has
historically allowed such cancellations.
Marketing
- ---------
The Company sells its products through a network of
distributing houses located in 15 geographical districts throughout
the United States. In each district the Company maintains a main
distributing house and a number of branch distributing houses, each of
which carries an inventory of supply materials and operates as a
wholesale distributor for the territory in which it is located. The
main distributing house in each district carries a substantially
larger inventory than the branch houses so that the branch houses can
call upon the main distributing house for additional items of
inventory. In addition, the Company maintains two (2) zone warehouses
with special inventories so all locations can call upon them for
additional items. The Company also has subsidiary operations with
distribution facilities located in Puerto Rico, Mexico, Panama, Guam,
Singapore and Canada.
3
<PAGE> 4
<TABLE>
The distribution facilities operated by the Company are shown
in the following table:
<CAPTION>
Location of Main Number of Distributing Number of
Distributing House Houses in District Distributing Houses
- ------------------ ---------------------- -------------------
<S> <C> <S> <C>
Graybar Holdings Limited
------------------------
Boston, MA 9 Canada 2
Cincinnati, OH 9
Dallas, TX 29 Graybar Electric (Ontario) Ltd.
-------------------------------
Glendale Heights, IL 14 Canada 5
Miami, FL 1
Minneapolis, MN 17 Graybar Electric Ltd.
---------------------
New York, NY 12 Canada 21
Norcross, GA 18
Philadelphia, PA 7
Phoenix, AZ 24 Graybar International Guam, Inc.
--------------------------------
Pittsburgh, PA 8 Tamuning, Guam 1
Richmond, VA 13
Seattle, WA 20 Graybar de Mexico, S.A. de CV.
------------------------------
St. Louis, MO 14 Juarez, Mexico 1
Tampa, FL 24 Mexico City, Mexico 1
Zone Distributing Graybar-P&M International
- ----------------- -------------------------
Houses PTE, Ltd.
- ------ ---------
Bethlehem, PA 1 Singapore 1
Peoria 1
Graybar International, Inc. Graybar Free Zone, S.A.
- --------------------------- -----------------------
Puerto Rico 1 Panama 1
</TABLE>
Where the specialized nature or size of a particular shipment
warrants, the Company has products shipped directly from its suppliers
to the place of use, while in other cases orders are filled from the
Company's inventory. On a dollar volume basis, over one-half of the
orders are filled from the Company's inventory and the remainder are
shipped directly from the supplier to the place of use. The Company
generally finances its inventory from internally generated funds and
from long and short-term borrowings.
4
<PAGE> 5
<TABLE>
The Company distributes its products to more than 200,000
customers, which fall into five general classes. The following list
shows the estimated percentage of the Company's total sales for each
of the three years ended December 31, attributable to each of these
classes:
<CAPTION>
CLASS OF CUSTOMERS PERCENTAGE OF SALES
------------------ -------------------
1994 1993 1992
----------- --------- ----------
<S> <C> <C> <C>
Electrical contractors 39.2% 40.8% 42.4%
Industrial plants 30.9 31.3 29.9
Telecommunication companies 21.7 18.7 17.3
Private and public power utilities 6.3 7.0 7.8
Miscellaneous 1.9 2.2 2.6
----------- --------- ----------
100.0% 100.0% 100.0%
=========== ========= ==========
</TABLE>
At December 31, 1994, the Company employed approximately 2,100
persons in sales capacities. Approximately 950 of these sales
personnel were sales representatives who work in the field making
sales to customers at the work site. The remainder of the sales
personnel were sales and marketing managers, and telemarketing,
advertising, quotation, counter and clerical personnel.
Competition
- -----------
The Company believes that it is the largest distributor of
electrical products not affiliated with a manufacturing company, and
one of the three largest distributors of such products in the United
States. The field is highly competitive, and the Company estimates
that the three largest distributors of electrical products account for
only a small portion of the total market, with the balance of the
market being accounted for by independent distributors and
manufacturers operating on a local, state-wide or regional basis.
The Company believes that its competitive position is primarily a
result of its ability to supply its customers through a network of
conveniently located distribution facilities with a broad range of
electrical and telecommunications materials within a short period of
time. Price is also important, particularly where the Company is
asked to submit bids to contractors in connection with large
construction jobs.
5
<PAGE> 6
Employees
- ---------
At December 31, 1994, the Company employed approximately 5,600
persons on a full-time basis. Approximately 140 of these persons were
covered by union contracts. The Company has not had a material work
stoppage and considers its relations with its employees to be good.
Item 2. Properties
- ------- ----------
As of December 31, 1994 the Company operated offices and
distribution facilities in 238 locations. Of these, 132 were owned by
the Company, and the balance were leased. The leases are for varying
terms, the majority having a duration of less than five years.
The Company's distribution facilities consist primarily of
warehouse space. A small portion of the space in each facility is
used for offices. Distribution facilities vary in size from
approximately 2,400 square feet to 129,000 square feet, the average
being approximately 29,000 square feet.
As of December 31, 1994, approximately $45.2 million in debt of the
Company was secured by mortgages on thirty-three buildings. Twenty of
these facilities are subject to a first mortgage securing a 12.25%
note, of which approximately $12.5 million in principal amount remains
outstanding. Seven of these facilities are subject to a first
mortgage securing a 9.23% note, of which $30.0 million in principal
amount remains outstanding.
Distribution houses in Salt Lake City, Utah; Pinellas County and
Polk County, Florida; Tucson, Arizona; Beaumont, Texas and Glendale
Heights, Illinois are subject to mortgages securing Industrial Revenue
Bonds at variable interest rates with payments totaling $2.7 million
due periodically to 2004.
Item 3. Legal Proceedings
- ------- -----------------
The Company has been named, together with numerous other companies,
as a co-defendant in actions by approximately 1,000 plaintiffs which
have been filed in various federal and state courts in Arkansas,
Louisiana, Maryland, Minnesota, Mississippi, New Hampshire, New
Jersey, New York, Ohio, Pennsylvania, Texas, Washington, and West
Virginia. The plaintiffs allege personal injuries due to exposure to
asbestos products and seek substantial damages. The majority of the
complaints do not identify any products containing asbestos allegedly
sold by the Company.
6
<PAGE> 7
However, since all products sold by the Company have been and are
purchased from suppliers, if a plaintiff were to successfully
establish an asbestos-related injury claim with respect to a product
sold by the Company, the Company believes it would normally have a
claim against its supplier. Furthermore, the Company believes it has
product liability insurance coverage available to cover these claims.
Accordingly, based on information now known to the Company, in the
opinion of management the ultimate disposition of the asbestos-related
claims against the Company will not have a materially adverse effect
on the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
No matter was submitted to a vote of shareholders during the fourth
quarter of the fiscal year covered by this Annual Report on Form 10-K.
PART II
-------
Item 5. Market for the Registrant's Common Stock and Related
- ------- ----------------------------------------------------
Shareholder Matters
-------------------
The Company is wholly owned by its active and retired
employees, and there is no public trading market for its Common Stock,
par value $1 per share with a stated value of $20 per share. No
shareholder may sell, transfer or otherwise dispose of shares of
Common Stock without first offering the Company the option to purchase
such shares at the price at which they were issued. The Company also
has the option to purchase the Common Stock of any shareholder who
dies or ceases to be an employee of the Company for any cause other
than retirement on a Company pension. In the past all shares issued
by the Company have been issued at $20 per share, and the Company has
always exercised its repurchase option, and expects to continue to do
so.
The information as to number of holders of Common Stock and
frequency and amount of dividends, required to be included pursuant to
this Item 5, is included under the captions "Capital Stock Data" and
"Dividend Data" on page 1 of the Company's Annual Report to
Shareholders for the year ended December 31, 1994, (the "1994 Annual
Report") furnished to the Securities and Exchange Commission (the
"Commission") pursuant to Rule 14c-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and such information is
incorporated herein by reference.
7
<PAGE> 8
In May, 1994, the Company entered into a ten-year note
agreement that includes 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.
Item 6. Selected Financial Data
- ------- -----------------------
The selected financial data for the Company as of December 31,
1994 and for the five years then ended, which is required to be
included pursuant to this Item 6, is included under the caption
"Selected Consolidated Financial Data" on page 15 of the 1994 Annual
Report and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
- ------- -----------------------------------------------------------
and Results of Operations
-------------------------
Management's discussion and analysis required to be included
pursuant to this Item 7 is included under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" on pages 16 and 17 of the 1994 Annual Report and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The financial statements required by this Item 8 are listed in
Item 14(a)(1) of this Annual Report on Form 10-K under the caption
"Index to Financial Statements."
Such financial statements specifically referenced from the 1994
Annual Report in such list are incorporated herein by reference.
There is no supplementary financial information required by this item
which is applicable to the Company.
Item 9. Disagreements on Accounting and Financial Disclosure
- ------- ----------------------------------------------------
None.
8
<PAGE> 9
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
The information with respect to the directors and executive
officers of the Company required to be included pursuant to this Item
10 will be included under the caption "Directors and Executive
Officers -- Nominees for Election as Directors" in the Company's
Information Statement relating to the 1995 Annual Meeting (the
"Information Statement"), to be filed with the Commission pursuant to
Rule 14c-5 under the Exchange Act, and is incorporated herein by
reference.
Item 11. Executive Compensation
- -------- ----------------------
The information with respect to executive compensation required
to be included pursuant to this Item 11 will be included under the
captions "Executive Compensation" and "Pension Plan" in the
Information Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The information with respect to the security ownership of
beneficial owners of more than 5% of the Common Stock, the directors
of the Company and all directors and officers of the Company, which is
required to be included pursuant to this Item 12, will be included in
the introductory language and under the caption "Directors and
Executive Officers -- Nominees for Election as Directors" in the
Information Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
The information with respect to any reportable transactions,
business relationships and indebtedness between the Company and the
beneficial owners of more than 5% of the Common Stock, the directors
or nominees for director of the Company, the executive officers of the
Company or the members of the immediate families of such individuals,
required to be included pursuant to this Item 13, will be included
under the caption "Directors and Executive Officers" in the
Information Statement and is incorporated herein by reference.
9
<PAGE> 10
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------- ----------------------------------------------------------------
(a) Documents filed as part of this report:
--------------------------------------
The following financial statements and Report of
Independent Accountants are included on the indicated
pages in the 1994 Annual Report and are incorporated by
reference in this Annual Report on Form 10-K:
1. Index to Financial Statements
-----------------------------
(i) Consolidated Statements of Income and Retained
Earnings for each of the three years ended
December 31, 1994 (page 18).
(ii) Consolidated Balance Sheets, as of December
31, 1994 and December 31, 1993 (page 19).
(iii) Consolidated Statements of Cash Flows for
each of the three years ended December 31,
1994 (page 20).
(iv) Notes to Consolidated Financial Statements
(pages 21 to 24).
(v) Report of Independent Accountants relating to
above mentioned financial statements and notes
for each of the three years ended December 31,
1994 (page 25).
2. Index to Financial Schedules
----------------------------
The following schedules for each of the three years ended
December 31, 1994, to the Financial Statements and Report of
Independent Accountants thereon is included on the indicated pages in
this Annual Report on Form 10-K:
(i) Schedule IX. Reserves (page 15).
(ii) Report of Independent Accountants on Financial
Statement Schedules (page 14).
All schedules other than those indicated above are omitted
because of the absence of the conditions under which they are required
or because the required information is set forth in the financial
statements and the accompanying notes thereto.
10
<PAGE> 11
3. Exhibits
--------
The following exhibits required to be filed as part of this
Annual Report on Form 10-K have been included:
(3) Articles of incorporation and by-laws
(i) Restated Certificate of Incorporation dated March
9, 1984 filed as exhibit 3(i) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1984 (Commission File No. 0-255) and
incorporated herein by reference.
(ii) By-laws as amended through August 1, 1991 filed as
exhibit 6(a)(19) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30,
1991 (Commission File No. 0-255) and incorporated
herein by reference.
(4)and(9) Instruments defining the rights of security
holders, including indentures and voting trust
agreements.
Voting Trust Agreement dated as of April 15,
1987, attached as Annex A to the Prospectus, dated
January 20, 1987, constituting a part of the
Registration Statement on Form S-13 (Registration
No. 2-57861) and incorporated herein by reference.
The Company hereby agrees to furnish to the
Commission upon request a copy of each instrument
omitted pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K.
(10) Material contracts.
(i) Management Incentive Plan, filed as Exhibit
4(a)(1) to the Annual Report on Form 10-K for the
year ended December 31, 1972 (Commission File No.
0-255), as amended by the Amendment effective
January 1, 1974, filed as Exhibit 13-c to the
Registration Statement on Form S-1 (Registration
No. 2-51832), the Amendment effective January 1,
1977, filed as Exhibit 13(d) to the Registration
Statement on Form S-1 (Registration No. 2-59744),
and the Amendment effective January 1, 1980, filed
as Exhibit 5(f) to the Registration Statement on
Form S-7 (Registration No. 2-68938) and
incorporated herein by reference.
(13) Annual Report to Shareholders for 1994 (except for
those portions which are expressly incorporated by
reference in this Annual Report on Form 10-K, this
exhibit is furnished for the information of the
Commission and is not deemed to be filed as part
of this Annual Report on Form 10-K).
(21) List of subsidiaries of the Company.
(b) Reports on Form 8-K:
--------------------
No reports on Form 8-K were filed during the last quarter of
the Company's fiscal year ended December 31, 1994.
11
<PAGE> 12
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Company has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized, as of the 27th day of March, 1995.
GRAYBAR ELECTRIC COMPANY, INC.
By /s/ E. A. McGrath
-----------------------------------------
(E. A. McGRATH, President)
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on Form 10-K has been signed below by the
following persons on behalf of the Company, in the capacities
indicated, on March 27, 1995.
/s/ E. A. McGrath
- --------------------------------------- Director and President
(E. A. McGrath) (Principal Executive Officer
and Principal Financial
Officer)
/s/ J. R. Seaton
- --------------------------------------- Director, Vice President
(J. R. Seaton) and Comptroller (Principal
Accounting Officer)
/s/ J. R. Hade
- --------------------------------------- Director
(J. R. Hade)
/s/ C. L. Hall
- --------------------------------------- Director
(C. L. Hall)
/s/ R. H. Haney
- --------------------------------------- Director
(R. H. Haney)
/s/ G. W. Harper
- --------------------------------------- Director
(G. W. Harper)
/s/ R. L. Mygrant
- --------------------------------------- Director
(R. L. Mygrant)
/s/ R. D. Offenbacher
- --------------------------------------- Director
(R. D. Offenbacher)
12
<PAGE> 13
/s/ I. Orloff
- --------------------------------------- Director
(I. Orloff)
/s/ R. A. Reynolds
- --------------------------------------- Director
(R. A. Reynolds)
/s/ A. A. Thompson
- --------------------------------------- Director
(A. A. Thompson)
/s/ G. S. Tulloch, Jr.
- --------------------------------------- Director
(G. S. Tulloch, Jr.)
/s/ J. F. Van Pelt
- --------------------------------------- Director
(J. F. Van Pelt)
/s/ J. W. Wolf
- --------------------------------------- Director
(J. W. Wolf)
13
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To The Board of Directors of
Graybar Electric Company, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 17, 1995 appearing on page 25 of the 1994 Annual Report to
Shareholders of Graybar Electric Company, Inc., (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedule listed
in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated
financial statements.
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 17, 1995
-14-
<PAGE> 15
<TABLE>
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
-----------------------------------------------
SCHEDULE IX-RESERVES
--------------------
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance at Additions Balance
Beginning Charged to at End
of Period Income Deductions of Period
--------- ---------- ---------- ---------
Description
-----------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1994:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 3,497,000 $ 2,287,000 $ 1,983,000<F1> $ 3,801,000
Allowance for cash discounts 448,000 8,886,000 8,839,000<F2> 495,000
----------- ----------- ----------- -----------
Total $ 3,945,000 $11,173,000 $10,822,000 $ 4,296,000
=========== =========== =========== ===========
FOR THE YEAR ENDED DECEMBER 31, 1993:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 3,485,000 $ 2,061,000 $ 2,049,000<F1> $ 3,497,000
Allowance for cash discounts 464,000 8,290,000 8,306,000<F2> 448,000
----------- ----------- ----------- -----------
Total $ 3,949,000 $10,351,000 $10,355,000 $ 3,945,000
=========== =========== =========== ===========
FOR THE YEAR ENDED DECEMBER 31, 1992:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 3,433,000 $ 2,328,000 $ 2,276,000<F1> $ 3,485,000
Allowance for cash discounts 415,000 8,292,000 8,243,000<F2> 464,000
----------- ----------- ----------- -----------
Total $ 3,848,000 $10,620,000 $10,519,000 $ 3,949,000
=========== =========== =========== ===========
<FN>
<F1> Amount of trade receivables written off against the reserve provided.
<F2> Discounts allowed to customers.
</TABLE>
15
<PAGE> 16
INDEX TO EXHIBITS
<PAGE> 17
INDEX TO EXHIBITS
-----------------
<TABLE>
Exhibits
--------
<S> <C>
(3) Articles of incorporation and by-laws.
(i) Restated Certificate of Incorporation dated March 9, 1984................<F*>
(ii) By-laws as amended through August 1, 1991................................<F*>
(4)and(9) Instruments defining the rights of security holders, including
indentures and voting trust agreements.
Voting Trust Agreement dated as of April 15, l987, attached as
Annex A to the Prospectus, dated January 20, 1987, constituting a part
of the Registration Statement on Form S-13 (Registration No. 2-57861)..........<F*>
(10) Material contracts.
(i) Management Incentive Plan, filed as Exhibit 4(a)(1) to the Annual
Report on Form 10-K for the year ended December 31, 1972 (Commission File
No. 0-255), as amended by the Amendment effective January 1, 1974, filed as
Exhibit 13-c to the Registration Statement on Form S-1 (Registration No. 2-
51832), the Amendment effective January 1, 1977, filed as Exhibit 13(d) to
the Registration Statement on Form S-1 (Registration No. 2-59744), and the
Amendment effective January 1, 1980, filed as Exhibit 5(f) to the
Registration Statement on Form S-7 (Registration No. 2-68938)..................<F*>
(13) Annual Report to Shareholders for 1994 (except for those portions which
are expressly incorporated by reference in this Annual Report on Form
10-K, this exhibit is furnished for the information of the Commission
and is not deemed to be filed as part of this Annual Report on Form 10-K)
(21) List of subsidiaries of the Company
--------------
<FN>
<F*>Incorporated by reference in this Annual Report on Form 10-K.
</TABLE>
16
<PAGE> 1
EXHIBIT 13
ANNUAL REPORT TO SHAREHOLDERS
FOR 1994
<PAGE> 2
G R A Y B A R
1 9 9 4
A N N U A L
R E P O R T
1 2 5 Y E A R S * 1 8 6 9 - 1 9 9 4
<PAGE> 3
- -------------------------------------------------------------------------------
[PHOTO]
In 1994 the Company celebrated the 125th anniversary of its founding. Graybar
Directors, photographed in December 1994, are shown in front of an
anniversary display in the lobby of the Graybar Building.
1. Robert L. Mygrant
Tampa District Manager
2. Richard H. Haney
Atlanta District Manager
3. Carl L. Hall
Executive Vice President
4. Edward A. McGrath
President
5. Aubrey A. Thompson
Senior Vice President - Sales and Marketing
6. Irving Orloff
Vice President - Commercial and Industrial
7. George S. Tulloch
Vice President, Secretary and General Counsel
8. Richard D. Offenbacher
St. Louis District Manager
9. Robert A. Reynolds
Vice President - Marketing Services
10. Frank L. Hipp
San Francisco District Manager
11. John W. Wolf
Vice President and Treasurer
12. James R. Hade
Senior Vice President - Distribution
13. John R. Seaton
Vice President and Comptroller
14. Golden W. Harper
Vice President--Operations
15. Jack F. Van Pelt
Vice President--Human Resources
- -------------------------------------------------------------------------------
<PAGE> 4
- -------------------------------------------------------------------------------
COMPANY'S BUSINESS
Graybar Electric Company, Inc. is engaged internationally in the
distribution of electrical and communications equipment and supplies
primarily to contractors, industrial plants, telephone companies, power
utilities, and commercial users. All products sold by the Company are
purchased by the Company from others.
MARKETS SERVED
Electrical Contractor
Commercial & Industrial
Voice & Data Communications
Power Utility
International
Front cover: The photographs show a model Graybar Flagship
Counter, which was the Company's exhibit at the 1994 NECA
Exposition and Convention.
CAPITAL STOCK DATA
<TABLE>
Number of Equity Security Holders as of
December 31, 1994:
<CAPTION>
- --------------------------------------------------------------------------
Title of Class Number of Security Holders
- --------------------------------------------------------------------------
<S> <C>
Preferred Stock 125
Common Stock 116
Voting Trust Certificates for Common Stock 4,012
- ------------------------------------------------------------------------
</TABLE>
DIVIDEND DATA
Common Stock, par value $1; stated value $20.
<TABLE>
<CAPTION>
Dividends declared for year: 1994 1993 1992
- --------------------------------------------------------------------------
<S> <C> <C> <C>
First Quarter $ .30 $ .30 $ .30
Second Quarter .30 .30 .30
Third Quarter .30 .30 .30
Fourth Quarter $1.10 $1.10 $1.10
- --------------------------------------------------------------------------
</TABLE>
In September, 1994 a six and one quarter percent stock dividend was
declared and shares representing this dividend were issued in January, 1995.
<TABLE>
CONTENTS
<S> <C>
Graybar Officers and Directors Inside Front Cover
President's Letter 2
Market Review 4
Operations Review 10
Financial Review 15
Selected Consolidated Financial Data 15
Management's Discussion & Analysis
of Financial Condition and Results of Operations 16
Consolidated Financial Statements 18
Report of Independent Accountants 25
District Management 26
Locations 28
</TABLE>
- --------------------------------------- 1 -------------------------------------
<PAGE> 5
LETTER TO OUR SHAREHOLDERS
- -------------------------------------------------------------------------------
Nineteen ninety-four was a good year for our Company. Sales of more
than $2.3 billion represented an increase of 15.9 percent over last
year and set an all-time record.
At the start of 1994 we merged the Miami District with Tampa and merged
the Houston District with Dallas. The economies of scale provided by
continued improvements in technology are at last becoming a reality. We
know that central processing, purchasing, and at least some of our
accounting functions can be consolidated for a better end product. We
are beginning to achieve the long-awaited productivity gains as well.
At the close of 1994, we announced the merger of the Los Angeles and
Phoenix Districts into an Electrical District headquartered in Phoenix,
and the merger of the San Francisco and Seattle Districts into an
Electrical District headquartered in Seattle. We also announced the
consolidation of the communications business from those four original
districts into a new Western Communications and Data District
headquartered in Bellevue, Washington.
Nineteen ninety-
four was a good
year for our
Company. Sales
of more than
$2.3 billion set an
all-time record.
By separating the electrical supply and communication portions of
our business, we expect faster profitable growth for Graybar in both
market areas.
We have specialized people working within specialized
organizations. We are fortunate to have Richard Haney head the
electrical business group and Robert Reynolds the communications/data
organization.
The time to capitalize in both our major markets and to press the
technology gains for market share is now. We are increasing our sales
volume, increasing the speed and accuracy of many of our procedures,
and at the same time lowering costs. We are convinced that this
strategy, while still in its early stages, is part of the reason our
sales increase on a percentage basis is greater than the percentage of
sales increase reported by many of our suppliers.
The new Distribution Centers in Los Angeles and Houston are part of
this ongoing strategy. The Distribution Center allows us to fill the
customer's order in one complete shipment, rather than in multiple
shipments. In the past, multiple shipments from branch and zone
locations "filled the order" but did not always provide the most
desirable service to the customer. Nor were multiple shipments
accomplished at the lowest cost to Graybar.
Today, bar-coded product, locator systems, and "paperless" warehousing
are realities. In Houston, for example, the combination of a main house
inventory, zone warehouse, and wire service center greatly enhances our
ability to ship complete orders. This increases accuracy and lowers
costs.
A number of suppliers are working with us on "vendor-managed
inventories," "distributor manufacturer integration," and "supplier-
assisted inventory management systems." These are all variations of a
theme, and all use technology to help us keep a sharp eye on stocks
based on what the customer is buying.
Now, electronically, we can "hand" our supplier a report of daily sales
of their products. This allows the supplier to help us replenish stock,
formulate orders, and arrange shipments based on what our customers are
buying, rather than on what Graybar is purchasing. This provides better
customer service at a lower cost to Graybar. By using these inventory
management tools, we are seeing higher fill rates, faster turns, and
lower inventory levels.
- -------------------------------------- 2 --------------------------------------
<PAGE> 6
LETTER TO OUR SHAREHOLDERS
- -------------------------------------------------------------------------------
Our international interests are concentrated in North America and the
Caribbean. We continue, however, to serve customers around the world.
This was exemplified recently by an order from Fuji, of Japan, for
material destined for the Philippines. Some products are being supplied
from South America and many from the United States to complete a multi-
year, multimillion-dollar construction project.
In February of 1994, we increased our share of ownership of Harris &
Roome Supply, Ltd., of Nova Scotia. We are still minority shareholders.
In May, we purchased a minority interest in R.E.D. Electronics of
Toronto. R.E.D. concentrates in the higher-end technology of the data
markets and complements the strong electrical supply presence we now
have in Canada. We have chosen to close Panama and Dubai but we
continue sales to these areas from Miami International and Houston,
respectively.
Improvements in technology, training, and the Graybar Quality Process
continue:
* Our dedicated employees at the Information Systems Department
produced the new GraybarNet(R), the on-line customer order-entry system.
It is now available in the popular Windows(R) format.
* Information Systems also implemented the "Hot Key," allowing Graybar
Customer Service Representatives to directly check suppliers' stocks of
selected items. This speeds up our response time when the customer
needs a non-stock item immediately.
* Employees used Pathfinder, Graybar's interactive training network, in
record numbers. Activity on Pathfinder exceeded expectations and
sharpened our skills.
* The Company conducted two major data and communications conferences --
one in St. Louis and one in Chicago. Each meeting drew hundreds of our
employees from all over the country and many of our top suppliers. The
emphasis was on training our people to take best advantage of the
unprecedented opportunities in today's voice and data markets.
* Employees at the Long Island City Branch and New York District
Headquarters earned ISO 9002 certification for Long Island City. ISO
certification is an internationally recognized standard of high
commitment to the Quality Process.
In September we welcomed Carl Hall as Executive Vice President and
President-designate. We are indeed fortunate to have Carl. His wide
experience with our Company and his enthusiasm for our future will
serve him well in the years to come. I know he will successfully guide
us through the challenges ahead.
We missed Ralph Sackett as a Director and fellow employee when he
retired in 1994 after 42 years of contribution and achievement at
Graybar. We were saddened by his death so soon after he retired. In
Ralph we had a valued and respected friend.
We celebrated Graybar's 125th Anniversary across the country in a
variety of ways -- and we recalled in those celebrations the wonderful
legacy of earlier generations of our Graybar family.
In this, my last letter to you, our shareholders,
I want to assure you that the Graybar tradition of integrity still
guides the Company. Through both the brightest and darkest of days, we
have shared successes and failures. But whatever I and the other
officers have accomplished, we have accomplished with close adherence
to those principles that have guided Graybar from the beginning.
And for your support, encouragement, and
confidence in me, I shall never adequately express my appreciation.
/s/ E. A. McGrath
Edward A. McGrath
St. Louis, Missouri President
March 1995
- -------------------------------------- 3 --------------------------------------
<PAGE> 7
MARKET REVIEW
- -------------------------------------------------------------------------------
Construction Market
===================================--------------------------------------------
The Construction Market, which represented 40 percent of Graybar
sales in 1994, continues to be our largest market. This market includes
our traditional base of contractors, as well as a growing number of
"engineering constructors" who manage and purchase materials for major
construction projects.
Our sales to the Construction Market in 1994 increased at a rate
greater than that of the construction industry as a whole, indicating
that Graybar is gaining market share. We continued our emphasis on
stock sales and product merchandising at the counter, producing major
gains in profitable warehouse shipments and counter sales. Our volume
of direct business was little changed compared to the year before.
We are using technology to help us improve service to our
construction customers and lower our internal costs:
* The electronic "paperless" warehouse allows us to receive material,
monitor stocks, select orders and ship them faster -- and more
accurately -- than we could before.
* Inventories are deployed where they make the most sense for our
customers. Stocks are quickly replenished based on what customers are
buying.
* Centralized purchasing allows us to combine orders to take advantage
of volume purchase discounts.
Engineering constructors are the fastest-growing segment of the
Construction Market. We expect this industry trend to continue in 1995
and beyond. Graybar is responding with dedicated personnel and services
geared specifically to these customers. In 1994, for example, the
Company piloted the "On Site" project site inventory program. Materials
are bar-coded, delivered to the job site, and replenished daily as
needed. "On Site" provides cost savings for both Graybar and the
customer by maintaining required stocks where they are needed most -- at
the job site. "On Site" will be offered to additional construction
customers in 1995.
In 1994, we reinforced our Company's commitment to build lighting
sales with specialized training. Graybar held three lamp and lighting
conferences at the General Electric (GE) Nela Park Lighting Institute.
Approximately 120 employees representing all Graybar districts
participated. In addition, the Company conducted advanced lighting
seminars in Chicago, Las Vegas, and Charlotte. Participants at each
seminar prepared lighting marketing plans that focused on opportunities
in the retrofit market, Graybar Financial Services, and with the
Environmental Protection Agency's Green Lights(R) energy conservation
program.
In 1994, the Company participated in two major contractor
expositions and conventions -- the National Electrical Contractors
Association (NECA) convention and the Independent Electrical
Contractors (IEC) convention. Graybar made a strong impression on NECA
delegates with a highly popular exhibit that set NECA attendance
records. At IEC, Graybar and GE Lighting co-hosted a reception and
dinner for more than 300 delegates. The Company's strong presence at
these events reinforced our customers' awareness of Graybar value-added
services.
Sales to the residential construction market were robust and
produced significantly higher profits for the Company. Lower mortgage
interest rates and an overall stronger economy contributed to housing
construction.
Our biggest sales gain, however, came from Graybar's
traditionally strong position with the local contractors who use
Graybar's local stocks and sales support.
- -------------------------------------- 4 --------------------------------------
<PAGE> 8
MARKET REVIEW
- -------------------------------------------------------------------------------
Commercial & Industrial Markets
==================================---------------------------------------------
Graybar is strongly committed to the Commercial and Industrial
(C&I) Markets, and continues to invest in people and other resources to
serve these important customers. As a result, combined sales in the
Commercial & Industrial Markets in 1994 increased dramatically over the
prior year. Gross margins produced by these markets are among the
highest of any market the Company serves.
Industrial Market sales and margins increased significantly in
1994. Double-digit growth was achieved with national and local
customers as well as in the original equipment manufacturer (OEM) and
industrial communications market areas. Graybar industrial sales growth
exceeded the growth rate of the industry, indicating that we continue
to grow our market share. Stock sales grew substantially, led by
increases in sales of wire and cable, conduit and raceway, distribution
equipment, fuses, fittings, industrial enclosures, transformers, and
motor control equipment.
Graybar also achieved strong growth in the Commercial Market. Our
commitment to sales and service specialization contributed to
exceptionally strong growth with commercial customers who use voice and
data products. These efforts were supported through appropriate local
inventories backed by our network of Zone Service Centers.
National Account sales continue to be a major portion of our
total Industrial Market. Particular attention has been devoted to this
market through the appointment of a Vice President-National Accounts
and Integrated Supply. A new position, Manager-National Account
Services, was added to coordinate National Account services between
Graybar branches and customer facilities.
We added National Sales Managers in order to broaden account
coverage and develop closer relationships with strategic customers. Our
service offering has been extended to meet the rapidly changing
requirements of the industrial marketplace, ranging from just-in-time
delivery to outsourcing, bin stock replacement, and managing the
storeroom on the customer's premises.
Training of Sales Representatives, Customer Service
Representatives, and sales management continues to be a priority. In
January, we hosted a training conference for all District C&I Market
Managers. Conference participants discussed the Company's growing
service capabilities to meet the changing requirements of our
industrial customers. Four regional C&I seminars and lighting schools
were held, providing product and market training to more than 100 Sales
Managers, Sales Representatives and Customer Service support personnel.
Product training specific to Graybar was provided by GE Lighting,
Square D Industrial Control Products and Intermediate Distributor
Training Schools. Pathfinder training modules, which are now
prerequisites for these schools, are improving the technical knowledge
of our people.
Advertising and promotion played an increasingly important role
in our marketing efforts. During the year, we participated in industry-
sponsored trade shows hosted by the American Society of Hospital
Engineers and Building Owners and Managers Association. Our booths
included displays of Graybar capabilities and were
co-hosted by major suppliers supporting those industries. Local
districts participated in regional trade shows sponsored by the
American Institute of Plant Engineers.
Branches around the
country promoted
Graybar distribution
services to commercial
and industrial customers.
Representing the
Company at the 1994 New
Jersey Industrial Show
are Ed Krysz, Newark
Branch Manager; Ronald
Mushinsky and Pat
McHugh, Sales
Representatives; Donna
Ferguson, Financial
Manager; and Jack
Brautigan, Sales Manager.
[PHOTO]
- -------------------------------------- 5 --------------------------------------
<PAGE> 9
MARKET REVIEW
- -------------------------------------------------------------------------------
In 1994 Graybar instituted
the new Elisha Gray
Excellence in
Communications Award.
The winners were Cathy
Tekien, Senior Sales
Representative at
Cleveland; Karl Griffith,
Senior National Product
Specialist at the General
Department; Shirra
Sanchez, Branch Manager
at Houston Telcom; and
(not shown) Steve Thomas,
Senior Sales Representative
at Nashville.
At the Company's second
National Communications
Sales Training Conference,
Al Eddings, Manager,
Distance Learning,
demonstrates Pathfinder.
[PHOTO]
[PHOTO]
Communications and Data Markets
==================================---------------------------------------------
Comm/Data Products
The Company achieved significant market growth in 1994 as
business customers moved to connect more and more of their computer
systems into local and remote networks. Our sales growth outpaced the
market, reaching record levels. The Company is increasing its share of
an expanding market.
Unshielded twisted pair cable remained the medium of choice, and
demand exceeded manufacturers' capacity. Fiber optic cable continues
to gain acceptance among users as they see the value of its high
capacity. The cost of fiber optic networks continues to decrease.
The Company continued to benefit from the technical support group
at headquarters. This group provides pre-sales technical support for
many data products and what the industry calls "active electronics."
Our Flagship Counters also contributed to comm/data sales growth
through merchandising and expanded availability of products. Every
Graybar counter now displays a wide variety of comm/data products.
We are continuing to specialize and aggressively train our sales
organization. This has two major, positive effects: a well-trained
sales force increases sales at the same time it makes Graybar a more
effective distributor for our suppliers. Graybar's technical expertise
will help us understand the emerging technologies of computer/telephone
integration and the requirements of the "work-at-home" business. This
all translates to broader service offerings for our customers.
Interconnect Market
Sales to the Interconnect Market exceeded budgeted growth, and we
continued to gain market share. In this market, price competition is
being replaced by competition based on service and technical
competence.
The Company achieved high sales growth in the traditional product
families such as PBXs and key systems. These products are now equipped
with more features such as integrated call distributing, call
accounting, voice messaging, the ability to connect local area
networks, and full data communications capability.
Key systems are now programmable by personal computers. The new
key systems offer many features, including automatic call distribution,
statistical call distribution, call monitoring, queue control, and others.
These features evolve rapidly, and trained Graybar personnel offer our
customers valuable product information.
The Zone Service Centers and the new Distribution Centers enabled
us to respond quickly to increases in product demand as well as
changing technologies.
- -------------------------------------- 6 --------------------------------------
<PAGE> 10
MARKET REVIEW
- -------------------------------------------------------------------------------
Telephone Company Market
Graybar sales to Regional Bell Operating Companies and
independently-owned telephone companies were up in 1994.
These customers are showing an interest in moving into the cable
television market. This is in response to the perception that cable
television companies may offer telephone service. In support of our
customers' interest, we are now stocking many products for cable
television systems in the Zone Service Centers. A Graybar Digest
publication presenting our cable television product list was in
production during the last quarter of 1994. It is scheduled for
distribution to telephone company customers in 1995.
In November, our Independent Telephone Company Advisory Council
met in Charlotte, North Carolina, during the national Outside Plant
Show. Council members discussed new products in detail and reviewed
the business concerns facing this industry.
Trade Shows
We continue to promote Graybar capabilities in the voice and data
markets through our participation in regional and national trade shows.
During 1994, we increased the promotion of Graybar's service offerings
with demonstrations on Pathfinder and GraybarNet. Graybar districts
and local branches also conducted trade shows and special event
promotions in every major market area.
In March, and again in October, we held Graybar's first two
National Communications Sales Training Conferences. The conferences
were held in St. Louis and Chicago. More than 75 suppliers supported
the conferences. A total of approximately 600 Graybar delegates
attended the conferences and toured exhibits of the latest
communications and data products. Our suppliers also were delighted
that more than 1,000 Graybar customers visited the exhibits the day
before the conferences opened. Employees were also given the
opportunity to participate in 110 technical seminars conducted by
suppliers, Graybar technical support personnel, and the national marketing
staff.
On the occasion of the
Company's 125th
anniversary, Square D
President Charles W.
Denny (right) presented a
restored 1928 Square D
safety switch to Edward A.
McGrath, President.
[PHOTO]
Power Utility Market
==================================---------------------------------------------
There is increasing competition in the Power Utility Market,
which is a result of the needs for less expensive and more readily
available power. Public utility commissions in several states have
enacted legislation allowing low-cost power generators to compete for
business beyond their traditional boundaries. High-cost power
generators are doing all they can to become more competitive.
All of this may be good for the power utility customers, but it
has created unprecendented change within the industry.
Through the change, Graybar sales are increasing as more
utilities see the value of our distribution service offerings.
Utilities continue to seek cost reductions, and in so doing will look
to the distributor to be part of the solution. Our leadership position
in distribution services will enable us to capitalize on these
opportunities.
We would like to recognize the contributions of the late Ralph L.
Sackett, who served as Vice President-Utility Markets until his
retirement early in 1994. Ralph was instrumental in promoting Graybar
to the Power Utility Market, and he is missed by his many friends in
the industry.
- -------------------------------------- 7 --------------------------------------
<PAGE> 11
MARKET REVIEW
- -------------------------------------------------------------------------------
Company co-founder
Elisha Gray's printing
telegraph, forerunner of
the stock ticker, was the
Company's first major
success.
[PHOTO]
International Markets
==================================---------------------------------------------
Overall international sales were up slightly in 1994. Graybar is
participating in major electrical and communications/data projects
around the world.
North America
Both Graybar Ontario and Harris & Roome Supply, Ltd., of Halifax,
Nova Scotia, enjoyed strong sales in 1994. In May, Graybar purchased a
minority interest in R.E.D. Electronics of Ontario. R.E.D., a major
distributor of communications and data products, complements our well-
established electrical products business in Canada.
Graybar de Mexico established a full-stocking facility in Mexico
City. The devaluation of the Mexican currency in December has left the
market in turmoil and will cause us to modify our original marketing
plans.
Latin America/Caribbean
We closed the Graybar Free Zone office in Panama and are focusing
on major projects in this market that we can serve through Miami
International. This branch had a very good year in 1994 and has
strengthened the Company's presence throughout the market area in both
electrical and communications/data.
Graybar Puerto Rico experienced a difficult year, but the market
remains strong. The operation has been completely restructured. The
facility will be remodeled and a Flagship Counter will be in place in
early 1995.
Asia-Pacific
The Pacific Rim remains the fastest-growing market in the world.
Graybar increased its ownership in Graybar P&M - Singapore and moved to
a new location.
The San Francisco International Group ended the year with strong
sales in Japan, the Philippines, and China. They closed the year with a
multi-million dollar order for electrical products that will be used in
a major construction project in the Philippines.
Middle East/Africa
Graybar sold its interest in the Dubai operation and will
concentrate on this market through the Houston International Group.
- -------------------------------------- 8 --------------------------------------
<PAGE> 12
MARKET REVIEW
- -------------------------------------------------------------------------------
Marketing Support
==================================---------------------------------------------
Counters
Graybar counters contributed to our banner year in 1994 with a
substantial increase in sales. Communications products played a
significant role in sales growth, while electrical products maintained
a strong position.
The Company continued counter remodeling and expansion in 1994.
A total of 35 Graybar counters were upgraded to Flagship Counters in
1994. The new Flagship concept increases counter traffic and improves
customer service through effective merchandising. This merchandising
strategy makes products highly visible and provides a consistent
product mix at every location. Customers can shop in the merchandising
areas, generating additional sales.
A model Flagship Counter was exhibited at the 1994 NECA
Exposition and Convention in Chicago. This award-winning exhibit
showcased the Company's superior counter service offerings to key
contractor customers.
The Company will continue to promote this merchandising center
concept in all Graybar locations.
Graybar Financial Services
Our finance subsidiary, Graybar Financial Services (GFS), enjoyed
a record year in 1994. Currently, approximately 4,300 customers have
leases or loans in place with GFS.
Nine hundred interconnects and contractors offered GFS leasing
options to their customers in 1994. In that year, 3,600 of these
customers -- the end users -- chose GFS to finance millions of dollars of
tools, test equipment, electrical upgrades, communication systems, data
networks, and other projects.
In 1994, a centralized GFS customer group was created at Graybar
corporate headquarters to improve service to GFS customers. Also in
1994, the Company introduced the GFS leasing program in Canada for
customers of Graybar Ontario, Ltd., Harris & Roome, and R.E.D.
Electronics.
GFS continues to educate and train employees, Graybar customers,
and end users on leasing options. In 1994, GFS published a quarterly
newsletter for distribution throughout the Company, participated in
Pathfinder, advertised in trade journals and other promotional
literature, participated in local and national trade shows, and
conducted GFS training seminars.
Advertising and Sales Promotion
The Company's 125th anniversary was an important theme in 1994
advertising and sales promotion literature. Thirty-eight suppliers
participated with Graybar in national promotions supported by trade
journal advertising.
Graybar's communications catalog continues to be updated. In
1994 the sections on station apparatus, key/PABX and message processing
products were updated. Sections on tools, safety equipment, and test
equipment were updated and combined. The wire and cable section was
reprinted.
The Company produced three Telcom Digests with specific, market-
oriented themes, such as fiber optic products, premises wiring, and
voice products.
In 1994 Graybar and several key suppliers implemented a new
series of brochures for the Communications and Data Markets. These
colorful, supplier-furnished brochures conform to a common format
developed by Graybar and are designed to promote product-specific
solutions for customers.
- -------------------------------------- 9 --------------------------------------
<PAGE> 13
OPERATIONS REVIEW
- -------------------------------------------------------------------------------
Graybar observed the
125th anniversary of the
founding of the Company
in 1869 by Elisha Gray, the
inventor, and Enos Barton,
the entrepreneur.
[PHOTO]
Elisha Gray
Operations
==================================---------------------------------------------
Customer Service
During 1994, the Company's primary focus was training for
improved customer service. In conjunction with Square D Company, we
introduced "Excellence in Customer Service" (ECS), a two-day service
skills program. This class helped sharpen the communications skills
that all front-line personnel must have to identify, satisfy, and then
exceed the expectations of Graybar's customers. In 1994, all Managers,
Customer Service participated in this training. The plan for 1995 is
to present ECS to all branch employees who have direct contact with
customers, such as Customer Service Representatives, Counter Sales
Representatives, Quotations Personnel, Truck Drivers and Switchboard
Operators.
In conjunction with the ECS course, all employees have completed
the Pathfinder training module, "Continuous Service Improvement." This
module instructs employees in the proper procedures for measuring and
resolving service issues. Taken together, this training will help
Graybar employees build solid relationships with individual customers
and learn to provide a superior level of service for all customers.
Purchasing
In 1994 we moved from pilot project to full implementation of the
Supplier Assisted Inventory Management (SAIM) program with two key
suppliers. With SAIM, the supplier electronically monitors Graybar
stock levels of specific products, and then automatically replenishes
those stocks based on agreed-upon levels. This process makes the most
of our inventory investment, reduces Graybar's procurement costs, and
improves customer service by keeping needed merchandise in stock. The
SAIM program has proven very effective.
During implementation, nearly 100 Graybar buyers, purchasing
supervisors, and managers attended seminars explaining the mechanics
and benefits of the program. During 1995 the program will be expanded
to include additional suppliers.
The first section of the Inventory Management manual was
completed in 1994. This manual is a training reference for Graybar
buyers, purchasing supervisors, managers and other interested
employees. The manual details the Company's philosophy and approach to
managing our inventory asset for maximum profitability. Additional
sections of this manual are under development. It will serve as the
training foundation for Graybar buyers. Other training activities
included circulating to all Purchasing Departments a twelve-hour video
training series on purchasing practices.
Several new purchasing enhancements were introduced in 1994. One
of the most significant developments was an improved process for
replenishing merchandise at our counters. With the growth in the
number of Flagship Counters, it is critical to maintain proper levels
of stock on display. The new "stocking decision" report is a helpful
tool for analyzing sales of non-stock items and highlighting items that
should be considered for stock. In addition, major changes were made to
the month-end analysis reports resulting in improved measurements of in-
stock service capabilities and return on investment.
In 1994 we made significant progress in improving Graybar's
inventory asset. We are working closely with key suppliers to balance
our stocks nationally. This, along with a concerted effort to
eliminate unwanted merchandise, helps to substantially improve the
Company's return on our merchandise investment.
- -------------------------------------- 10 -------------------------------------
<PAGE> 14
OPERATIONS REVIEW
- -------------------------------------------------------------------------------
Enos Barton guided the
Company for more than
40 years.
[PHOTO]
Enos Barton
Distribution Centers
In the fall of 1994, Graybar opened Distribution Centers in Los
Angeles and Houston. Inventories from the former Pacific and Gulf Zone
Service Centers were combined with stocks tailored to the local
markets. By centralizing inventory, we can now ship one complete order
to the customer rather than several partial orders. This improves
service to the customer and makes better use of our investment dollars.
Graybar's Distribution Centers employ the most current
technologies in material handling and storage. Bar coding, radio-
frequency scanning equipment, and "paperless" processing provide
improved accuracy and better customer service.
Zone Service Centers
The Zone Service Centers, along with the Distribution Centers,
are important to Graybar's commitment to quality service. Acting as an
extension of each branch, the Zone Service Centers and the Distribution
Centers provide back-up inventory available for prompt delivery to our
customers. Central stock, redeployment of existing stock, and strategic
placement of new items continue to improve Graybar's service offering.
Cost Containment
In 1994 the Company moved aggressively to control costs by
entering into strategic partnerships with key service providers. One
example is an agreement with AT&T to furnish both voice and data
communications services. In the past, these services had been provided
by multiple carriers. The new agreement has resulted in significant
savings for Graybar.
Agreements with our national trucking firms provided an
additional reduction in the cost of doing business. Volume incentives
from United Parcel Service provided substantial cost savings on a major
portion of our shipping expense.
1994 Real Estate
New Locations:
Beaverton, Oregon
City of Industry, California
(Los Angeles Distribution Center)
Conway, Arkansas
Englewood, Colorado
Houston, Texas (Distribution Center)
Livonia, Michigan
Lubbock, Texas
Mexico City, Mexico
North Dallas, Texas
Rock Hill, South Carolina
Santa Maria, California
Sherman, Texas
Acquisitions:
Carthage, Texas
Kilgore, Texas
Longview, Texas
Beaufort, South Carolina
Hilton Head, South Carolina
Total locations as of December 31, 1994 were 238.
- -------------------------------------- 11 -------------------------------------
<PAGE> 15
OPERATIONS REVIEW
- -------------------------------------------------------------------------------
Information Systems
==================================---------------------------------------------
Our Information Systems Department technicians continue to develop
information tools to help us profitably manage Graybar's business. We
are seeing solid returns on the Company's investments in information
technology.
A new version of GraybarNet, the Company's remote electronic order-entry
system for customers, was released in 1994. The new GraybarNet operates
on personal computers in a highly popular software format. Customer
response has been exceptional and several hundred customers now use this
offering.
Graybar customer service personnel now have a valuable new tool, the
"Hot Key," which allows Graybar personnel to access selected suppliers'
computer systems to obtain stock availability and pricing information.
Supplier information can be accessed while the Customer Service
Representative is entering the order. Using Hot Key, an order then can
be placed electronically with the supplier. We will add additional
suppliers to Hot Key in 1995.
The Company installed local area networks in every district during the
year. We were then able to standardize on office automation software and
install it company-wide. This allowed us to provide better word
processing and spreadsheet tools. Electronic mail is now available as
well.
Our mini-computers, which were used by the districts to manage their
printing requirements, were replaced with new UNIX systems. This new
hardware will do much more for the districts than manage their printing.
The UNIX systems will allow local managers access to sales and inventory
data on the mainframe via a "Decision Support System" (DSS). With DSS,
local managers will be able to create ad hoc reports to study sales and
inventory data on specific accounts and products. This will give them
an important information tool to help them manage their business. DSS is
scheduled for installation in all districts during 1995.
Our telephone data network was upgraded during the third quarter of
1994. Subsequently, Graybar combined its voice and data communications
services with a significant reduction in company-wide telephone
expense.
Electronic Data Interchange (EDI), which allows a customer's computer to
place orders directly with Graybar's computer system, continues to be a
growing service offering. In 1994 we developed new software that
provides "event driven" EDI to those customers who need it. This
version of EDI provides even faster transmission of
information between the computer systems. In addition, IS created
several new "transaction sets," business documents generated by EDI, to
support customer and supplier requirements.
- -------------------------------------- 12 -------------------------------------
<PAGE> 16
OPERATIONS REVIEW
- -------------------------------------------------------------------------------
Graybar retirees take
pride in the Company they
helped build. Shown here
are retirees representing
the Cleveland District.
Standing are Bill Crotser,
Isabel Lee, Wally Kiewel,
Bob Urmetz, Herman
Lotarski, and Vince
Chazinski. In front are
Anne Marinch, Annie
Souris, and Al Jarosz.
[PHOTO]
Human Resources
==================================---------------------------------------------
Personnel
In 1994, the Board of Directors elected Carl L. Hall to the position of
Executive Vice President. Mr. Hall will succeed Edward A. McGrath as
President when Mr. McGrath retires in 1995. At the time of his election,
Mr. Hall was District Manager at Chicago. He has served as a Director
since 1989.
The Board also elected a new Director, Richard D. Offenbacher, District
Manager at St. Louis.
The Company appointed two District Managers in 1994: Richard A. Cole,
Chicago, and Robert L. Nowak, Minneapolis.
Graybar districts continued to specialize their marketing
functions in 1994. Several districts appointed Market Managers in
keeping with the Company goal of providing specialized marketing support
to all branches. The Company also appointed one District Operating
Manager and one District Financial Manager in 1994.
Graybar continued the process of grouping selected branches into trading
areas. Trading areas allow two or more locations to combine their sales
and marketing resources at the same time they share certain
administrative responsibilities.
In 1994, Robert A. Reynolds was appointed Vice President-Marketing
Services at corporate headquarters. Anthony A. Brzoski was appointed
Vice President-Utility and Communications Markets. Also appointed at
the General Department were four National Sales Managers, two National
Product Managers, four General Managers-International, one Sales
Manager-International, and a Manager, Graybar Financial Services.
During the year, management formulated a realignment of the Company
which became effective January 1, 1995. Two business groups, one for
distribution of electrical supplies and one for distribution of
communications and data products, were formed. Effective the same date,
Richard H. Haney was appointed Group Vice President-Electrical Business,
and Robert A. Reynolds was appointed Group Vice President-Comm/Data
Business.
- -------------------------------------- 13 -------------------------------------
<PAGE> 17
OPERATIONS REVIEW
- -------------------------------------------------------------------------------
Training
The Company's training efforts were focused in five primary areas in
1994: sales, quality and customer service, product, management, and
employee development.
Pathfinder, Graybar's interactive computer-based training network, has
become an integral part of the Company's training strategy. Pathfinder
modules address our five primary areas of training emphasis. There are
approximately 190 modules currently on the network.
In addition to the training programs mentioned in the Market Review and
Operations Review sections of this Report, the Company's High-
Performance Selling and Excellence in Customer Service programs
graduated 916 employees in 1994.
The Graybar Management Training Seminar completed its eleventh year. Two
classes were conducted by the officers, with 40 managers completing the
week-long course.
[PHOTO]
Graybar employees in Long
Island City made their
branch the first Graybar
location to achieve the
prestigious ISO 9002
certification.
[PHOTO]
- -------------------------------------- 14 -------------------------------------
<PAGE> 18
FINANCIAL REVIEW
- -------------------------------------------------------------------------------
<TABLE>
Selected Consolidated Financial Data
(Stated in thousands except for per share data)
<CAPTION>
1994 1993 1992 1991 1990
=====================================================================================================
<S> <C> <C> <C> <C> <C>
Sales $2,364,461 $2,041,473 $1,902,354 $1,743,544 $1,894,626
Less--Cash discounts (8,839) (8,306) (8,243) (8,170) (9,903)
- -----------------------------------------------------------------------------------------------------
Net Sales 2,355,622 2,033,167 1,894,111 1,735,374 1,884,723
- -----------------------------------------------------------------------------------------------------
Cost of Merchandise Sold (1,934,925) (1,668,007) (1,564,929) (1,431,255) (1,565,717)
- -----------------------------------------------------------------------------------------------------
Interest Expense (12,003) (9,810) (10,054) (13,092) (13,962)
- -----------------------------------------------------------------------------------------------------
Provision for Income Taxes
Current (15,225) (10,016) (6,601) (6,356) (9,961)
Deferred 1,251 763 (493) (534) 1,633
- -----------------------------------------------------------------------------------------------------
Total provision for income taxes (13,974) (9,253) (7,094) (6,890) (8,328)
- -----------------------------------------------------------------------------------------------------
Income Before Cumulative
Effect of Accounting Change 18,702 14,745 10,232 9,515 11,985
- -----------------------------------------------------------------------------------------------------
Cumulative effect on prior years
of change in accounting for
postretirement benefits -- (45,000) -- -- --
- -----------------------------------------------------------------------------------------------------
Net Income (Loss) 18,702 (30,255) 10,232 9,515 11,985
- -----------------------------------------------------------------------------------------------------
Income (Loss) Applicable to
Common Stock 18,694 (30,265) 10,222 9,504 11,973
- -----------------------------------------------------------------------------------------------------
Average Common Shares
Outstanding <FA> 4,641 4,779 4,638 4,814 4,931
- -----------------------------------------------------------------------------------------------------
Income (Loss) per Share of
Common Stock <FA> 4.03 (6.33) 2.20 1.97 2.43
- -----------------------------------------------------------------------------------------------------
Cash dividends per share 2.00 2.00 2.00 2.00 2.00
- -----------------------------------------------------------------------------------------------------
Retained Earnings
Balance, beginning of year 52,486 91,733 93,837 92,910 89,776
Add--Net income (loss) 18,702 (30,255) 10,232 9,515 11,985
- -----------------------------------------------------------------------------------------------------
71,188 61,478 104,069 102,425 101,761
- -----------------------------------------------------------------------------------------------------
Less dividends
Preferred ($1.00 per share) (8) (10) (10) (11) (12)
Common (in cash) (8,729) (8,982) (8,282) (8,577) (8,839)
Common (in stock) (5,370) -- (4,044) -- --
- -----------------------------------------------------------------------------------------------------
(14,107) (8,992) (12,336) (8,588) (8,851)
- -----------------------------------------------------------------------------------------------------
Balance, end of year 57,081 52,486 91,733 93,837 92,910
Proceeds on stock subscriptions,
shares unissued 39 51 -- 67 72
Stock Outstanding
Preferred 164 183 197 219 223
Common 91,859 89,098 85,719 85,132 87,687
- -----------------------------------------------------------------------------------------------------
Total Shareholders' Equity 149,143 141,818 177,649 179,255 180,892
- -----------------------------------------------------------------------------------------------------
Total Assets 719,786 610,512 557,036 518,480 541,358
Long-term Debt $ 90,212 $ 63,621 $ 64,655 $ 70,338 $ 79,189
=====================================================================================================
<FN>
<FA> Adjusted for the declaration of 6.25% and 5% stock dividends in 1994
and 1992, respectively. Prior to adjusting for the stock dividends, the
average common shares outstanding for 1993, 1992, 1991 and 1990 were
4,498, 4,157, 4,315 and 4,420, respectively.
This summary should be read in conjunction with the consolidated
financial statements and related notes thereto included elsewhere in
this annual report.
</TABLE>
- -------------------------------------- 15 -------------------------------------
<PAGE> 19
FINANCIAL REVIEW
- -------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Stated in thousands except for share and per share data)
RESULTS OF OPERATIONS
1994 Compared to 1993
Net sales in 1994 were 15.9% higher than in 1993. The higher net sales
resulted from improvements in the market sectors of the economy in which
the Company operates. The impact of inflation on sales and cost of sales
was not significant in 1994.
Gross margin in 1994 increased $55,537 (15.2%) compared to 1993
primarily due to the increased sales in the electrical and
communications markets.
The increase in selling, general and administrative expenses in 1994
compared to 1993 occurred largely because of adjustments in personnel
complement and adjustments in compensation and related expenses.
Interest charges increased in 1994 compared to 1993 primarily due to
increased levels of borrowing incurred to finance higher levels of
inventory and receivables. Interest rates on 1994 short-term borrowings
have been generally higher than for the same period in 1993.
The combined effect of the increase in gross margin and the decrease in
other income, together with the increases in selling, general and
administrative expenses, interest charges and depreciation and
amortization, resulted in an increase in income before provision for
income taxes and cumulative effect of the accounting change of $8,678 in
1994 compared to 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 1993 earnings $45,000, or $9.42 per share.
1993 Compared to 1992
Net sales in 1993 were 7.3% higher than in 1992. The higher net sales
resulted from improvements in the market sectors of the economy in which
the Company operates. The impact of inflation on sales and cost of sales
was not significant in 1993.
Gross margin in 1993 increased $35,978 (10.9%) compared to 1992
primarily due to the increased sales in the electrical and
communications markets together with a generally higher gross margin
rate in those markets.
The increase in selling, general and administrative expenses in 1993
compared to 1992 occurred largely because of adjustments in personnel
complement and adjustments in compensation and related expenses.
Interest charges decreased in 1993 compared to 1992 primarily due to
lower interest rates on short-term borrowings.
The combined effect of the increases in gross margin and other income
and the decrease in interest charges, together with the increases in
selling, general and administrative expenses and depreciation and
amortization, resulted in an increase in income before provision for
income taxes and cumulative effect of the accounting change of $6,672 in
1993 compared to 1992.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," on January 1, 1993. SFAS No. 106 requires current recognition
of postretirement benefit costs as opposed to recognizing these costs on
a cash basis. SFAS No. 106 was adopted by the Company on the immediate
recognition basis. The after-tax impact of the accounting change
decreased 1993 earnings $45,000, or $9.42 per share. While adoption of
SFAS No. 106 had an adverse effect on the 1993 reported results of
operations and shareholders' equity, cash flows were not affected.
- -------------------------------------- 16 -------------------------------------
<PAGE> 20
FINANCIAL REVIEW
- -------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Stated in thousands except for share and per share data)
1992 Compared to 1991
Net sales in 1992 were 9.1% higher than in 1991. The higher net sales
resulted from improvements in the market sectors of the economy in which
the Company operates. The impact of inflation on sales and cost of sales
was not significant in 1992.
Gross margin in 1992 increased $25,063 (8.2%) compared to 1991 primarily
due to the increased sales in the electrical and communications markets.
The increase in selling, general and administrative expenses in 1992
compared to 1991 occurred largely because of adjustments in compensation
and related expenses including an increase in the Company's contribution
to the profit sharing and savings plan.
Interest charges decreased in 1992 compared to 1991 primarily due to
lower interest rates on short-term borrowings.
The combined effect of the increases in gross margin and other income,
together with the decrease in interest charges and increases in selling,
general and administrative expenses and depreciation and amortization,
resulted in an increase in pretax earnings of $921 in 1992 compared to
1991.
FINANCIAL CONDITION AND LIQUIDITY
The financial condition of the Company continues to be strong. At
December 31, 1994, current assets exceeded current liabilities by
$136,134, up $16,215 from December 31, 1993. The current assets at
December 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 December 31, 1994, the Company had available to it unused lines of
credit amounting to $129,000. These lines are available to meet short-
term cash requirements of the Company. Bank borrowings outstanding
during 1994 and 1993 varied from a minimum of $54,000 and $50,000 to a
maximum of $132,000 and $123,000,
respectively.
In May, 1992, the Company entered into a $50,000 Revolving Credit Loan
Agreement with a group of banks at an interest rate based on the London
Interbank Offered Rate (LIBOR). The credit agreement has various
covenants which limit the Company's ability to make investments, incur
debt, dispose of property, and issue equity securities. The Company is
also required to maintain certain financial ratios as defined in the
agreement. The Company intends to utilize this credit line primarily as
a secondary source of borrowing for short-term financing requirements.
There have been no borrowings against this credit line through December
31, 1994.
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.
Cash provided by operations during 1994 amounted to $16,453, which was
$10,153 more than the cash provided by operations in 1993. Cash provided
from the sale of common stock and proceeds received on stock
subscriptions amounted to $578 and $6,288 in 1994 and 1993,
respectively. Additional cash of approximately $447 will be provided in
1995 as a result of payments to be made for stock subscribed to by
employees under the 1992 Common Stock Purchase Plan.
- -------------------------------------- 17 -------------------------------------
<PAGE> 21
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Statements of Income and Retained Earnings
(Stated in thousands except for share and per share data)
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
======================================================================================
<S> <C> <C> <C>
Sales, net of returns and allowances $2,364,461 $2,041,473 $1,902,354
Less--Cash discounts (8,839) (8,306) (8,243)
- --------------------------------------------------------------------------------------
Net Sales 2,355,622 2,033,167 1,894,111
- --------------------------------------------------------------------------------------
Cost of Merchandise Sold (1,934,925) (1,668,007) (1,564,929)
- --------------------------------------------------------------------------------------
Gross Margin 420,697 365,160 329,182
Selling, General and Administrative expenses (339,557) (299,910) (271,615)
Taxes, other than income taxes (21,952) (19,915) (18,361)
Depreciation and amortization (15,999) (14,379) (13,729)
- --------------------------------------------------------------------------------------
Income from operations 43,189 30,956 25,477
Other Income, net 1,490 2,852 1,903
Interest Expense (12,003) (9,810) (10,054)
- --------------------------------------------------------------------------------------
Income Before Provision for Income Taxes
and Cumulative Effect of Accounting Change 32,676 23,998 17,326
- --------------------------------------------------------------------------------------
Provision for Income Taxes
Current (15,225) (10,016) (6,601)
Deferred 1,251 763 (493)
- --------------------------------------------------------------------------------------
Total provision for income taxes (13,974) (9,253) (7,094)
- --------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 18,702 14,745 10,232
- --------------------------------------------------------------------------------------
Cumulative effect on prior years of change
in accounting for postretirement benefits,
net of $28,000 tax benefit --- (45,000) ---
- --------------------------------------------------------------------------------------
Net Income (Loss) 18,702 (30,255) 10,232
- --------------------------------------------------------------------------------------
Retained Earnings, beginning of year 52,486 91,733 93,837
Cash dividends-
Preferred, $1.00 per share each year (8) (10) (10)
Common, $2.00 per share each year (8,729) (8,982) (8,282)
Common Stock dividend (5,370) --- (4,044)
- --------------------------------------------------------------------------------------
Retained Earnings, end of year $ 57,081 $ 52,486 $ 91,733
- --------------------------------------------------------------------------------------
Income per Share of Common Stock Before
Cumulative Effect of Accounting Change $ 4.03 $ 3.09 $ 2.20
- --------------------------------------------------------------------------------------
Net Income (Loss) per share of Common Stock $ 4.03 $ (6.33) $ 2.20
- --------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
</TABLE>
- -------------------------------------- 18 -------------------------------------
<PAGE> 22
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Balance Sheets December 31,
(Stated in thousands except for share and per share data) 1994 1993
===========================================================================================
<S> <C> <C>
ASSETS
===========================================================================================
Current Assets
Cash $ 17,144 $ 17,332
Trade receivables (less allowances of $4,296 and $3,945,
respectively) 301,525 256,634
Merchandise inventory 211,482 167,927
Other current assets 12,273 10,099
- -------------------------------------------------------------------------------------------
Total current assets 542,424 451,992
- -------------------------------------------------------------------------------------------
Property, at cost
Land 19,297 16,812
Buildings 131,081 121,339
Furniture and fixtures 79,542 68,666
Capital equipment leases 32,235 29,612
- -------------------------------------------------------------------------------------------
262,155 236,429
Less--Accumulated depreciation 108,722 99,494
- -------------------------------------------------------------------------------------------
153,433 136,935
- -------------------------------------------------------------------------------------------
Deferred Income Taxes 15,234 14,446
- -------------------------------------------------------------------------------------------
Other Assets 8,695 7,139
- -------------------------------------------------------------------------------------------
$719,786 $610,512
- -------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------
Current Liabilities
Notes payable to banks $ 80,488 $ 82,194
Current portion of long-term debt 13,457 11,000
Trade accounts payable 258,656 193,843
Accrued payroll and benefit costs 35,075 27,643
Other accrued taxes 7,475 6,375
Dividends payable 4,801 4,910
Other payables and accruals 6,338 6,108
- -------------------------------------------------------------------------------------------
Total current liabilities 406,290 332,073
- -------------------------------------------------------------------------------------------
Postretirement Benefits Liability 74,141 73,000
- -------------------------------------------------------------------------------------------
Long-term Debt 90,212 63,621
- -------------------------------------------------------------------------------------------
<CAPTION>
Shares at December 31,
1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholders' Equity
Capital stock-
Preferred, par value $20 per share,
authorized 300,000 shares--
Issued to shareholders 8,248 9,533
In treasury, at cost (60) (378)
- -------------------------------------------------------------------------------------------
Outstanding 8,188 9,155 164 183
- -------------------------------------------------------------------------------------------
Common, stated value $20 per share,
authorized 5,000,000 shares--
Issued to voting trustees 4,347,757 4,239,403
Issued to shareholders 250,893 240,991
In treasury, at cost (5,708) (25,507)
- -------------------------------------------------------------------------------------------
Outstanding 4,592,942 4,454,887 91,859 89,098
- -------------------------------------------------------------------------------------------
Common shares subscribed 486 1,088
Retained earnings 57,081 52,486
- -------------------------------------------------------------------------------------------
149,590 142,855
Less--Subscriptions receivable 447 1,037
- -------------------------------------------------------------------------------------------
Total Shareholders' Equity 149,143 141,818
- -------------------------------------------------------------------------------------------
$719,786 $610,512
- -------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
</TABLE>
- -------------------------------------- 19 -------------------------------------
<PAGE> 23
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Statements of Cash Flows
(Stated in thousands)
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
================================================================================================
<S> <C> <C> <C>
Cash Flows from Operations
Income before cumulative effect of
accounting change $18,702 $14,745 $10,232
================================================================================================
Adjustments to reconcile income before
cumulative effect of accounting
change to cash provided by operations-
Depreciation and amortization 15,999 14,379 13,729
Deferred income taxes (1,251) (763) 493
Changes in assets and liabilities:
Trade receivables (44,891) (19,226) (36,287)
Merchandise inventory (43,555) (5,524) (10,351)
Other current assets (2,174) (1,556) (2,171)
Other assets (1,556) 448 (285)
Trade accounts payable 64,813 1,609 45,182
Accrued payroll and benefit costs 7,432 1,948 8,862
Other accrued liabilities 2,934 240 (682)
================================================================================================
(2,249) (8,445) 18,490
================================================================================================
Net cash flow provided by operations 16,453 6,300 28,722
================================================================================================
Cash Flows From Investing Activities
Proceeds from sale of property 415 277 1,131
Capital expenditures for property (26,963) (13,264) (9,626)
================================================================================================
Net cash flow used by investing activities (26,548) (12,987) (8,495)
================================================================================================
Cash Flows From Financing Activities
Net (decrease) increase in notes payable to banks (1,706) 12,196 3,998
Proceeds from long-term debt 35,000 10,000 --
Repayment of long-term debt (7,892) (5,699) (6,909)
Principal payments under capital equipment leases (4,009) (3,812) (2,467)
Sale of common stock 578 6,288 562
Purchase of treasury stock (3,218) (2,872) (4,108)
Dividends paid (8,846) (8,620) (8,444)
================================================================================================
Net cash flow provided (used) by financing activities 9,907 7,481 (17,368)
================================================================================================
Net (Decrease) Increase in Cash (188) 794 2,859
================================================================================================
Cash, Beginning of Year 17,332 16,538 13,679
- ------------------------------------------------------------------------------------------------
Cash, End of Year $17,144 $17,332 $16,538
- ------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
</TABLE>
- -------------------------------------- 20 -------------------------------------
<PAGE> 24
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
for the Years Ended December 31, 1994, 1993 and 1992
(Stated in thousands except for share and per share data)
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Graybar
Electric Company, Inc. and its subsidiary companies. All significant
intercompany balances and transactions have been eliminated.
Merchandise Inventory
Inventory is stated at the lower of cost (determined using the last-in,
first-out (LIFO) cost method) or market. LIFO accounting is generally a
conservative method of accounting that, compared with other inventory
accounting methods, provides better matching of current costs with
current revenues. Had the first-in, first-out (FIFO) method been used,
inventory would have been approximately $25,360 and $19,690 greater than
reported under the LIFO method at December 31, 1994 and 1993,
respectively.
Revenue Recognition
Revenue from the sale of the Company's products is recognized upon
shipment to the customer. Costs of the products are recorded as cost of
merchandise sold when the related revenue is recognized.
Property and Depreciation
<TABLE>
The Company provides for depreciation using the straight-line method
over the following estimated useful lives of the assets:
- ----------------------------------------------------------
<S> <C>
Buildings 42 years
- ----------------------------------------------------------
Permanent fixtures-- Over the lives of the
leased property respective leases
- ----------------------------------------------------------
Furniture, fixtures and equipment 4 to 14 years
- ----------------------------------------------------------
Capital equipment Over the lives of the
leases respective leases
- ----------------------------------------------------------
</TABLE>
At the time property is retired, or otherwise disposed of, the asset and
related accumulated depreciation are removed from the accounts and any
resulting gain or loss is credited or charged to other income.
Equipment under capital leases is recorded in property with the
corresponding obligations carried in long-term debt. The amount
capitalized is the present value at the beginning of the lease term of
the aggregate minimum lease payments.
Maintenance and repairs are expensed as incurred. Renewals and
betterments that extend the life of the property are capitalized.
The Company capitalizes interest expense on major construction and
development projects while in progress.
Credit Risk
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts
receivable. The Company distributes its products to a large number of
customers in the electrical contractor, industrial plant and
communications markets. Most of the Company's business activity is with
customers in the United States; however, the Company has limited sales
activity in several international locations. The Company performs
ongoing credit evaluations of its customers, and a significant portion
of trade receivables is secured by lien or bond rights. In addition,
export sales are usually guaranteed by letter of credit or advance
payment arrangements. The Company maintains allowances for potential
credit losses and such losses historically have been within management's
expectations.
2. INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standard No. 109 (SFAS No. 109), "Accounting for Income
Taxes." No cumulative adjustment was required as a result of the
adoption of SFAS No. 109 due to the Company's previous use of the
liability method of accounting for income taxes.
<TABLE>
The provision for income taxes recorded in the Consolidated Statements
of Income and Retained Earnings is as follows:
<CAPTION>
Years Ended December 31: 1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax
Current $13,335 $9,067 $5,896
Deferred (951) (629) 471
State income tax
Current 1,890 949 705
Deferred (300) (134) 22
- -------------------------------------------------------------------------
Financial statement
income tax provision $13,974 $9,253 $7,094
- -------------------------------------------------------------------------
</TABLE>
- -------------------------------------- 21 -------------------------------------
<PAGE> 25
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
Deferred income taxes are provided based upon differences between the
financial statement and tax bases of assets and liabilities. The
following deferred taxes are recorded at December 31:
<CAPTION>
Assets/(Liabilities) 1994 1993
- -------------------------------------------------------------
<S> <C> <C>
Postretirement benefits $ 29,323 $ 28,872
Payroll accruals 4,320 3,872
Bad debt reserves 1,673 1,383
Inventory 1,463 1,147
Other deferred tax assets 3,431 2,475
Prepaid pension (2,717) (2,294)
Fixed asset depreciation (13,513) (13,523)
Fixed asset gains (624) (624)
Other deferred tax liabilities (4,976) (4,179)
- -------------------------------------------------------------
$ 18,380 $ 17,129
- -------------------------------------------------------------
</TABLE>
Deferred tax assets included in Other Current Assets were $3,146 and
$2,683 in 1994 and 1993, respectively.
<TABLE>
A reconciliation between the "statutory" federal income tax rate and
the effective tax rate in the Consolidated Statements of Income and
Retained Earnings is as follows:
<CAPTION>
Years Ended December 31: 1994 1993 1992
- ------------------------------------------------------------------------
<S> <C> <C> <C>
"Statutory" tax rate 35.0% 35.0% 34.0%
State and local income taxes,
net of federal benefit 3.4 2.9 2.8
Other, net 4.4 .7 4.1
- ------------------------------------------------------------------------
Effective tax rate 42.8% 38.6% 40.9%
- ------------------------------------------------------------------------
</TABLE>
3. CAPITAL STOCK
The Company's capital stock is owned by its employees and retirees.
Neither common nor preferred stock may be sold by the holder thereof,
except by first offering it to the Company. The Company may buy any
common shares so offered at the price at which they were issued ($20)
with appropriate adjustments for current dividends, or may call all or
part of the preferred stock at par plus accrued dividends.
During 1992, the Company offered to eligible employees the right to
subscribe to 480,000 shares of common stock at $20 per share in
accordance with the provisions of the Company's Common Stock Purchase
Plan dated October 7, 1992. This resulted in the subscription of 363,681
shares ($7,274). Subscribers under the Plan elected to make payments
under one of the following options: (i) all shares subscribed for prior
to January 22, 1993; (ii) a portion of such shares prior to January 22,
1993, and the balance in monthly installments through payroll deductions
(or in certain cases where a subscriber is no longer on the Company's
payroll, through pension deductions or direct monthly payments) over a
34-month period; or (iii) all shares pursuant to the installment method.
Shares were issued and Voting Trust Certificates were delivered to
subscribers as of January 22, 1993, in the case of shares paid for prior
to January 22, 1993. Shares will be issued and Voting Trust Certificates
will be delivered to subscribers on a quarterly basis, as of the tenth
day of March, June, September and December to the extent full payments
of shares are made in the case of subscriptions under the installment
method.
<TABLE>
Shown below is a summary of shares reacquired and retired by the Company
in the three years ended December 31:
<CAPTION>
Preferred Common
Reacquired Retired Reacquired Retired
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Years ended December 31:
1994 967 1,285 159,938 179,737
1993 717 514 142,889 128,633
1992 1,082 907 204,303 208,797
- ------------------------------------------------------------------------------------------------
</TABLE>
4. LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31,
Long-term debt was composed of: 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
6.25% note, unsecured, maturing
June, 2004, installments of $7,000
due annually in each of the years
2000 through 2004 $35,000 $ --
9.23% note secured by a first
mortgage on various properties,
maturing June, 2005, installments
of $2,725 due annually in each
of the years 1995 through 2004
with final payment of $2,750 due
in 2005 27,275 30,000
12.25% note secured by a first
mortgage on various properties,
due in monthly installments
through June, 1999 10,343 12,575
5.68% to 9.23% capital equipment
leases, various maturities 10,027 7,873
5.68% note, unsecured, maturing
June, 1998, installments of $2,000
due annually in each of the years
1994 through 1998 6,000 8,000
8.75% note, unsecured, maturing
November, 1995 -- 2,500
Variable rate, Industrial Revenue
Bonds, secured by facilities,
various maturities 1,567 2,673
- ------------------------------------------------------------------------
$90,212 $63,621
- ------------------------------------------------------------------------
</TABLE>
- -------------------------------------- 22 -------------------------------------
<PAGE> 26
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
Long-term debt matures as follows:
- ------------------------------------
<S> <C>
1996 $10,906
1997 10,882
1998 9,804
1999 6,245
2000-2005 52,375
- ------------------------------------
$90,212
- ------------------------------------
</TABLE>
The present value of future minimum lease payments under capital leases
as of December 31, 1994 was $12,921 of which $10,027 is included in
long-term debt.
Bank borrowings varied from a minimum of $54,000 and $50,000 to a
maximum of $132,000 and $123,000 in 1994 and 1993, respectively.
The average amount of bank borrowings outstanding during 1994 and 1993
amounted to approximately $88,000 and $85,000 at average interest rates
of 4.40% and 3.30%, respectively. The averages are based on the daily
amounts outstanding during each year.
The Company had unused lines of credit of approximately $129,000 as of
December 31, 1994. Certain lines require maintenance of compensating
balances of up to 5% of the available lines of credit.
In May, 1994, the Company received the proceeds from a ten-year note for
$35,000 at a fixed interest rate of 6.25%. 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.
In May, 1992, the Company entered into a $50,000 Revolving Credit Loan
Agreement with a group of banks at an interest rate based on the London
Interbank Offered Rate (LIBOR). The credit agreement has various
covenants which limit the Company's ability to make investments, incur
debt, dispose of property, and issue equity securities. The Company is
also required to maintain certain financial ratios as defined in the
agreement. There have been no borrowings against this credit line
through December 31, 1994.
5. PENSION PLAN
Pension and related expense was $4,635, $3,556 and $3,676 for each of
three years ended December 31, 1994, 1993 and 1992, respectively.
The Company has a noncontributory defined benefit pension plan covering
substantially all full-time employees. The plan provides retirement
benefits based on an employee's final average earnings and years of
service. Employees become 100% vested after 5 years of service,
regardless of age.
<TABLE>
The Company's funding policy is to contribute the net periodic pension
cost accrued each year, provided that the contribution will not be less
than the ERISA minimum nor greater than the maximum tax deductible
amount. The actuarially computed components of the defined benefit
pension plan expense for the three years ended December 31, are as
follows:
<CAPTION>
1994 1993 1992
-------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during the year $ 4,249 $ 3,383 $ 3,303
Interest cost on projected
benefit obligation 7,357 6,923 6,641
Actual return on plan
assets 642 (9,472) (2,546)
Net amortization of return
on plan assets and
unrecognized net asset (8,660) 1,958 (4,389)
------- ------- -------
Total defined benefit plan
expense $ 3,588 $ 2,792 $ 3,009
======= ======= =======
</TABLE>
<TABLE>
The following table sets forth the plan's funded status for the two
years ended December 31:
<CAPTION>
1994 1993
-------------------
<S> <C> <C>
Actuarial present value of benefit
obligation:
Vested benefits $52,883 $61,765
Nonvested benefits 11,329 11,798
------- -------
Accumulated benefit obligation 64,212 73,563
------- -------
Projected benefit obligation for
service rendered to date 92,514 98,753
------- -------
Plan assets at fair value, primarily
common stocks and bonds 80,738 88,464
------- -------
Projected benefit obligation
in excess of plan assets (11,776) (10,289)
------- -------
Unrecognized prior service cost (12) 6
Unrecognized net loss 28,412 27,030
Unrecognized net asset at
January 1, 1987 (11,584) (12,743)
------- -------
Net pension asset recognized in
the consolidated balance sheet $ 5,040 $ 4,004
======= =======
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligation were 8.50% and 5.50%, and 7.50% and 4.50% in 1994 and 1993,
respectively. The long-term rate of return on assets used in determining
defined benefit plan expense was 9.75% in 1994, and 9.00% in 1993 and
1992. The average remaining service lives of plan participants used to
calculate the amortization of the unrecognized net asset at January 1,
1987 was 18 years.
- -------------------------------------- 23 -------------------------------------
<PAGE> 27
CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The Company also provides a defined contribution profit sharing and
savings plan covering substantially all of its full-time employees.
Annual contributions by the Company to the plan are at the discretion of
management and are generally determined based on the profitability of
the Company. Employees may also contribute to the plan subject to
limitations imposed by federal tax law and ERISA.
6. POSTRETIREMENT HEALTH CARE AND
LIFE INSURANCE
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The Company and its
subsidiaries provide certain health care and life insurance benefits for
retired employees through the Retiree Welfare Plan (the Plan).
Substantially all of the Company's employees may become eligible to
participate in the Plan if they reach normal retirement age while
working for the Company. Benefits are provided through insurance
coverage with premiums based on the benefits paid during the year. The
Company funds the Plan on a pay-as-you-go basis and, accordingly, the
Plan had no assets at December 31, 1994 or 1993.
The Company elected to immediately recognize the cumulative effect of
adoption of SFAS No. 106 pertaining to years prior to 1993 through a
one-time adjustment which decreased 1993 net income by $45,000, net of a
$28,000 income tax effect.
<TABLE>
Periodic postretirement benefit expense for the two years ended December
31, is as follows:
<CAPTION>
1994 1993
------------------------------
<S> <C> <C>
Service cost-benefits earned during
the year $ 536 $ 401
Interest cost on accumulated
postretirement benefit obligation 6,149 6,111
Amortization of net loss from prior
years 122 ---
------ ------
Net periodic postretirement benefit
expense $6,807 $6,512
====== ======
</TABLE>
<TABLE>
The following table sets forth the accumulated postretirement benefit
obligation for the Company's postretirement benefit plans for the two
years ended December 31:
<CAPTION>
1994 1993
-------------------
<S> <C> <C>
Retirees $60,743 $63,719
Fully eligible active plan participants 11,135 13,243
Other active plan participants 6,034 7,492
------- -------
Accumulated postretirement benefit
obligation 77,912 84,454
Unrecognized net loss (3,771) (11,454)
------- -------
Accrued postretirement benefit cost $74,141 $73,000
======= =======
</TABLE>
The discount rate used in determining net periodic postretirement
benefit expense was 7.50% and 8.75%
for 1994 and 1993, respectively. The discount rate used to determine the
accumulated postretirement benefit obligation was 8.50% and 7.50% at
December 31, 1994 and 1993, respectively. The health care cost trend
rate used in determining net periodic postretirement benefit expense for
all years was 6.75% and 8.00% for 1994 and 1993, respectively. The
health care cost trend rate used to determine the accumulated
postretirement benefit obligation for all years was 6.75% at December
31, 1994 and 1993. A one percentage point increase in the health care
cost trend rate would not have a material impact on the net periodic
postretirement benefit expense or the accumulated postretirement benefit
obligation.
7. NET INCOME PER SHARE OF COMMON
STOCK
The computation of net income per share of common stock is based on the
weighted average number of common shares outstanding during each year.
The average numbers of shares used in computing net income per share of
common stock were 4,640,998, 4,778,747 and 4,638,056 in 1994, 1993 and
1992, respectively, adjusted for the declaration of a 6.25% stock dividend
in 1994 and a 5.00% stock dividend in 1992.
8. COMMITMENTS
Rental expense was $8,420, $6,941 and $6,813 in 1994, 1993 and 1992,
respectively.
<TABLE>
Future minimum rental payments required under operating leases that have
either initial or remaining noncancellable lease terms in excess of one
year as of December 31, 1994 are as follows:
<CAPTION>
Years ending December 31:
- ------------------------------------------------
<S> <C>
1995 $8,182
1996 6,394
1997 4,176
1998 3,002
1999 2,314
Subsequent to 1999 3,182
- ------------------------------------------------
</TABLE>
9. STATEMENTS OF CASH FLOWS
During 1994, 1993 and 1992 income taxes paid totaled $16,783, $10,621
and $6,166; interest paid totaled $11,987, $10,158 and $9,714 and
liabilities assumed in connection with capitalized leases totaled
$5,949, $0 and $5,607, respectively.
- -------------------------------------- 24 -------------------------------------
<PAGE> 28
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
One Boatmen's Plaza Telephone 314 425 0500
St. Louis, MO 63101
Price Waterhouse LLP
REPORT OF INDEPENDENT ACCOUNTANTS
February 17, 1995
To the Shareholders and
Board of Directors of
Graybar Electric Company, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of
Graybar Electric Company, Inc. and its subsidiaries (the Company) at
December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
As discussed in Note 6 to the financial statements, the Company changed
its method of accounting for postretirement benefits other than pensions
effective January 1, 1993.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
- -------------------------------------- 25 -------------------------------------
<PAGE> 29
DISTRICT MANAGEMENT AS OF DECEMBER 31, 1994
- -------------------------------------------------------------------------------
========================================
New York District
========================================
Frank Mossa
Manager
Robert E. Wierzbicki
Communications Market Manager
Michael Patoka
Operating Manager
Robert J. Bracchi
Financial Manager
========================================
Boston District
========================================
William L. King
Manager
Donald M. Block
C&I and Utility Market Manager
Gerald G. Pollick
Operating Manager
Richard C. Hird
Financial Manager
========================================
Philadelphia District
========================================
Gerard J. McCrea
Manager
Gerard J. Kollar
Construction Market Manager
Matthew W. Meacle
Operating Manager
Joseph P. Peduto
Financial Manager
========================================
Pittsburgh District
========================================
Steven M. Schooley
Manager
Richard C. Kelly
Construction Market Manager
C. Robert Smith
Operating Manager
Brent D. Morgan
Financial Manager
========================================
Cincinnati District
========================================
Lawrence R. Giglio
Manager
James D. Hooper
C&I Market Manager
David L. Mitchell
Operating Manager
Stephen C. Beckmann
Financial Manager
========================================
Atlanta District
========================================
Richard H. Haney
Manager
H. Bennett Wall
C&I and Utility Market Manager
William E. Meyer, Jr.
Construction Market Manager
Allen C. Feige
Operating Manager
Darrel D. Schilling
Financial Manager
========================================
Richmond District
========================================
Thomas S. Gurganous
Manager
J. Wayne Andrews
C&I Market Manager
Wallace H. Hancock
Construction Market Manager
Michael R. Gross
Communications Market Manager
Ernest L. Chappell, Jr.
Operating Manager
David E. Metz
Financial Manager
========================================
Tampa District
========================================
Robert L. Mygrant
Manager
Robert C. Lyons
District Construction and C&I Market Manager
Robert P. Weiland
Communications Market Manager
Robert D. Wombacher
Operating Manager
Bruce E. Neilson
Financial Manager
- -------------------------------------- 26 -------------------------------------
<PAGE> 30
DISTRICT MANAGEMENT AS OF DECEMBER 31, 1994
- -------------------------------------------------------------------------------
========================================
Chicago District
========================================
Richard A. Cole
Manager
Thomas E. Walsh
C&I and Utility Market Manager
Nancy C. Porter
Operating Manager
Martin J. Beagen
Financial Manager
========================================
Minneapolis District
========================================
Robert L. Nowak
Manager
Terrence J. Innes
C&I Market Manager
Charles B. Paschke
Communications Market Manager
Edmund L. Trolander
Operating Manager
Thomas E. Kinate
Financial Manager
========================================
St. Louis District
========================================
Richard D. Offenbacher
Manager
John P. Mills
Operating Manager
James V. Glass
Financial Manager
========================================
Dallas District
========================================
Donald D. Erwin
Manager
Peter J. Roettinger
C&I Market Manager
Francis B. Roderick
Construction Market Manager
Raymond Manger
Communications Market Manager
Thomas T. Townsend
Operating Manager
George D. Zackey
Financial Manager
Arnold W. Nephew
Integrated Supply Market Manager
========================================
San Francisco District
========================================
Frank L. Hipp, Jr.
Manager
Robert D. Vivian
Communications Market Manager
Peter F. Finn
Operating Manager
Gerald E. Spillman
Financial Manager
========================================
Los Angeles District
========================================
Kenneth B. Sparks
Manager
Robert C. Odney
C&I Market Manager
James H. Schmidt
Communications Market Manager
Christopher O. Olsen
Operating Manager
James Bateman, Jr.
Financial Manager
========================================
Seattle District
========================================
John C. Loff
Manager
Michael S. Lind
C&I Market Manager
Donald R. Stevenson
Communications Market Manager
T. Peter Girard, Jr.
Operating Manager
Randall R. Harwood
Financial Manager
========================================
Phoenix District
========================================
Gary D. Hodges
Manager
Ralph S. Benell
Communications Market Manager
Jerry D. Nichols
Operating Manager
Ronald J. Grabar
Financial Manager
- -------------------------------------- 27 -------------------------------------
<PAGE> 31
LOCATIONS AS OF JANUARY 1, 1995
- -------------------------------------------------------------------------------
CORPORATE OFFICE
34 North Meramec Avenue
St. Louis, Missouri 63105
314 727-3900
INFORMATION SYSTEMS
11828 Lackland Road
St. Louis, Missouri 63146
314 569-0006
MID-ATLANTIC ZONE
SERVICE CENTER
2124 Avenue C
Bethlehem, Pennsylvania 18017
MIDWEST ZONE
SERVICE CENTER
2424 A North Main Street
East Peoria, Illinois 61611
========================================
New York District
========================================
21-15 Queens Plaza North
Long Island City,
New York 11101
718 392-2000
BRANCHES
New York: Manhattan,
Rochester, Albany, Syracuse,
Hauppauge, Buffalo
New Jersey: Newark,
North Brunswick,
Teterboro Telcom,
Hackettstown, Parsippany
========================================
Philadelphia District
========================================
1550 South Warfield Street
Philadelphia, Pennsylvania
19146
215 336-2211
BRANCHES
Maryland: Baltimore, Lanham
Pennsylvania: Harrisburg,
Allentown
Delaware: New Castle
Virginia: Chantilly
========================================
Cincinnati District
========================================
1022 West Eighth Street
Cincinnati, Ohio 45203
513 621-0600
BRANCHES
West Virginia: Charleston
Ohio: Columbus, Dayton,
Lima
Kentucky: Lexington,
Louisville
Tennessee: Nashville
========================================
Richmond District
========================================
1510 Tomlynn Street
Richmond, Virginia 23230
804 359-1381
BRANCHES
Virginia: Norfolk, Roanoke
Hampton
North Carolina: Asheville,
Raleigh, Winston-Salem,
Charlotte, Greensboro,
Wilmington
South Carolina: Rock Hill
Tennessee: Bristol, Johnson City
========================================
Boston District
========================================
345 Harrison Avenue
Boston, Massachusetts 02118
617 482-9320
BRANCHES
Rhode Island: Cranston
Massachusetts: Worcester,
West Springfield, Boston
Telcom (Somerville)
Maine: Portland
New Hampshire: Manchester
Vermont: Rutland
Connecticut: Hamden
========================================
Pittsburgh District
========================================
900 Ridge Avenue
Pittsburgh, Pennsylvania
15212
412 323-5200
BRANCHES
Ohio: Youngstown, Cleveland,
Akron, Canton, Mansfield
Pennsylvania: Greensburg
West Virginia: Wheeling
========================================
Atlanta District
========================================
2050 Nancy Hanks Drive
Norcross, Georgia 30071
404 441-5580
BRANCHES
Georgia: Norcross, Atlanta
Midtown, Marietta,
Riverdale, Savannah,
Cartersville
Alabama: Birmingham,
Huntsville, Mobile
South Carolina: Columbia,
Greenville, Spartanburg,
Hilton Head, Beaufort
Tennessee: Knoxville,
Chattanooga
Florida: Pensacola
Mississippi: Jackson
========================================
Tampa District
========================================
801 North Rome Avenue
Tampa, Florida 33606
813 253-8881
BRANCHES
Florida: Sarasota, Lakeland,
Orlando, Largo, Melbourne,
North Tampa, Jacksonville,
South Jacksonville,
Tallahassee, Daytona Beach,
Perrine, Miami,
West Palm Beach,
Tampa Utility, Florida City,
Fort Myers, Fort Pierce,
Miami Telcom, Naples,
Pompano Beach,
Pompano Beach Telcom,
Tampa Telcom
Georgia: Kingsland
- -------------------------------------- 28 -------------------------------------
<PAGE> 32
LOCATIONS AS OF JANUARY 1, 1995
- -------------------------------------------------------------------------------
========================================
Chicago District
========================================
900 Regency Drive
Glendale Heights, Illinois
60139
708 893-3600
BRANCHES
Illinois: Naperville
Indiana: Fort Wayne,
South Bend, Hammond,
Indianapolis
Michigan: Flint, Lansing,
Grand Rapids, Kalamazoo,
Auburn Hills, Kentwood,
Livonia
Ohio: Toledo
========================================
St. Louis District
========================================
600 South Taylor Avenue
St. Louis, Missouri 63110
314 531-4700
BRANCHES
Iowa: Davenport, Des Moines,
Cedar Rapids
Illinois: East Peoria,
Springfield
Missouri: Jefferson City,
Kansas City, Springfield
Indiana: Evansville
Kansas: Olathe, Wichita
Nebraska: Omaha
Tennessee: Memphis
========================================
Seattle Electrical District
========================================
1919 Sixth Avenue South
Seattle, Washington 98134
206 292-4848
BRANCHES
Washington: Spokane,
Tacoma, Everett, Bellevue
Oregon: Portland, Beaverton
Idaho: Boise
Alaska: Anchorage
California: Oakland, Fresno,
Modesto, Sacramento,
San Jose, Martinez,
San Francisco Downtown
Nevada: Reno
Hawaii: Aiea
========================================
Western Comm/Data District
========================================
1600 132nd Avenue, Northeast
Bellevue, Washington 98005
206 453-1574
This new District supports
communications and data
sales in all branches of the
Seattle Electrical District and
the Phoenix Electrical District.
========================================
Minneapolis District
========================================
2300 East 25th Street
Minneapolis, Minnesota
55406
612 721-3545
BRANCHES
Minnesota: St. Paul, Duluth,
Brooklyn Park, Burnsville,
Minneapolis Telcom
(Plymouth), Rochester,
Mankato
Montana: Billings
North Dakota: Fargo
South Dakota: Sioux Falls,
Brookings
Wisconsin: Green Bay,
Milwaukee, Marinette,
Manitowoc, Madison
========================================
Dallas District
========================================
717 South Good Latimer
Expressway
Dallas, Texas 75226
214 939-0844
BRANCHES
Texas: San Antonio,
Fort Worth, Amarillo, Austin,
Abilene, Dallas Telcom,
Cypress, Beaumont,
Corpus Christi, Houston,
Houston Telcom,
North Dallas, Sherman,
Lubbock, Longview, Kilgore,
Carthage,
Houston Distribution Center
Oklahoma: Oklahoma City,
Tulsa
Arkansas: Little Rock, Conway
Louisiana: Shreveport,
Baton Rouge, Lake Charles,
Harahan
========================================
Phoenix Electrical District
========================================
3350 West Earll Drive
Phoenix, Arizona 85017
602 269-2131
BRANCHES
Arizona: Mesa, Tucson, Nogales
Colorado: Colorado Springs,
Denver, Englewood
New Mexico: Albuquerque
Texas: El Paso
Nevada: Las Vegas, Henderson
Utah: Salt Lake City
California: Los Angeles,
Anaheim, Costa Mesa,
Long Beach, San Bernardino,
San Diego, Chula Vista, Santa
Barbara, Van Nuys,
Bakersfield, San Marcos,
Santa Maria, Los Angeles
Distribution Center
========================================
International
========================================
34 North Meramec Avenue
St. Louis, Missouri 63105
314 727-3900
LOCATIONS
Halifax, Nova Scotia
Toronto, Canada
Guaynabo, Puerto Rico
Singapore
Tamuning, Guam
Juarez and Mexico City, Mexico
GRAYBAR ELECTRIC
(ONTARIO) LTD.
Kitchener, Ontario
Niagara Falls, Ontario
Hamilton, Ontario
Guelph, Ontario
Windsor, Ontario
MIAMI INTERNATIONAL
10500 Southwest 186th Street
Perrine, Florida 38157
305 252-0400
<PAGE> 33
Graybar Electric Company, Inc.
34 North Meramec Avenue
St. Louis, Missouri 63105
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
<PAGE> 2
EXHIBIT 21
----------
GRAYBAR ELECTRIC COMPANY, INC.
LIST OF SUBSIDIARIES
--------------------
Graybar Foreign Sales Corporation, a Barbados corporation.
Graybar International, Inc., a Missouri corporation doing
business in the territory of Puerto Rico.
Graybar Financial Services, Inc., a Missouri corporation.
Graybar International Guam, Inc., a Missouri corporation.
Graybar Electric de Mexico, S.A. de C.V., a Mexican corporation.
Graybar Free Zone, S.A., a Panamanian corporation.
Graybar Electric Limited, a Canadian corporation.
Graybar Foundation, Inc., a Missouri corporation.
Graybar Services, Inc., an Illinois corporation.
Cognitive Training Corporation, a Missouri corporation.
Distribution Associates, Inc., a Missouri corporation.
Graybar Electric (Ontario) Limited, a Canadian corporation
Graybar Holdings Limited, a Canadian corporation.
Graybar-P&M International PTE LTD, a Singapore corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 17,144
<SECURITIES> 0
<RECEIVABLES> 301,525
<ALLOWANCES> 3,801
<INVENTORY> 211,482
<CURRENT-ASSETS> 542,424
<PP&E> 262,155
<DEPRECIATION> 108,722
<TOTAL-ASSETS> 719,786
<CURRENT-LIABILITIES> 406,290
<BONDS> 90,212
<COMMON> 91,859
0
164
<OTHER-SE> 57,120
<TOTAL-LIABILITY-AND-EQUITY> 719,786
<SALES> 2,355,622
<TOTAL-REVENUES> 2,355,622
<CGS> 1,934,925
<TOTAL-COSTS> 1,934,925
<OTHER-EXPENSES> 377,508
<LOSS-PROVISION> 304
<INTEREST-EXPENSE> 12,003
<INCOME-PRETAX> 32,676
<INCOME-TAX> 13,974
<INCOME-CONTINUING> 18,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,702
<EPS-PRIMARY> 4.03
<EPS-DILUTED> 4.03
</TABLE>
