<PAGE> 1
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
-------------------
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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GRAYBAR ELECTRIC COMPANY, INC.
(Exact name of registrant as specified in its charter)
New York 13-0794380
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
34 North Meramec Avenue, St. Louis, Missouri 63105, (314) 512-9200
(Address, including zip code, and telephone number, including area code,
of principal executive offices)
G.S. TULLOCH, JR., Esq.
Vice President, Secretary and General Counsel
Graybar Electric Company, Inc.
34 North Meramec Avenue
St. Louis, Missouri 63105
(314) 512-9200
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
-------------------
Copy to:
JOHN H. DENNE, Esq.
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, New York 10166
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Approximate date of commencement of proposed sale to the public:
October 9, 1995.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box./ /
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof, pursuant
to Item 11(a)(1) of this Form, check the following box./ /
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering./ / ---------------
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering./ / ---------------
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box./ /
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<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed Maximum
Aggregate Amount of
Title of Securities to Offering Price Registration
be Registered Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock (par value $1 per share) . . . . . . . . . . . . $11,500,000 $3,966
- ------------------------------------------------------------------------------------------------------------------------------------
Voting Trust Certificates <F1> . . . . . . . . . . . . . . . . -- --
===================================================================================================================================
<FN>
<F1> Representing the shares of Common Stock offered hereunder.
</TABLE>
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The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said section 8(a), may determine.
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<PAGE> 2
GRAYBAR ELECTRIC COMPANY, INC.
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<TABLE>
CROSS-REFERENCE SHEET
<CAPTION>
Item Number and Caption Prospectus Heading
----------------------- ------------------
<S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus. . . . . . . . Cover page
2. Inside Front and Outside Back of Cover
Pages of Prospectus.. . . . . . . . . . . . . . . . . Table of Contents; Available Information;
Incorporation of Certain Documents by Reference
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges. . . . . . . . . . Prospectus Summary
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . Purpose of Issue
5. Determination of Offering Price . . . . . . . . . . . . The Offering; Description of Common Stock
6. Dilution. . . . . . . . . . . . . . . . . . . . . . . . <F*>
7. Selling Security Holders. . . . . . . . . . . . . . . . <F*>
8. Plan of Distribution. . . . . . . . . . . . . . . . . . The Offering; Common Stock Purchase
Plan; Subscription Agreement
9. Description of Securities to be Registered. . . . . . . Description of Common Stock; Summary of Certain
Provisions of the Voting Trust Agreement
10. Interests of Named Experts and Counsel. . . . . . . . . Legal Matters; Experts
11. Information with Respect to the Registrant. . . . . . . Prospectus Summary; Selected Consolidated
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Dividends; Business; Management;
Information Concerning the Voting Trustees
12. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . . . . . . <F*>
<FN>
- ------------------
<F*> Omitted because not applicable, or answer to Item is negative and is omitted from the Prospectus.
</TABLE>
<PAGE> 3
SUBJECT TO COMPLETION, DATED AUGUST 31, 1995
P R O S P E C T U S
- -------------------
575,000 SHARES
GRAYBAR ELECTRIC COMPANY, INC.
----------------
Common Stock
Par Value $1 Per Share
offered to
Employees of Graybar Electric Company, Inc.
Pursuant to the
COMMON STOCK PURCHASE PLAN
Dated as of October 9, 1995
and
Voting Trust Certificates
in respect thereof
----------------
Shares of Common Stock, which eligible employees may subscribe for
by execution of a Subscription Agreement in the form set forth in this
Prospectus, will upon issuance pursuant to the terms of the Common Stock
Purchase Plan be deposited in the Voting Trust established by the Voting
Trust Agreement, dated as of April 15, 1987, pursuant to which
approximately 95% of the presently outstanding shares of Common Stock of
the Company are held, and Voting Trust Certificates will be issued in
respect of shares so subscribed for and purchased, except that eligible
employees who are shareholders and who have not elected to participate
in the Voting Trust Agreement will receive stock certificates
representing the shares for which they subscribed. The Voting Trust
Agreement is more fully described in this Prospectus under the heading
"Summary of Certain Provisions of the Voting Trust Agreement."
All subscriptions will be irrevocable by their terms; however, the
subscription of an employee whose employment terminates for any cause
other than retirement on a pension (other than a deferred pension) will
be canceled. The Company will have the option to repurchase, at $20 per
share, shares of Common Stock purchased hereunder in the event the owner
desires to sell, transfer or otherwise dispose of such shares or Voting
Trust Certificates issued in respect thereof or in the event of death or
termination of employment otherwise than by retirement on a pension
(other than a deferred pension). See "The Offering," "Common Stock
Purchase Plan" and "Description of Common Stock -- Repurchase Option."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
===================================================================================================================================
Underwriting Discounts Proceeds to the
Price to Public and Commissions Company<F2>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit . . . . . . . . . . . $20 None $20
- ------------------------------------------------------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . $11,500,000<F1> None $11,500,000<F1>
====================================================================================================================================
<FN>
<F1> Shares of Common Stock of the Company registered hereunder are to
be offered pursuant to the Common Stock Purchase Plan set forth in
this Prospectus to approximately 5,300 eligible employees of the
Company. To the extent that subscription rights are not exercised,
the proceeds to the Company will be reduced by $20 for each share
not subscribed for and, to the extent that shares are purchased
under the installment method, receipt by the Company of the
proceeds will be deferred. See "The Offering."
<F2> Before deducting expenses estimated at $70,000 payable by the
Company.
</TABLE>
----------------
The date of this Prospectus is October 9, 1995.
<PAGE> 4
NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY OR THE VOTING TRUSTEES
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE VOTING TRUSTEES. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER OR
SOLICITATION WITHIN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
----------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . . . . . . . . 3
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Common Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Subscription Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Purpose of Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Management's Discussion and Analysis of Financial Condition and Results of Operations. . . 15
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Information Concerning the Voting Trustees . . . . . . . . . . . . . . . . . . . . . . . . 25
Summary of Certain Provisions of the Voting Trust Agreement. . . . . . . . . . . . . . . . 28
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Index to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
--------------------
AVAILABLE INFORMATION
Graybar Electric Company, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, information statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at certain regional offices of the
Commission at the following addresses: 7 World Trade Center, Suite
1300, New York, New York 10048; and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
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<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated
in this Prospectus by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994; and
(b) the Company's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1995 and June 30, 1995.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus is delivered, upon written or
oral request, a copy of any of the documents that have been incorporated
by reference in this Prospectus (not including exhibits to such
documents unless such exhibits are specifically incorporated by
reference). Requests for such copies should be directed to G. S.
Tulloch, Jr., Esq., Vice President, Secretary and General Counsel,
Graybar Electric Company, Inc., P.O. Box 7231, St. Louis, Missouri
63177, telephone number (314) 512-9200.
PROSPECTUS SUMMARY
The following is a summary of certain information in the Prospectus
and is qualified in its entirety by such information.
THE OFFERING (See pp. 5 to 12)
The Company is offering to eligible employees the right to
subscribe for up to 575,000 shares of the Company's common stock, par
value $1 per share with a stated value of $20 per share (the "Common
Stock"), at $20 per share. Pursuant to the Common Stock Purchase Plan,
subscribers have the option of paying for and receiving all of the
shares subscribed for by them in January 1996, paying for and receiving
a portion of such shares in January 1996 and paying for and receiving
the balance of such shares on an installment basis, or paying for and
receiving all such shares on an installment basis. The proceeds from
the offering will be added to working capital, in part to replenish
amounts previously used to repurchase outstanding shares of Common Stock
pursuant to the Company's repurchase option. To the extent that shares
offered are not subscribed for by employees, the number of shares sold
and the proceeds received will be correspondingly reduced. The number
of shares which each employee will be entitled to purchase will be
reduced on a pro rata basis in the event the aggregate number of shares
subscribed for by all employees exceeds 575,000.
THE COMPANY (See pp. 19 to 22)
The Company, which is wholly owned by its present and former
employees, was formed in 1925 and 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. The Company distributes more than
100,000 different products made by more than 1,000 manufacturers through
219 distributing houses located in 15 geographical districts throughout
the United States. 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, Guam, Singapore
and Canada. All products sold by the Company are purchased from others.
The location and telephone number of the principal executive
offices of the Company are 34 North Meramec Avenue, St. Louis, Missouri
63105 (314-512-9200), and the mailing address of the principal executive
offices is P.O. Box 7231, St. Louis, Missouri 63177.
-3-
<PAGE> 6
THE VOTING TRUST AGREEMENT (See pp. 28 to 30)
Approximately 95% of the outstanding shares of Common Stock of the
Company are held in a Voting Trust pursuant to the terms of a Voting
Trust Agreement which became effective on April 15, 1987. Shares
subscribed for will be deposited upon issuance in the Voting Trust and
Voting Trust Certificates will be issued in respect thereof, except that
subscribers who are shareholders and who have not elected to participate
in the Voting Trust will receive stock certificates representing the
shares for which they subscribed. The Voting Trust Agreement will
expire on April 14, 1997 unless sooner terminated as provided therein.
The Voting Trustees are entitled in their discretion and using their
best judgment to vote on the election of directors and the ratification,
approval or disapproval of any other action or proposed action of the
Company, except that the Voting Trustees may not, without the consent of
the holders of Voting Trust Certificates representing at least 75% of
the aggregate number of shares of Common Stock then deposited under the
Voting Trust Agreement, vote on the merger or consolidation of the
Company into another corporation, the sale of all or substantially all
of the Company's assets or the liquidation or dissolution of the
Company. Holders of Voting Trust Certificates will receive cash
dividends paid on shares of Common Stock beneficially owned by them and
held by the Voting Trustees. Shares of Common Stock paid as a stock
dividend with respect to such shares will be deposited in the Voting
Trust and Voting Trust Certificates relating thereto will be issued to
the beneficial owner of the shares upon which the stock dividends are
paid.
<TABLE>
SELECTED FINANCIAL INFORMATION
(See pp. 14 to 18 and pp. F-1 to F-13)
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------ ----------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
(In thousands, except for per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales. . . . . . . . . . . .$1,884,723 $1,735,374 $1,894,111 $2,033,167 $2,355,622 $1,097,372 $1,319,354
Income before
cumulative effect of
accounting change. . . . . . 11,985 9,515 10,232 14,745 18,702 10,246 16,141
Cumulative effect on prior
years of change in
accounting for post-
retirement benefits. . . . . --- --- --- (45,000) --- ---- ---
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Income (Loss). . . . . . . . 11,985 9,515 10,232 (30,255) 18,702 10,246 16,141
Per share of common
stock:
Income before cumulative
effect of accounting
change . . . . . . . . . . . 2.43 1.97 2.20 3.09 4.03 2.19 3.54
Net income (loss) <FA> . . . . 2.43 1.97 2.20 (6.33) 4.03 2.19 3.54
Cash dividends . . . . . . . . 2.00 2.00 2.00 2.00 2.00 .60 .60
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1995
------------ --------
BALANCE SHEET DATA: (IN THOUSANDS)
<S> <C> <C>
Working capital . . . . . . . . . . . . . . . . . . . . $136,134 $148,132
Total assets. . . . . . . . . . . . . . . . . . . . . . 719,786 820,156
Long-term debt. . . . . . . . . . . . . . . . . . . . . 90,212 94,674
Total liabilities . . . . . . . . . . . . . . . . . . . 570,643 658,970
Shareholders' Equity . . . . . . . . . . . . . . . . . 149,143 161,186
<FN>
- ------------------
<FA> Adjusted for the declaration of 5.0% and 6.25% stock dividends in
1992 and 1994, respectively. Prior to adjusting for stock
dividends, the average common shares outstanding for the years
1990, 1991, 1992 and 1993 were 4,420, 4,315, 4,157 and 4,498,
respectively.
</TABLE>
-4-
<PAGE> 7
THE OFFERING
The Company is offering to eligible employees the right to
subscribe for an aggregate of 575,000 shares of Common Stock under the
provisions of the Company's Common Stock Purchase Plan dated as of
October 9, 1995 (the "Plan") adopted by the Board of Directors and the
shareholders of the Company.
The Company is 100% owned by its active and retired employees. At
August 18, 1995, 4,502,910 shares of Common Stock were issued and
outstanding and an additional 105,836 shares of Common Stock had been
acquired by the Company and were held in the treasury. At such date,
approximately 95% of the issued and outstanding shares of Common Stock
were held of record by C.L. Hall, J.R. Hade, G.W. Harper, R.L. Mygrant
and R.D. Offenbacher, as Voting Trustees (the "Voting Trustees") under
a Voting Trust Agreement dated as of April 15, 1987 (the "Voting Trust
Agreement") among the Voting Trustees, the Company and the shareholders
of the Company who have elected to participate therein (the "Partici-
pating Shareholders"). Pursuant to the Voting Trust Agreement, Par-
ticipating Shareholders have deposited their certificates representing
shares of Common Stock with the Voting Trustees and voting trust
certificates (the "Voting Trust Certificates") have been issued by the
Voting Trustees in respect of such shares. The Voting Trust was
established in order to permit the owners of shares of Common Stock to
act together concerning the management of the Company and the voting on
matters presented to the shareholders.
Under the terms of the Plan, shares of Common Stock subscribed for
will upon issuance be deposited in the Voting Trust and in exchange
subscribers will receive Voting Trust Certificates, except that
subscribers who are shareholders of record as of the date hereof and who
have not elected to participate in the Voting Trust Agreement will
receive certificates representing the number of shares of Common Stock
for which they subscribed and paid. For information concerning the
Voting Trustees and the Voting Trust Agreement, see "Information
Concerning the Voting Trustees" and "Summary of Certain Provisions of
the Voting Trust Agreement." A copy of the Voting Trust Agreement is
being sent, together with this Prospectus, to each eligible employee who
is not either a Participating Shareholder or a shareholder of record of
Common Stock.
LIMITATION ON TRANSFERABILITY
The Plan and the Company's Restated Certificate of Incorporation,
as amended, grant to the Company the option to repurchase the
outstanding shares of Common Stock, including shares of Common Stock
purchased under the Plan, at $20 per share in the event the owner
desires to sell, transfer or otherwise dispose of such shares or the
Voting Trust Certificates issued in exchange therefor, or in the event
of the owner's death or termination of employment otherwise than by
retirement on a pension (other than a deferred pension). The Company
has in the past always exercised its option to repurchase shares and
expects to continue to exercise such option in the future. As a result,
no public trading market exists for the Common Stock or the Voting Trust
Certificates. If the Company, at some point in the future, should
decide not to exercise its option, no assurance can be given that a
public trading market in the Common Stock would develop, in which case
it might be difficult for a shareholder to sell his shares or Voting
Trust Certificates. Shares deposited in the Voting Trust may not be
withdrawn prior to the expiration in 1997 or earlier termination of the
Voting Trust Agreement. See "Common Stock Purchase Plan," "Description
of Common Stock -- Repurchase Option" and "Summary of Certain Provisions
of the Voting Trust Agreement -- Restrictions on Transfer, and Right of
the Company to Repurchase Voting Trust Certificates Under Certain
Circumstances."
SUBSCRIPTION AGREEMENT
Any eligible employee desiring to subscribe for shares of Common
Stock must sign a Subscription Agreement in the form set forth in this
Prospectus and file it with the Secretary of the Company on or before
December 8, 1995, by mailing it to Graybar Electric Company, Inc., P.O.
Box 7231, St. Louis, Missouri 63177, Attention: Secretary. No sub-
scriptions will be accepted after that date.
-5-
<PAGE> 8
Subscribers under the Plan may elect to make payments for (i) all
shares subscribed for prior to January 19, 1996, (ii) a portion of such
shares prior to January 19, 1996 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 of such shares
pursuant to the installment method. Shares will be issued and Voting
Trust Certificates delivered to a subscriber as of January 19, 1996, in
the case of shares paid for prior to January 19, 1996, and on a
quarterly basis as of the tenth day of March, June, September and
December to the extent full payment has been made for shares being
purchased under the installment method.
All subscriptions will be irrevocable by their terms; however, the
subscription of an employee whose employment terminates for any cause
other than for retirement on a pension (except a deferred pension) will
be canceled. Refund of any balance due employees who terminate service
shall be made in the quarter following termination. Except during the
first ten days of March, June, September and December, subscribers
paying for shares under the installment method may prepay the balance
due on all or a portion of the shares being paid for under such method,
and upon such prepayment the shares so purchased shall be issued. The
Plan provides that no corporate action which will result in a dis-
tribution of stock or other assets of the Company to its shareholders
(except the payment of cash dividends) shall be taken after January 19,
1996 without the Company first giving notice of such proposed action to
subscribers under the Plan who shall not then have paid in full for the
shares of Common Stock for which they have subscribed. Such subscribers
shall thereupon have a reasonable opportunity, not less than twenty
days, to complete their payment on all shares subscribed for in order
that they may obtain the benefits of such action.
COMMON STOCK PURCHASE PLAN
Set forth below is the text of the Common Stock Purchase Plan,
approved by the Board of Directors of the Company on March 9, 1995 and
by the shareholders of the Company on June 18, 1995.
COMMON STOCK PURCHASE PLAN
DATED AS OF OCTOBER 9, 1995
RELATING TO SHARES OF COMMON STOCK OF
GRAYBAR ELECTRIC COMPANY, INC.
---------------------------
1. EMPLOYEES ENTITLED TO SUBSCRIBE.
Each person who on September 30, 1995 was an employee of Graybar
Electric Company, Inc. (the "Company") who had been employed by the
Company since January 1, 1995, and each person who on June 30, 1995 was
an employee of the Company and who retired on a pension (except a
deferred pension) on or after June 30, 1995 and prior to September 30,
1995, is entitled to subscribe for shares of the Company's common stock,
par value $1.00 per share with a stated value of $20.00 per share (the
"Common Stock"), at the price of $20.00 per share. Such persons are
sometimes referred to as "eligible employees" and after executing a
Subscription Agreement are referred to as "subscribers"; provided,
however, that the term "eligible employees" shall not be deemed to
include: (a) those who receive pensions (other than persons who on June
30, 1995 were employees who retired on a pension (except a deferred
pension) on or after June 30, 1995 and prior to September 30, 1995), or
retainers, whether or not currently employed, (b) those who are employed
solely on a contract basis or who by written agreement have released all
stock subscription rights, or (c) those included in a collective
bargaining unit represented by a labor organization where the agreement
between the Company and the labor organization excludes such persons
from subscribing for Common Stock of the Company.
-6-
<PAGE> 9
2. PERIOD FOR AND METHOD OF MAKING SUBSCRIPTION.
Any eligible employee desiring to subscribe for shares of Common
Stock shall sign a Subscription Agreement in the form approved for such
purpose and file it, on or before December 8, 1995, with the Secretary
at the executive offices of the Company, P.O. Box 7231, St. Louis,
Missouri 63177. No subscription shall be effective and binding unless
and until accepted by the Company at its executive offices. No
subscription will be accepted after December 8, 1995.
3. DETERMINATION OF NUMBER OF SHARES FOR WHICH AN ELIGIBLE EMPLOYEE
IS ENTITLED TO SUBSCRIBE.
The maximum number of shares for which an eligible employee may
subscribe shall be determined as hereinafter provided:
3.1. The subscription rights of each eligible employee, subject
to increase as provided in Section 3.2 and reduction as provided in
Section 3.3, shall be one share for each $400 of his annual salary rate
in effect on June 30, 1995; fractional shares resulting from this
computation shall be disregarded.
3.2. The number of shares determined in accordance with Section
3.1 shall, in the case of eligible employees who on June 30, 1995 were
in the grade classifications listed below, be increased by the following
percentages:
3.2.1. Eligible Employees in Grade 20 or above--200%;
3.2.2. Eligible Employees in Grades 17, 18 and 19--150%;
3.2.3. Eligible Employees in Grades 15 and 16--100%;
3.2.4. Eligible Employees in Grade 14 or below who are covered
either by the Management Incentive Plan or the Sales Incentive
Plan--50%;
3.2.5. Eligible Employees in Grade N--60%; and
3.2.6. Eligible Employees in Grades J, K, L and M--25%.
Fractional shares resulting from the above computations shall be
disregarded.
3.3 In the event the aggregate number of shares subscribed for
by all eligible employees exceeds 575,000, the number of shares which
each eligible employee will be entitled to purchase shall be reduced to
a number determined by multiplying the number of shares such eligible
employee has subscribed for by a fraction, the numerator of which is
575,000 and the denominator of which is the aggregate number of shares
subscribed for by all eligible employees. Fractional shares resulting
from such computation shall be disregarded.
4. PAYMENTS FOR ISSUANCE OF STOCK.
Payments for shares subscribed for may be made pursuant to either
or both of the following methods:
4.1. Method A--payment in full on or before January 19, 1996
for all or a portion of the shares subscribed for, in which case the
shares paid for will be issued as of January 19, 1996.
4.2. Method B--payments in monthly installments, at the rate
of $.59 for each share subscribed for and paid for under Method B in
each of the 33 months commencing January 1996, and at the rate of $.53
for each such share in the 34th month, in which case the Company shall
issue as of the tenth day of March, June,
-7-
<PAGE> 10
September and December of each year, beginning March 10, 1996, a share
certificate for such number of full shares of Common Stock as have been
fully paid for as of the last day of the preceding month.
4.2.1. Payments under Method B shall be made, in the case of
a subscriber on the Company's payroll, through payroll deductions
authorized by the subscriber and, in the case of a subscriber who is no
longer on the Company's payroll but whose subscription has not been
canceled in accordance with Section 5.4, through pension deductions
authorized by the subscriber or monthly payments made directly by such
person to the Treasurer of the Company on or before the last day of each
month. Except as provided in Section 5.4, subscriptions made under
Method B and the obligations of subscribers to make full payment for all
shares subscribed for (including any authorization to the Company to
make payroll deductions) shall be irrevocable.
4.2.2. No interest shall be paid on amounts deducted from a
participant's salary or pension or paid directly to the Treasurer under
Method B.
4.2.3. A subscriber under Method B, at his option exercised at
any time except during the first ten days of March, June, September or
December, may pay the balance due on all or any portion of the number of
shares subscribed for pursuant to Method B, and upon such payment a
share certificate shall be issued for the number of shares for which
payment is so made.
5. CONDITIONS OF SUBSCRIPTION.
Each subscription for shares of Common Stock hereunder is expressly
conditioned, among other things, upon the following terms, to all of
which every subscriber by executing a Subscription Agreement agrees:
5.1. Right to receive stock not transferable.
No subscriber may sell, pledge or in any manner alienate or suffer
to be alienated his right to receive Voting Trust Certificates or stock
certificates representing the shares of Common Stock subscribed for by
him. A violation of this provision shall constitute a withdrawal by the
subscriber from his Subscription Agreement, in which event the only
right of the subscriber or his assignee shall be to have the Company
return to the person entitled thereto the total amount paid under said
Subscription Agreement. Such return shall operate as a cancellation and
satisfaction of all rights under the Subscription Agreement.
5.2. Issuance of stock certificates and Voting Trust Certificates.
A stock certificate or certificates representing the shares
subscribed for and purchased pursuant to this Plan by subscribers who
are or who, upon executing a Subscription Agreement, become parties to
the Voting Trust Agreement (the "Voting Trust Agreement") dated as of
April 15, 1987, relating to shares of Common Stock of the Company, shall
be issued to, and deposited by the Company with, the Voting Trustees
thereunder in accordance with the provisions of Section 4.05 of the
Voting Trust Agreement. The Voting Trustees will issue Voting Trust
Certificates to such subscribers representing the number of shares
subscribed for and purchased by them. Stock certificates representing
the shares subscribed for and purchased pursuant to this Plan by
subscribers who are shareholders and who are not parties to the Voting
Trust Agreement shall be issued and delivered directly to such
subscribers.
5.3. Subscribers bound by provisions in Restated Certificate of
Incorporation, as amended.
All shares of Common Stock subscribed for shall be issued and held
subject to all the terms, provisions, restrictions and qualifications
set forth in the Restated Certificate of Incorporation, as amended, of
the Company, which provides, among other things, that the Company has
the option to repurchase outstanding shares of Common Stock at the price
at which such shares were issued with appropriate adjustment for current
dividends in the event any shareholder shall desire to sell, transfer or
otherwise dispose of any of his shares, or in the event
-8-
<PAGE> 11
of his death (in which case the option is exercisable beginning one year
after the date of death) or in the event of termination of his employment
other than by retirement on a pension. Eligibility for or entitlement to a
deferred pension under the Company's "Plan for Employees' Pensions,
Disability Benefits and Death Benefits" does not constitute a retirement on
a pension for purposes of this Section 5.3 or for purposes of the Restated
Certificate of Incorporation. The Voting Trust Certificates issued and
to be issued under the Voting Trust Agreement provide, in substance,
that every Voting Trust Certificate is issued and held upon and subject
to the same terms and conditions upon which shares of Common Stock are
issued and held. Each subscriber by executing a Subscription Agreement
specifically agrees to be bound by all provisions of this Section 5.3
and agrees that all stock certificates or Voting Trust Certificates
owned by such subscriber shall be subject to such provisions.
5.4. Cancellation of subscription on termination of employment.
In the event of the death of a subscriber or the termination of his
employment other than by retirement on a pension (except a deferred
pension) before any or all of the shares of Common Stock subscribed for
by him are issued, his subscription shall be canceled as to shares not
then issued, and he or his estate shall be entitled to receive the total
amount of the purchase price, if any, then held by the Company for his
account for unissued shares under this Plan, without interest. Payment
of such amount by the Company shall operate as a cancellation and
satisfaction of all rights under his Subscription Agreement. Refund of
any balance due employees who terminate service shall be made in the
quarter following termination. Eligibility for or entitlement to a
deferred pension under the Company's "Plan for Employees' Pensions,
Disability Benefits and Death Benefits" does not constitute a retirement
on a pension for purposes of this Section 5.4.
5.5. Determination of Board of Directors to control.
The determination of the Board of Directors of the Company upon any
question concerning the application or interpretation of any of the
provisions of this Plan or of the Subscription Agreement shall be final,
and no director shall incur any responsibility by reason of any error of
fact or of law or of any matter or thing done or suffered or omitted to
be done in connection with any such determination or interpretation or
otherwise, except for his own willful misconduct.
6. CERTAIN CORPORATE ACTION NOT TO BE TAKEN WITHOUT NOTICE.
The Company will not take any action after January 19, 1996 which
would result in a distribution to its shareholders of shares of Common
Stock or other assets (except the payment of cash dividends on shares of
Common Stock or the issuance of shares of Common Stock pursuant to
installment payments made under Section 4.2) without first giving notice
of such proposed action to all subscribers who shall not then have paid
their subscriptions in full and granting such subscribers an opportunity
within such time (not to be less than 20 days) and in such manner as the
Board of Directors may determine to be reasonable, to complete their
payments on all shares subscribed for by them and thereby to become
shareholders entitled to the benefit of and subject to such action.
-9-
<PAGE> 12
7. RIGHT OF THE COMPANY TO ISSUE AND SELL ADDITIONAL SHARES OF COMMON
STOCK.
Nothing in this Plan shall be construed to limit or restrict in any
way the right of the Company from time to time hereafter to sell any of
the shares offered pursuant to this Plan and not issued pursuant to
subscriptions made hereunder or any shares that may now or hereafter be
authorized or may now or hereafter be reacquired by the Company upon
exercise of the repurchase option described in Section 5.3 or otherwise.
Set forth below is the form of the Subscription Agreement approved
for use in connection with the Plan:
SUBSCRIPTION AGREEMENT
<TABLE>
1. I hereby subscribe to purchase ---- shares of common stock,
par value $1.00 per share with a stated value of $20.00 per share (the
"Common Stock"), of Graybar Electric Company, Inc., a New York
corporation (the "Company"), under and pursuant to the terms and
conditions stated below and of the Common Stock Purchase Plan dated as
of October 9, 1995 (the "Plan") of the Company, and agree to pay $20.00
for each such share as follows:
<CAPTION>
NUMBER OF SHARES
----------------
<C> <S> <C>
Method A -- Payment in full on or before January 19, 1996 . . . . . . . . . . . . . -------------
Method B -- Payment in monthly installments. Upon acceptance of this subscription,
(i) I direct that, during such time as I shall be on the Company's
payroll, periodic deductions shall be made from my salary in accordance
with the Plan and applied to the purchase price of the shares subscribed
for until such shares are fully paid for or until my subscription is
canceled in accordance with Section 5.4 of the Plan; and (ii) I promise
that during such time as I shall no longer be on the Company's payroll
I will make monthly payments either through authorized pension
deductions or directly to the Treasurer of the Company in accordance
with the Plan, to be applied to the purchase price of the shares
subscribed for by me, until such shares are fully paid for or until my
subscription is canceled in accordance with Section 5.4 of the
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------
Total shares subscribed for . . . . . . . . . . . . . . . . . . . . . .
=============
</TABLE>
2. I understand that the number of shares I hereby subscribe for
may be reduced as provided in Section 3.3 of the Plan.
3. If I am a party to the Voting Trust Agreement dated as of April
15, 1987 (the "Voting Trust Agreement") relating to shares of Common
Stock of the Company, or if I become a party to the Voting Trust
Agreement pursuant to Section 4 of this Subscription Agreement, I agree
and direct that certificates for the shares of Common Stock purchased by
me pursuant hereto, when issuable pursuant to the Plan, be issued to and
deposited with the Voting Trustees under the Voting Trust Agreement who
will issue Voting Trust Certificates in my name for the certificates so
deposited.
-10-
<PAGE> 13
4. This provision does not apply to subscribers who presently are
parties to the Voting Trust Agreement or to subscribers who are
shareholders of record of Common Stock and are not parties to the Voting
Trust Agreement.
(a) I hereby represent and warrant that I have received a
copy of the Voting Trust Agreement, that I am familiar with
its terms and provisions and that I desire to become a party
to the Voting Trust Agreement and be bound thereby.
(b) I hereby authorize and direct J. H. Kipper or C. B.
Temple as my attorney-in-fact, to execute and deliver the
Voting Trust Agreement on my behalf.
(c) I recognize that this power of attorney constitutes an
election to participate in the Voting Trust Agreement, which
is given in consideration of a similar election made by other
employees of the Company and is therefore irrevocable.
5. I have read the Plan and, for the considerations stated therein
and for the privilege of subscribing for such shares of Common Stock, I
agree to be bound by all of the provisions of the Plan, including
without limitation the provisions of Section 5 of the Plan.
6. I request and direct that any Voting Trust Certificates or
stock certificates issued in my name pursuant to this subscription be
issued as follows:
--------------------------------------
(PLEASE PRINT OR TYPE FIRST NAME IN FULL,
MIDDLE INITIAL AND SURNAME)
--------------------------------------
SIGNATURE OF SUBSCRIBER
Dated ----------------------, 1995
-11-
<PAGE> 14
PURPOSE OF ISSUE
This offering affords an opportunity to employees of the Company
who are not presently shareholders, as well as present employee-
shareholders of the Company, to purchase shares of Common Stock in
accordance with the policy formulated in 1929 when the Company became an
employee-owned company through acquisition by its then employees of all
its Common Stock from Western Electric Company, Incorporated.
The net proceeds of the offering, after the deduction of estimated
expenses, will be approximately $11,430,000. The net proceeds will be
added to working capital, in part to replenish amounts which were used
to repurchase shares of Common Stock pursuant to the Company's
repurchase option. See "The Offering" and "Description of Common Stock
- -- Repurchase Option." Payments made under subscriptions will be
applied to the repayment of any short-term indebtedness incurred for
working capital purposes then outstanding and, to the extent not needed
for such purpose, will be placed in the general funds of the Company or
invested in short-term securities. The Company expects to continue to
exercise its option to repurchase outstanding shares of Common Stock and
to use working capital in making such purchases. To the extent shares
offered are not subscribed for, the number of shares sold and the
proceeds received will be correspondingly reduced and, to the extent
subscribers elect to purchase shares on a monthly payment basis under
the installment method, receipt by the Company of the proceeds of the
offering will be deferred.
-12-
<PAGE> 15
CAPITALIZATION
Set forth below is the capitalization of the Company as of August
18, 1995, and as adjusted as of such date to reflect the sale of Common
Stock offered hereby and the application by the Company of the net
proceeds thereof, assuming that all shares offered will be purchased.
Because the Company is unable to estimate the number of shares which
will be purchased under the installment method, the "As Adjusted" column
assumes that no shares will be so purchased. A significant number of
shares may be purchased under the installment method, however, and in
that event the receipt by the Company of the proceeds from such
purchases will be deferred.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
------ --------
(DOLLARS IN THOUSANDS)
<S>
SHORT-TERM DEBT: <C> <C>
Notes payable to banks<F1> . . . . . . . . . . . . . . . . . . . . . . . . . . $140,000 $128,570
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . . . 16,145 16,145
LONG-TERM DEBT:
6.25% note, unsecured, maturing June, 2004, installments of $7,000 due
annually in each of the years 2000 through 2004. . . . . . . . . . . . . . . $ 35,000 $ 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 . . . . . . . . . 24,550 24,550
12.25% note secured by a first mortgage on various properties, due in
monthly installments through June, 1999. . . . . . . . . . . . . . . . . . . 8,698 8,698
5.68% to 9.23% capital equipment leases, various maturities 7,896 7,896
5.68% note, unsecured, maturing June, 1998, installments of $2,000 due
annually in each of the years 1994 through 1998. . . . . . . . . . . . . . . 4,000 4,000
7.67% note, unsecured, maturing April, 2000, installments of $2,000 due
annually in each of the years 1996 through 2000. . . . . . . . . . . . . . . 8,000 8,000
8.53% note, secured by facility, due in quarterly installments through
March, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 3,500
Variable rate, Industrial Revenue Bonds, secured by facilities,
various maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
CAPITAL STOCK:
Preferred stock, $20 par value - authorized 300,000 shares;
outstanding 7,964 shares<F2> . . . . . . . . . . . . . . . . . . . . . . . . $ 159 $ 159
Common stock, $1 par value, $20 stated value - authorized
7,500,000 shares; outstanding 4,502,910 shares<F3> . . . . . . . . . . . . . $ 90,058 $101,558
<FN>
- --------------------
<F1> These notes evidence borrowings made under lines of credit in the
aggregate principal amount of $241,000 which the Company maintains
with approximately 12 banks. The borrowings at August 18, 1995
consisted of demand notes in the amount of $140,000 bearing
interest at the money market rate of the lending banks as in
effect from time to time (5.99% at August 18, 1995). Pursuant to
its arrangements with the banks, the Company maintains com-
pensating balances relating both to outstanding borrowings and the
unused portion of certain of the lines of credit. See Note 4 of
Notes to Consolidated Financial Statements for additional
information regarding these compensating balance arrangements.
Included in the principal amount of the aggregate lines of credit
is a $80,000 Revolving Credit Loan Agreement with a group of banks
with an interest rate based on the London Interbank Offered Rate
(LIBOR). There have been no borrowings against this revolving
credit line through August 18, 1995. Other lines of credit are
typically reviewed by the banks on an annual basis and while
certain of such lines may not be legally binding commitments, bank
lines of credit traditionally have been honored by the banking
community.
<F2> Does not include 284 shares of Preferred Stock acquired by the
Company and held in its treasury.
<F3> Does not include 105,836 shares of Common Stock represented by
Voting Trust Certificates acquired by the Company and held in its
treasury. Approximately 95% of the shares of Common Stock
outstanding are held subject to the Voting Trust Agreement.
</TABLE>
-13-
<PAGE> 16
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
The following data, insofar as it relates to each of the years
1990-1994, has been derived from the Company's audited consolidated
financial statements, including the consolidated balance sheets at
December 31, 1993 and 1994 and the related consolidated statements
of income and of cash flows for the three years ended December 31,
1994 and the notes thereto included elsewhere in this
Prospectus, which have been audited by Price Waterhouse LLP. The data
for the six months ended June 30, 1994 and 1995 has been derived
from unaudited consolidated financial statements also appearing
elsewhere herein and, in the opinion of management, includes all
adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the unaudited
interim periods. Interim results are not necessarily indicative of
results for a full year.
The following selected consolidated financial data should be
read in conjunction with the consolidated financial statements and
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales. . . . . . . . . . . . $ 1,894,626 $ 1,743,544 $ 1,902,354 $ 2,041,473 $ 2,364,461 $ 1,101,352 $1,323,980
Less-Cash discounts . . . (9,903) (8,170) (8,243) (8,306) (8,839) (3,980) (4,626)
----------- ----------- ----------- ----------- ---------- ----------- ----------
Net Sales. . . . . . . . . . 1,884,723 1,735,374 1,894,111 2,033,167 2,355,622 1,097,372 1,319,354
----------- ----------- ----------- ----------- ---------- ----------- ----------
Cost of Merchandise Sold . . (1,565,717) (1,431,255) (1,564,929) (1,668,007) (1,934,925) (897,950) (1,082,211)
----------- ----------- ----------- ----------- ---------- ----------- ----------
Interest Expense . . . . . . (13,962) (13,092) (10,054) (9,810) (12,003) (5,406) (8,116)
----------- ----------- ----------- ----------- ---------- ----------- ----------
Provision for Income Taxes:
Current . . . . . . . . . (9,961) (6,356) (6,601) (10,016) (15,225) (8,186) (12,528)
Deferred. . . . . . . . . 1,633 (534) (493) 763 1,251 455 314
----------- ----------- ----------- ----------- ---------- ----------- ----------
Total provision for
income taxes . . . . . (8,328) (6,890) (7,094) (9,253) (13,974) (7,731) (12,214)
----------- ----------- ----------- ----------- ---------- ----------- ----------
Income Before Cumulative
Effect of Accounting Change 11,985 9,515 10,232 14,745 18,702 10,246 16,141
----------- ----------- ----------- ----------- ---------- ----------- ----------
Cumulative effect on prior
years of change in
accounting postretirement
benefits . . . . . . . . -- -- -- (45,000) -- -- --
----------- ----------- ----------- ----------- ---------- ----------- ----------
Net Income (Loss). . . . . . 11,985 9,515 10,232 (30,255) 18,702 10,246 16,141
----------- ----------- ----------- ----------- ---------- ----------- ----------
Income (Loss) Applicable
to Common Stock. . . . . . 11,973 9,504 10,222 (30,265) 18,694 10,242 16,137
----------- ----------- ----------- ----------- ---------- ----------- ----------
Average Common Shares
Outstanding <FA>. . . . . 4,931 4,814 4,638 4,779 4,641 4,673 4,558
----------- ----------- ----------- ----------- ---------- ----------- ----------
Income (Loss) per share of
Common Stock <FA> . . . . 2.43 1.97 2.20 (6.33) 4.03 2.19 3.54
----------- ----------- ----------- ----------- ---------- ----------- ----------
Cash dividends per share. 2.00 2.00 2.00 2.00 2.00 .60 .60
----------- ----------- ----------- ----------- ---------- ----------- ----------
Retained Earnings:
Balance, beginning of
period . . . . . . . . . 89,776 92,910 93,837 91,733 52,486 52,486 57,081
Add-Net income (Loss) . . 11,985 9,515 10,232 (30,255) 18,702 10,246 16,141
----------- ----------- ----------- ----------- ---------- ----------- ----------
101,761 102,425 104,069 61,478 71,188 62,732 73,222
----------- ----------- ----------- ----------- ---------- ----------- ----------
Less Dividends:
Preferred ($1.00 per
share). . . . . . . . (12) (11) (10) (10) (8) (4) (4)
Common (in cash) . . . (8,839) (8,577) (8,282) (8,982) (8,729) (2,630) (2,729)
Common (in stock). . . -- -- (4,044) -- (5,370) -- --
----------- ----------- ----------- ----------- ---------- ----------- ----------
(8,851) (8,588) (12,336) (8,992) (14,107) (2,634) (2,733)
----------- ----------- ----------- ----------- ---------- ----------- ----------
Balance, end of period. . $ 92,910 $ 93,837 $ 91,733 $ 52,486 $ 57,081 $ 60,098 $ 70,489
Proceeds on stock
subscriptions, shares
unissued . . . . . . . 72 67 -- 51 39 46 39
Stock Outstanding:
Preferred . . . . . . . . 223 219 197 183 164 168 160
Common. . . . . . . . . . 87,687 85,132 85,719 89,098 91,859 87,174 90,498
----------- ----------- ----------- ----------- ---------- ----------- ----------
Total Shareholders' Equity. . $ 180,892 $ 179,255 $ 177,649 $ 141,818 $ 149,143 $ 147,486 $ 161,186
----------- ----------- ----------- ----------- ---------- ----------- ----------
Total Assets. . . . . . . . . $ 541,358 $ 518,480 $ 557,036 $ 610,512 $ 719,786 $ 706,147 $ 820,156
Long-term Debt. . . . . . . . $ 79,189 $ 70,338 $ 64,655 $ 63,621 $ 90,212 $ 94,715 $ 94,674
----------- ----------- ----------- ----------- ---------- ----------- ----------
<FN>
- ----------------------
<FA> Adjusted for the declaration of 5.00% and 6.25% stock dividends in
1992 and 1994, respectively. Prior to adjusting for stock
dividends, the average common shares outstanding for the years
1990, 1991, 1992 and 1993 were 4,420, 4,315, 4,157 and 4,498,
respectively.
</TABLE>
This summary should be read in conjunction with the Consolidated
Financial Statements and notes thereto included elsewhere in this
Prospectus.
-14-
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars stated in thousands except for share and per share data)
FINANCIAL CONDITION AND LIQUIDITY
The financial condition of the Company continues to be strong. At
June 30, 1995, current assets exceeded current liabilities by $148,132,
up $11,998 from December 31, 1994. The current assets at June 30, 1995
were sufficient to meet the cash needs required to pay current
liabilities. The Company does not have any plans or commitments which
would require significant amounts of additional working capital.
At June 30, 1995, the Company had available to it unused lines of
credit amounting to $133,000. These lines are available to meet short-
term cash requirements of the Company. Bank borrowings outstanding
during 1995 through June 30 ranged from a minimum of $77,000 to a
maximum of $151,000.
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.
In May, 1995, the agreement was amended to increase the aggregate
commitment to $80,000. There have been no borrowings against this
credit line through June 30, 1995.
The Company has funded its capital requirements from operations,
stock issuances to its employees and long-term debt. In February, 1995,
the Company received the proceeds from a ten-year note for $4,000 at a
fixed interest rate of 8.53% with principal payable in quarterly
installments beginning in June, 1995. In April, 1995, the Company
received the proceeds from a five-year note for $10,000 at a fixed
interest rate of 7.67% with principal payable in five equal annual
installments beginning in April, 1996. During the first six months of
1995, cash used by operations amounted to $26,396 which was $31,864 less
than the cash provided by operations in the first six months of 1994.
Cash provided from the sale of common stock and proceeds received on
stock subscriptions amounted to $201 in the first six months of 1995.
Additional cash of approximately $246 will be provided in the remainder
of 1995 as a result of payments to be made for stock subscribed to by
employees under the 1992 Common Stock Purchase Plan.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1995 Compared to Six Months Ended June 30,
1994
Net sales in the first six months of 1995 were 20.2% higher than in
the first six months of 1994. The higher net sales resulted from
improvements in the market sectors of the economy in which the Company
operates.
Gross margin in the first six months of 1995 increased $37,721
(18.9%) compared to the first six months of 1994 primarily due to
increased sales in the electrical and communications markets.
The increase in selling, general and administrative expenses in the
first six months of 1995 compared to the first six months of 1994
occurred largely because of adjustments in personnel complement and
adjustments in compensation and related expenses.
Interest charges increased in the first six months of 1995 compared
to the first six months of 1994 primarily due to increased levels of
borrowing incurred to finance higher aggregate levels of inventory and
-15-
<PAGE> 18
receivables. Interest rates on 1995 short-term borrowings have been
generally higher than for the same period in 1994.
The combined effect of the increases in gross margin and other
income, together with the increases in selling, general and
administrative expenses, interest charges and depreciation and
amortization, resulted in an increase in pretax earnings of $10,378 in
the first six months of 1995 compared to the same period in 1994.
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 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 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.
-16-
<PAGE> 19
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.
-17-
<PAGE> 20
DIVIDENDS
The Company has paid cash dividends on its Common Stock every year
since 1929. The following table sets forth the cash dividends per share
of Common Stock declared during the periods indicated.
<TABLE>
<CAPTION>
Cash
Dividends
---------
<S> <C>
1990 - . . . . . . . . . . . . . . . . . . . . . . . $2.00
1991 - . . . . . . . . . . . . . . . . . . . . . . . 2.00
1992 - . . . . . . . . . . . . . . . . . . . . . . . 2.00
1993 - First Quarter. . . . . . . . . . . . . . . .30
Second Quarter . . . . . . . . . . . . . . .30
Third Quarter. . . . . . . . . . . . . . . .30
Fourth Quarter . . . . . . . . . . . . . . 1.10
1994 - First Quarter. . . . . . . . . . . . . . . .30
Second Quarter . . . . . . . . . . . . . . .30
Third Quarter. . . . . . . . . . . . . . . .30
Fourth Quarter . . . . . . . . . . . . . . 1.10
1995 - First Quarter<F*>. . . . . . . . . . . . . .30
Second Quarter . . . . . . . . . . . . . . .30
<FN>
<F*> In September 1994, a 6.25% stock dividend was declared and shares
representing this dividend were issued in January 1995.
</TABLE>
-18-
<PAGE> 21
BUSINESS
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 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 from others.
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 and the period ended June 30, 1995, 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.
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 June 30, 1994 and 1995, the Company had orders on hand which
totaled approximately $206,914,000 and $240,292,000, respectively. The
Company believes that the increase from 1994 to 1995 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 June 30, 1995 will be filled within the twelve-month period
ending June 30, 1996. 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 219
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 houses 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, Guam, Singapore and Canada.
-19-
<PAGE> 22
The distribution facilities operated by the Company are shown in
the following table:
<TABLE>
<CAPTION>
No. of
Distributing
Location of Main Houses in
Distributing House District
- ------------------ ------------
<S> <C>
Boston, MA . . . . . . . . 9
Cincinnati, OH . . . . . . 9
Dallas, TX . . . . . . . . 29
Glendale Heights, IL . . . 14
Miami, FL. . . . . . . . . 1
Minneapolis, MN. . . . . . 17
New York, NY . . . . . . . 12
Norcross, GA . . . . . . . 18
Philadelphia, PA . . . . . 7
Phoenix, AZ. . . . . . . . 24
Pittsburgh, PA . . . . . . 8
Richmond, VA . . . . . . . 13
Seattle, WA. . . . . . . . 20
St. Louis, MO. . . . . . . 14
Tampa, FL. . . . . . . . . 24
Zone Distributing Houses
- ------------------------
Bethlehem, PA. . . . . . . 1
Peoria, IL . . . . . . . . 1
<CAPTION>
Number of
Distributing
Houses
------------
<S> <C>
Graybar Holdings Limited
- ------------------------
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Graybar Electric (Ontario) Ltd.
- -------------------------------
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Graybar Electric Ltd.
- ---------------------
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Graybar International, Inc.
- ---------------------------
Puerto Rico. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Graybar de Mexico, S.A. de CV
- -----------------------------
Juarez, Mexico . . . . . . . . . . . . . . . . . . . . . . . . 1
Mexico City, Mexico. . . . . . . . . . . . . . . . . . . . . . 1
Graybar International Guam, Inc.
- --------------------------------
Tamuning, Guam . . . . . . . . . . . . . . . . . . . . . . . . 1
Graybar-P&M International PTE. Ltd.
- -----------------------------------
Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . 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.
-20-
<PAGE> 23
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 last three years ended December 31 and the six-month periods ended
June 30, 1994 and 1995 attributable to each of these classes:
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
---------------------------- ------------------
Class of Customers 1992 1993 1994 1994 1995
- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Electrical contractors 42.4% 40.8% 39.2% 39.3% 38.9%
Industrial plants 29.9 31.3 30.9 30.8 31.1
Telecommunication companies 17.3 18.7 21.7 21.5 22.5
Private and public power utilities 7.8 7.0 6.3 6.5 5.9
Miscellaneous 2.6 2.2 1.9 1.9 1.6
100.0% 100.0% 100.0% 100.0% 100.0%
</TABLE>
At June 30, 1995 the Company employed approximately 2,200 persons
in sales capacities. Approximately 1,000 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.
EMPLOYEES
At June 30, 1995 the Company employed approximately 6,000 persons
on a full-time basis. Approximately 150 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.
-21-
<PAGE> 24
MANAGEMENT
<TABLE>
EXECUTIVE OFFICERS AND DIRECTORS
<CAPTION>
Name Office
---- ------
<C> <S>
C.L. Hall<F*>. . . . . . Director and President
T.S. Gurganous . . . . . Director and District Vice President
J.R. Hade<F*>. . . . . . Director and Senior Vice President
R.H. Haney<F*> . . . . . Director and Group Vice President
G.W. Harper<F*>. . . . . Director and Vice President-Operations
R.L. Mygrant . . . . . . Director and District Vice President
R.D. Offenbacher . . . . Director and District Vice President
I. Orloff. . . . . . . . Director and Vice President
R.A. Reynolds<F*>. . . . Director and Group Vice President
J.R. Seaton<F*>. . . . . Director, Vice President and Comptroller
G.S. Tulloch, Jr.<F*>. . Director, Vice President, Secretary and General Counsel
J.F. Van Pelt<F*>. . . . Director and Vice President-Human Resources
J.W. Wolf<F*>. . . . . . Director, Vice President and Treasurer
<FN>
------------------
<F*> Members of the Executive Committee of the Board of Directors.
</TABLE>
-22-
<PAGE> 25
DESCRIPTION OF COMMON STOCK
The Company's authorized capitalization consists of (a)
300,000 shares of preferred stock, par value $20 per share (the
"Preferred Stock"), and (b) 7,500,000 shares of Common Stock, par
value $1 per share with a stated value of $20 per share. The
number of equity security holders of the Company as of June 30,
1995 consisted of (a) Preferred Stock - 122, (b) Common Stock - 115
and (c) Voting Trust Certificates for Common Stock - 3,938.
DIVIDEND RIGHTS
Subject to the prior rights of the holders of Preferred Stock
to receive dividends in cash at the rate of $1 per share per year
(such dividends being non-cumulative except to the extent earned in
each calendar year), dividends may be paid upon the Common Stock as
and when declared by the Board of Directors.
VOTING RIGHTS
Except as otherwise required by law, the holders of shares of
Common Stock have the exclusive right to vote for the election of
directors and for all other purposes. Approximately 95% of the
issued and outstanding shares of Common Stock are held pursuant to
the Voting Trust Agreement, and the powers of the Voting Trustees
to exercise the voting powers of the Common Stock are described
under the heading "Summary of Certain Provisions of the Voting
Trust Agreement."
LIQUIDATION RIGHTS
In the event of voluntary or involuntary dissolution, liquida-
tion or winding-up of the Company, after payment in full of the
amounts required to be paid to the holders of the Preferred Stock
then outstanding, the holders of the Common Stock then outstanding
shall be entitled to share ratably in all remaining assets of the
Company.
The holders of shares of Preferred Stock are entitled to
receive, in the event of dissolution or liquidation of the Company,
the par value of such shares plus an amount equal to any dividends
accrued thereon to the extent earned but unpaid to the date of
payment.
MISCELLANEOUS
The Common Stock has no conversion, preemptive or subscription
rights and there are no sinking fund or redemption provisions
applicable thereto. The outstanding shares of Common Stock are,
and the shares to be sold by the Company hereunder will be, validly
issued, fully paid and non-assessable. Under Section 630 of the
New York Business Corporation Law the ten largest shareholders of
the Company are liable under certain conditions for debts, wages or
salaries due and not paid by the Company to any laborers, servants
or employees, other than contractors, for services performed by
them for the Company.
REPURCHASE OPTION
The following is a brief summary of the provisions of the
Company's Restated Certificate of Incorporation, as amended, which
place restrictions and limitations on the holding and sale,
transfer or pledge of Common Stock. Such provisions are equally
applicable to Voting Trust Certificates.
No holder of Common Stock may sell, transfer or otherwise
dispose of any shares of Common Stock without first offering the
Company the option to purchase such shares within 30 days after
said offer at the purchase price of $20 per share, with appropriate
adjustment for regular dividends, if any, declared and paid at the
end of the quarter in which such offer is made. The Company also
has the option to purchase the Common
-23-
<PAGE> 26
Stock of any shareholder who ceases to be an employee of the Company
for any reason other than death or retirement on a pension (except a
deferred pension) at the same price at any time after termination of
employment until 30 days after the holder makes an offer to sell said
Common Stock to the Company. In the event of the death of any
shareholder, the Company has the option to purchase all or any part of
his Common Stock from his estate at the purchase price hereinabove
referred to at any time after the expiration of one year from the date
of death until 30 days after such Common Stock shall have been offered
to the Company; provided, however, that the estate of such deceased
shareholder may offer to sell said shares to the Company within
such one-year period, in which event the Company's option
terminates within 30 days from such offer. In the past, the
Company has always exercised the options referred to above and
expects to continue exercising such options.
No shareholder may hypothecate or pledge any shares of Common
Stock, except under an agreement of hypothecation or pledge
containing provisions permitting the Company to exercise the
options referred to above and to redeem the pledge of shares in the
event of default upon payment of the lesser of the amount due on
the pledge or the purchase price hereinabove referred to with
suitable provisions for redemption by the shareholder or payment to
him of any balance to which he may be entitled.
-24-
<PAGE> 27
INFORMATION CONCERNING THE VOTING TRUSTEES
Approximately 95% of the issued and outstanding shares of
Common Stock are held of record in the names of C.L. Hall, J.R.
Hade, G.W. Harper, R.L. Mygrant and R.D. Offenbacher as Voting
Trustees under the Voting Trust Agreement dated as of April 15,
1987. The Voting Trustees therefore share approximately 95% of the
voting power with respect to election of directors and other
matters requiring shareholder approval. Shares of Common Stock
held of record by the Voting Trustees are so held for the benefit
of holders of Voting Trust Certificates issued in respect thereof
by the Voting Trustees.
The Voting Trust Agreement became effective as of April 15,
1987 and will terminate on April 14, 1997 unless sooner terminated
as provided therein.
<TABLE>
The names, positions with the Company and business addresses
of the Voting Trustees are as follows:
<CAPTION>
Name and Position Business Address
----------------- ----------------
<S> <C>
C.L. Hall, Director and President. . . . . . . . . . . . 34 North Meramec Avenue
St. Louis, MO 63105
J.R. Hade, Director and Senior Vice President. . . . . . 34 North Meramec Avenue
St. Louis, MO 63105
G.W. Harper, Director and Vice President-Operations. . . 34 North Meramec Avenue
St. Louis, MO 63105
R.L. Mygrant, Director and District Vice President . . . 801 North Rome Avenue
Tampa, FL 33606
R.D. Offenbacher, Director and District Vice President 600 South Taylor Avenue
St. Louis, MO 63110
</TABLE>
The sole occupation of each Voting Trustee is his employment
with the Company. All communications to the Voting Trustees should
be addressed to the Voting Trustees, c/o Graybar Electric Company,
Inc., P.O. Box 7231, St. Louis, Missouri 63177.
<TABLE>
As of August 18, 1995, each of the Voting Trustees owned of
record and beneficially for his account Voting Trust Certificates
as follows:
<CAPTION>
Amount Percent of
Name Owned<Fa> Class Owned
---- --------- -----------
<S> <C> <C>
C.L. Hall . . . . . . . . 4,914 .12
J.R. Hade . . . . . . . . 6,678 .16
G.W. Harper . . . . . . . 4,260 .10
R.L. Mygrant. . . . . . . 4,140 .10
R.D. Offenbacher. . . . . 2,743 .06
<FN>
----------------
<Fa> The number of shares of Common Stock to which such
Voting Trust Certificates relate.
</TABLE>
-25-
<PAGE> 28
No person owns of record and beneficially Voting Trust
Certificates representing more than 1% of the outstanding shares of
Common Stock.
As of August 18, 1995, all officers and directors of the
Company as a group owned beneficially, directly and indirectly,
Voting Trust Certificates representing 93,888 shares of Common
Stock (representing approximately 2% of the outstanding shares) and
no shares of Preferred Stock.
None of the Voting Trustees has received or will receive
remuneration for serving in such capacity. The table below sets
forth the aggregate cash compensation of the Voting Trustees during
the year ended December 31, 1994, in their capacities as officers
and directors of the Company.
<TABLE>
<CAPTION>
Cash Compensation
-----------------
Salaries, Bonuses and All
Name of Individual Capacities in Which Served Other Compensation <F1><F2><F3>
- ------------------ -------------------------- -------------------------------
<C> <S> <C>
C.L.Hall . . . . . . . Director and President $245,599
J.R. Hade. . . . . . . Director and Senior Vice President 321,523
G.W. Harper. . . . . . Director and Vice President-Operations 265,315
R.L. Mygrant . . . . . Director and District Vice President 188,814
R.D. Offenbacher . . . Director and District Vice President 174,859
<FN>
- ----------------
<F1> Includes amounts deferred pursuant to deferred compensation
agreements with certain employees who were not eligible to
participate in the employee contribution portion of the
Profit Sharing and Savings Plan. These agreements provide for
deferral of from 2% to 10% of compensation, together with an
additional amount credited to the employee's deferred
compensation account equal to the contribution to the Profit
Sharing and Savings Plan that would have been made by the
Company if such compensation had not been deferred. See (3)
below. Payment of sums deferred will generally be made in
five annual installments commencing on retirement or in a
lump sum on termination of service other than by retirement.
Interest is credited to sums deferred at the rate applicable
to the fixed income account of the Profit Sharing and Savings
Plan at the end of each calendar quarter.
<F2> Bonus paid on March 15th of each year under the Company's
Management Incentive Plan with respect to services rendered
during the prior year. The Company's Management Incentive
Plan covers all officers of the Company and other management
employees. In accordance with this Plan, each participant
has a guideline incentive, ranging from 20% to 80% of base
salary. This guideline is subject to a year-end adjustment
based on performance against Plan goals. The adjustments are
based on objective measurements, such as sales and profits,
but may be varied at the discretion of the president and
district vice presidents. Participants may earn a maximum of
150% of the applicable guideline.
<F3> Profit sharing contributions were made on December 31, 1994
for the year 1994. Contributions by the Company under the
Profit Sharing and Savings Plan are made at the discretion of
the Board of Directors for eligible employees and, subject to
certain exceptions, are made in proportion to their annual
earnings. Except as otherwise provided in the Deed of Trust,
the moneys held in trust thereunder are paid to employees
upon termination of employment for any reason including their
retirement or, in the event of their death prior to the
complete distribution of their interests, are paid to their
estates or designated beneficiaries. In addition, the portion
of the profit sharing payment earned by an employee in excess
of the annual limitations imposed by Section 401 or 415 of
the Internal Revenue Code was credited to his deferred
-26-
<PAGE> 29
compensation account or paid in cash. In 1994, $2,709 was
credited to Mr. Hall's deferred compensation account in this
regard. Similarly, $9,347 and $4,702 was credited to the
deferred compensation accounts of Messrs. Hade and Harper,
respectively.
</TABLE>
The Company has a qualified defined benefit pension plan
covering all eligible full-time employees. Employees become fully
vested after 5 years of service. After December 31, 1992,
employees may retire and begin receiving pensions at the age of 65,
or earlier if they are at least age 60 with 20 years of credited
service. Prior to January 1, 1993, employees could retire and
begin receiving pensions at age 55 with 20 years or more of
credited service, at age 50 with 25 years of credited service, or
any age with 30 years of credited service under the plan.
Employees who had completed 15 years of service on December 31,
1992 may still retire and receive their entire benefit under the
pre-1993 rule, but employees who had not completed 15 years of
service on December 31, 1992 can receive only the benefit accrued
on December 31, 1992 under the old rule, and the benefit accrued
after that date under the new rule.
An employee's annual pension income is based on the employee's
average earnings during the sixty consecutive months preceding
retirement in which earnings were highest, multiplied by one
percent for each year of credited service and offset by an amount
which cannot exceed limitations imposed by the Internal Revenue
Code. As of August 18, 1995, the years of credited service for the
Voting Trustees were as follows: C.L. Hall - 36, G.W. Harper - 38,
J.R. Hade - 37, R.L. Mygrant - 31 and R.D. Offenbacher - 27. To
the extent that annual benefits exceed limitations imposed by the
Internal Revenue Code of 1986, as amended, such benefits will be
paid out of the general revenues of the Company by means of a
supplemental benefits plan.
The following table sets forth annual benefits which would
become payable under the Company's pension plan or supplemental
benefits plan based on certain assumptions as to earnings and years
of credited service without giving effect to any applicable Social
Security offset.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
--------------------------------------------------
Compensation 20 25 30 35 40
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000 . . . . . .$ 40,000 $ 50,000 $ 60,000 $ 70,000 $ 80,000
300,000 . . . . . . 60,000 75,000 90,000 105,000 120,000
400,000 . . . . . . 80,000 100,000 120,000 140,000 160,000
600,000 . . . . . . 120,000 150,000 180,000 210,000 240,000
800,000 . . . . . . 160,000 200,000 240,000 280,000 320,000
</TABLE>
<TABLE>
The Company anticipates that each of the Voting Trustees will
acquire a beneficial interest in all or a part of the shares of
Common Stock of the Company for which he will be entitled to
subscribe pursuant to the Plan. The number of shares for which
each of the Voting Trustees will be entitled to subscribe under the
Plan will not exceed the following to any significant degree:
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
C.L. Hall 1,278
J.R. Hade 1,155
G.W. Harper 954
R.L. Mygrant 768
R.D. Offenbacher 693
</TABLE>
-27-
<PAGE> 30
SUMMARY OF CERTAIN PROVISIONS OF THE VOTING TRUST AGREEMENT
The statements under this heading relating to the Voting Trust
Agreement are summaries of certain of its provisions and do not
purport to be complete. Such summaries are qualified in their
entirety by reference to the Voting Trust Agreement, copies of
which are on file at the principal executive office of the Company
and with the Securities and Exchange Commission in Washington, D.C.
All section references are to the Voting Trust Agreement.
General. The Voting Trust Agreement provides for the deposit
-------
thereunder only of Common Stock or voting stock of the Company or
a successor corporation issued in respect of the Common Stock in
connection with a recapitalization or reclassification of the
Common Stock or merger or consolidation of the Company into another
corporation. Such securities may not be withdrawn by the
beneficial owners prior to the expiration or termination of the
Voting Trust Agreement. The certificates representing shares of
Common Stock deposited under the Voting Trust Agreement must be
deposited, within a reasonable time after receipt thereof by the
Voting Trustees, either in a safe deposit box rented by the Voting
Trustees or with a depositary bank or trust company located in the
Borough of Manhattan, City of New York. No such depositary has
been appointed and the Voting Trustees have no present intention of
making any such appointment. (Section 6.02)
The Voting Trust was originally established in 1928 as a
security device in connection with the purchase by the Company of
the wholesale supply business of Western Electric Company,
Incorporated. The Voting Trust arrangement has been continued
since its inception by the periodic adoption, as permitted by
applicable law, of successive Voting Trust Agreements by
substantially all of the shareholders of the Company. In
connection with the adoption of each new Voting Trust Agreement,
management has recommended to shareholders that the Voting Trust
arrangement be continued because it believed that the operation of
the business of the Company had been successfully conducted under
such arrangement and such arrangement was in the best interests of
the Company.
The Voting Trust Agreement is dated as of April 15, 1987 and
will expire April 14, 1997 unless extended or sooner terminated as
provided therein. The Voting Trust Agreement may be terminated at
any time by a majority of the Voting Trustees or by the holders of
Voting Trust Certificates representing at least 75% of the number
of shares of Common Stock deposited under the Voting Trust
Agreement. At any time within six months prior to the expiration
of the Voting Trust Agreement, one or more holders of Voting Trust
Certificates may, by agreement in writing with the Voting Trustees
and the Company, extend the duration of the Voting Trust Agreement
for an additional period not exceeding 10 years. Any such
extension will be binding only upon holders of Voting Trust
Certificates who consent thereto. (Section 6.04)
The Voting Trust Agreement may be amended or modified at any
time by a majority of the Voting Trustees, the Company and the
holders of Voting Trust Certificates representing at least 75% of
the number of shares of Common Stock deposited under the Voting
Trust Agreement. Such amendment or modification, if made, could
affect the rights of the then existing holders of Voting Trust
Certificates. (Section 6.03)
The Voting Trust Agreement is governed by the laws of the
State of New York. Under the Business Corporation Law of the State
of New York, holders of Voting Trust Certificates are given the
right to inspect the books and records of the Company under certain
circumstances. The Company intends to furnish copies of its Annual
Report to holders of Voting Trust Certificates. (Section 6.08)
Voting Trustees. Voting Trustees must be employees of the
---------------
Company and any Voting Trustee who for any cause, including
retirement on a pension, ceases to be an employee of the Company
automatically ceases to be a Voting Trustee. Any Voting Trustee
may at any time resign and may be removed by holders of Voting
Trust Certificates representing at least 66 2/3% of the number of
shares of Common Stock deposited under the Voting Trust Agreement.
(Section 5.01)
-28-
<PAGE> 31
Vacancies in the office of Voting Trustee will be filled by a
majority of the remaining Voting Trustees, unless there shall be
less than three Voting Trustees in office, in which event the
vacancies shall be filled by the Board of Directors of the Company.
No Voting Trustee who has been previously removed from office may
be redesignated or elected a Voting Trustee without the approval of
holders of Voting Trust Certificates representing at least 66 2/3%
of the number of shares of Common Stock deposited under the Voting
Trust Agreement. (Section 5.01)
The Voting Trust Agreement provides that the Voting Trustees,
in exercising the rights and powers granted to them, shall exercise
their best judgment in securing the election of suitable directors
for the Company and in voting on or consenting to other matters.
Voting Trustees may be, and may vote for themselves as, directors
of the Company. No person is disqualified from acting as a Voting
Trustee by reason of any personal interest in the Company and a
Voting Trustee may deal with the Company as fully as if he did not
hold such office. The Voting Trustees may execute any of the
trusts or powers or perform any of the duties under the Voting
Trust Agreement either directly or by or through agents or
attorneys appointed by them. Any action required or permitted to
be taken by the Voting Trustees may be taken by vote or written
consent of a majority of the Voting Trustees. (Sections 5.02 and
5.03)
As specified in the Voting Trust Agreement, Voting Trustees
and their agents and attorneys are not liable to holders of Voting
Trust Certificates or the Company except for their individual
willful misconduct. The Company has agreed to indemnify each
Voting Trustee and each agent or attorney of the Voting Trustees
for, and to hold him harmless against, any tax, loss, liability or
expense incurred for any reason, except his own individual willful
misconduct, arising out of or in connection with the acceptance or
administration of the Voting Trust and the performance of his
duties and obligations and the exercise of his rights and powers
thereunder. Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended (the "Securities
Act"), may be permitted to the Voting Trustees pursuant to the
foregoing provisions, the Voting Trustees have been informed that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. The Company has
also agreed to pay the reasonable expenses incurred by the Voting
Trustees in connection with the performance of their duties and
obligations under the Voting Trust Agreement. In consideration of
the Voting Trustees having agreed to serve in that capacity for the
benefit of the holders of Voting Trust Certificates, the Voting
Trust Agreement provides that, in the event the Company fails or is
unable to provide such indemnification or pay such expenses, the
holders of Voting Trust Certificates will do so and the
responsibility therefor will be allocated among them ratably in
proportion to the number of shares of Common Stock represented by
their respective Voting Trust Certificates. The obligations of the
Company and the holders of Voting Trust Certificates are payable
from any funds or other assets held by the Voting Trustees for
their respective accounts. (Sections 5.03 and 5.04)
No bond is to be posted by the Voting Trustees with respect to
their performance under the Voting Trust Agreement.
Voting. Except as set forth below, the Voting Trustees are
------
entitled in their discretion and using their best judgment to vote
on or consent to the election of directors of the Company and the
ratification, approval or disapproval of any other action or
proposed action of the Company. The Voting Trustees, each of whom
is currently a director of the Company, are specifically authorized
to vote for themselves as directors of the Company under the terms
of the Voting Trust Agreement. The Voting Trustees may not,
without the consent of the holders of Voting Trust Certificates
representing at least 75% of the aggregate number of shares of
Common Stock then deposited under the Voting Trust Agreement, vote
on or consent to the merger or consolidation of the Company into
another corporation, the sale of all or substantially all of the
Company's assets, or the liquidation and dissolution of the
Company. (Sections 4.02 and 5.02)
Dividends. All dividends payable with respect to shares of
---------
Common Stock deposited under the Voting Trust Agreement are payable
to the Voting Trustees as the owners of record of such shares. The
Voting Trustees will retain, subject to the terms of the Voting
Trust Agreement, any shares of Common Stock received as a stock
-29-
<PAGE> 32
dividend, and will deliver to each holder of a Voting Trust
Certificate representing shares of Common Stock on which such stock
dividend shall have been paid an additional Voting Trust
Certificate for the number of shares received as a dividend with
respect to such Common Stock. The Voting Trustees will pay or
cause to be paid to the holders of Voting Trust Certificates an
amount equal to any cash dividends and any distribution paid other
than in cash or Common Stock. (Section 4.03)
Subscription Offers and Employee Plans. Any shares of Common
--------------------------------------
Stock subscribed for on behalf of, or acquired by, a holder of a
Voting Trust Certificate pursuant to a subscription offer or
employee plan or otherwise must be deposited with the Voting
Trustees and will be held by them subject to the terms of the
Voting Trust Agreement. The Voting Trustees will deliver to the
holders of Voting Trust Certificates on whose behalf any such
shares of Common Stock are deposited additional Voting Trust
Certificates for such shares. (Sections 4.04 and 4.05)
Recapitalization or Reclassification of Common Stock. In the
----------------------------------------------------
event of a recapitalization of the Company or reclassification of
the Common Stock, the Voting Trustees will hold, subject to the
terms of the Voting Trust Agreement, any shares of voting stock of
the Company issued in respect of shares of Common Stock deposited
under the Voting Trust Agreement. In such case, issued and
outstanding Voting Trust Certificates may remain outstanding or the
Voting Trustees may substitute new certificates in appropriate
form. (Section 4.06)
Reorganization of the Company. Depending on the terms of any
-----------------------------
agreement pursuant to which the Company is merged or consolidated
into another corporation, the Voting Trustees either will hold,
subject to the terms of the Voting Trust Agreement, any shares of
voting stock of the successor corporation issued to them in respect
of the Common Stock deposited under the Voting Trust Agreement (in
which case issued and outstanding Voting Trust Certificates may
remain outstanding or the Voting Trustees may substitute new cer-
tificates in appropriate form), or will distribute such shares to
the holders of Voting Trust Certificates in accordance with the
number of shares of Common Stock represented by their respective
Voting Trust Certificates. In any event, any other consideration
received as a result of such reorganization will be distributed
ratably to the holders of Voting Trust Certificates. (Section
4.08)
Dissolution of the Company. In the event of the dissolution
--------------------------
and liquidation of the Company, the Voting Trustees will distribute
any money, securities, rights or property received by them as the
record owners of Common Stock ratably to the holders of Voting
Trust Certificates. (Section 4.07)
Restrictions on Transfer, and Right of the Company to
-----------------------------------------------------
Repurchase Voting Trust Certificates Under Certain Circumstances.
- ----------------------------------------------------------------
The Voting Trust Agreement provides that the Voting Trustees need
not recognize any claim of a holder of a Voting Trust Certificate
who has obtained such certificate in contravention of any of the
provisions of the Restated Certificate of Incorporation, as
amended, of the Company in effect at the time such Voting Trust
Certificate was so obtained, and further provides that Voting Trust
Certificates issued under the Voting Trust Agreement are held by
each holder upon and subject to the same terms and conditions upon
which shares of Common Stock are held pursuant to the provisions of
the Restated Certificate of Incorporation, as amended, of the
Company. (Sections 3.01 and 4.09) See "Description of Common
Stock -- Repurchase Option."
LEGAL MATTERS
The legality of the Common Stock and the Voting Trust
Certificates offered hereby will be passed upon by Whitman Breed
Abbott & Morgan, 200 Park Avenue, New York, New York 10166, counsel
for the Company and the Voting Trustees.
-30-
<PAGE> 33
EXPERTS
The financial statements as of December 31, 1993 and 1994 and
for each of the three years in the period ended December 31, 1994
included in this Prospectus have been so included in reliance on
the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and
accounting.
-31-
<PAGE> 34
<TABLE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants. . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 1993 and 1994
(audited) and June 30, 1995 (unaudited) . . . . . . . . . . . . F-3
Consolidated Statements of Income and Retained Earnings -- years
ended December 31, 1992, 1993 and 1994 (audited) and six-month
periods ended June 30, 1994 and 1995 (unaudited). . . . . . . . F-4
Consolidated Statements of Cash Flows -- years ended December 31,
1992, 1993 and 1994 (audited) and six-month periods ended June
30, 1994 and 1995 (unaudited) . . . . . . . . . . . . . . . . . F-5
Notes to Consolidated Financial Statements . . . . . . . . . . . F-6
</TABLE>
F-1
<PAGE> 35
REPORT OF INDEPENDENT ACCOUNTANTS
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.
Price Waterhouse LLP
St. Louis, Missouri
February 17, 1995
F-2
<PAGE> 36
<TABLE>
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1994 (AUDITED) AND JUNE 30, 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
ASSETS
<CAPTION>
JUNE 30,
DECEMBER 31, 1995
1993 1994 (UNAUDITED)
--------------------- ----------
<S> <C> <C> <C>
Current Assets
Cash $ 17,332 $ 17,144 $ 31,624
Trade receivables (less allowances of $3,945,
$4,296 and $4,296, respectively) 256,634 301,525 327,635
Merchandise inventory 167,927 211,482 265,681
Other current assets 10,099 12,273 12,873
-------- -------- --------
Total current assets 451,992 542,424 637,813
-------- -------- --------
Property, at cost
Land 16,812 19,297 19,609
Buildings 121,339 131,081 132,985
Furniture and fixtures 68,666 79,542 87,377
Capital equipment leases 29,612 32,235 22,428
-------- -------- --------
236,429 262,155 262,399
Less - Accumulated depreciation 99,494 108,722 105,658
-------- -------- --------
136,935 153,433 156,741
-------- -------- --------
Deferred Income Taxes 14,446 15,234 15,548
-------- -------- --------
Other Assets 7,139 8,695 10,054
-------- -------- --------
$610,512 $719,786 $820,156
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $ 82,194 $ 80,488 $135,268
Current portion of long-term debt 11,000 13,457 15,983
Trade accounts payable 193,843 258,656 283,849
Accrued payroll and benefit costs 27,643 35,075 22,018
Other accrued taxes 6,375 7,475 6,660
Dividends payable 4,910 4,801 --
Other payables and accruals 6,108 6,338 25,903
-------- ------- --------
Total current liabilities 332,073 406,290 489,681
-------- ------- --------
Postretirement Benefits Liability 73,000 74,141 74,615
-------- -------- --------
Long-term Debt 63,621 90,212 94,674
-------- -------- --------
<CAPTION>
SHARES AT SHARES AT
DECEMBER 31, JUNE 30,
------------------- --------
Shareholders' Equity 1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Capital Stock-
Preferred, par value $20 per share,
authorized 300,000 shares-
Issued to shareholders 9,533 8,248 8,248
In treasury, at cost (378) (60) (225)
--------- --------- ---------
Outstanding 9,155 8,188 8,023 183 164 160
--------- --------- --------- -------- -------- --------
Common, stated value $20 per share,
authorized 7,500,000 shares--
Issued to voting trustees 4,239,403 4,347,757 4,357,677
Issued to shareholders 240,991 250,893 251,059
In treasury, at cost (25,507) (5,708) (83,849)
--------- --------- ---------
Outstanding 4,454,887 4,592,942 4,524,887 89,098 91,859 90,498
--------- --------- --------- -------- -------- --------
Common shares subscribed 1,088 486 285
Retained Earnings 52,486 57,081 70,489
-------- -------- --------
142,855 149,590 161,432
Less - Subscriptions receivable 1,037 447 246
-------- -------- --------
Total Shareholders' Equity 141,818 149,143 161,186
-------- -------- --------
$610,512 $719,786 $820,156
======== ======== ========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
F-3
<PAGE> 37
<TABLE>
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
<CAPTION>
SIX MONTHS ENDED
FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
-------------------------------------------- ----------------------------
1992 1993 1994 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sales, net of returns and allowances. . . . . $ 1,902,354 $ 2,041,473 $ 2,364,461 $ 1,101,352 $ 1,323,980
Less - Cash discounts . . . . . . . . . . . (8,243) (8,306) (8,839) (3,980) (4,626)
----------- ----------- ----------- ----------- -----------
Net Sales . . . . . . . . . . . . . . . . 1,894,111 2,033,167 2,355,622 1,097,372 1,319,354
----------- ----------- ----------- ----------- -----------
Cost of Merchandise Sold. . . . . . . . . . . (1,564,929) (1,668,007) (1,934,925) (897,950) (1,082,211)
----------- ----------- ----------- ----------- -----------
Gross Margin. . . . . . . . . . . . . . . 329,182 365,160 420,697 199,422 237,143
Selling, General and Administrative Expenses. (271,615) (299,910) (339,557) (169,397) (193,176)
Taxes, other than income taxes. . . . . . . . (18,361) (19,915) (21,952) --- ---
Depreciation and amortization . . . . . . . . (13,729) (14,379) (15,999) (7,641) (8,685)
----------- ----------- ----------- ----------- -----------
Income from operations. . . . . . . . . . 25,477 30,956 43,189 22,384 35,282
Other Income, net . . . . . . . . . . . . . . 1,903 2,852 1,490 999 1,189
Interest Expense. . . . . . . . . . . . . . . (10,054) (9,810) (12,003) (5,406) (8,116)
----------- ----------- ----------- ----------- -----------
Income Before Provision for Income Taxes and
Cumulative Effect of Accounting Change. . . 17,326 23,998 32,676 17,977 28,355
----------- ----------- ----------- ----------- -----------
Provision for Income Taxes
Current . . . . . . . . . . . . . . . . . . (6,601) (10,016) (15,225) (8,186) (12,528)
Deferred. . . . . . . . . . . . . . . . . . (493) 763 1,251 455 314
----------- ----------- ----------- ----------- -----------
Total provision for income taxes. . . . (7,094) (9,253) (13,974) (7,731) (12,214)
----------- ----------- ----------- ----------- -----------
Income before cumulative effect of
accounting change. . . . . . . . . . . . 10,232 14,745 18,702 10,246 16,141
----------- ----------- ----------- ----------- -----------
Cumulative effect on prior years of change
in accounting for postretirement benefits,
net of $28,000 tax benefit. . . . . . . . --- (45,000) --- --- ---
Net Income (Loss) . . . . . . . . . . . . . . 10,232 (30,255) 18,702 10,246 16,141
----------- ----------- ----------- ----------- -----------
Retained Earnings, beginning of period. . . . 93,837 91,733 52,486 52,486 57,081
Cash dividends -- . . . . . . . . . . . . .
Preferred, $1.00 per share each year. . . (10) (10) (8) (4) (4)
Common, $2.00 per share each year . . . . (8,282) (8,982) (8,729) (2,630) (2,729)
Common Stock dividend . . . . . . . . . . . (4,044) --- (5,370) --- ---
----------- ----------- ----------- ----------- -----------
Retained Earnings, end of period. . . . . . . $ 91,733 $ 52,486 $ 57,081 $ 60,098 $ 70,489
=========== =========== =========== =========== ===========
Income per Share of Common Stock
Before Cumulative Effect of
Accounting Change . . . . . . . . . . . . $ 2.20 $ 3.09 $ 4.03 $ 2.19 $ 3.54
----------- ----------- ----------- ----------- -----------
Net Income (Loss) per share of Common Stock . $ 2.20 $ (6.33) $ 4.03 $ 2.19 $ 3.54
----------- ----------- ----------- ----------- -----------
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
F-4
<PAGE> 38
<TABLE>
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, (UNAUDITED)
-------------------------------- --------------------
1992 1993 1994 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Income before cumulative effect of
accounting change $10,232 $14,745 $18,702 $10,246 $16,141
------- ------- ------- ------- -------
Adjustments to reconcile income before
cumulative effect of accounting change
to cash provided (used) by operations--
Depreciation and amortization 13,729 14,379 15,999 7,641 8,685
Deferred income taxes 493 (763) (1,251) (455) (314)
Changes in assets and liabilities:
Trade receivables (36,287) (19,226) (44,891) (33,962) (26,110)
Merchandise inventory (10,351) (5,524) (43,555) (39,781) (54,199)
Other current assets (2,171) (1,556) (2,174) (898) (600)
Other assets (285) 448 (1,556) (797) (1,359)
Trade accounts payable 45,182 1,609 64,813 56,996 25,193
Accrued payroll and benefit costs 8,862 1,948 7,432 (8,308) (13,057)
Other accrued liabilities (682) 240 2,934 14,786 19,224
------- ------- ------- ------- -------
18,490 (8,445) (2,249) (4,778) (42,537)
------- ------- ------- ------- -------
Net cash flow provided (used) by operations 28,722 6,300 16,453 5,468 (26,396)
------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 1,131 277 415 103 239
Capital expenditures for property (9,626) (13,264) (26,963) (6,887) (11,632)
------- ------- ------- ------- -------
Net cash flow used by investing activities (8,495) (12,987) (26,548) (6,784) (11,393)
------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in notes payable to
banks 3,998 12,196 (1,706) (1,774) 54,780
Proceeds from long-term debt --- 10,000 35,000 35,000 14,000
Repayment of long-term debt (6,909) (5,699) (7,892) (3,665) (6,498)
Principal payments under capital equipment
leases (2,467) (3,812) (4,009) (2,289) (1,114)
Sale of common stock 562 6,288 578 265 201
Purchase of treasury stock (4,108) (2,872) (3,218) (2,209) (1,566)
Dividends paid (8,444) (8,620) (8,846) (7,544) (7,534)
------- ------- ------- ------- -------
Net cash flow provided (used) by financing
activities (17,368) 7,481 9,907 17,784 52,269
------- ------- ------- ------- -------
Net (Decrease) Increase in Cash 2,859 794 (188) 16,468 14,480
Cash, Beginning of Period 13,679 16,538 17,332 17,332 17,144
------- ------- ------- ------- -------
Cash, End of Period $16,538 $17,332 $17,144 $33,800 $31,624
------- ------- ------- ------- -------
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
F-5
<PAGE> 39
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS 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 $19,690, $25,360 and $26,910 greater than
reported under the LIFO method at December 31, 1993 and 1994 and June 30,
1995, 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
The Company provides for depreciation using the straight-line method
over the following estimated useful lives of the assets:
<TABLE>
<S> <C>
Buildings. . . . . . . . . . . . . . . . . . 42 years
Permanent fixtures--leased property. . . . . Over the lives of the respective leases
Furniture, fixtures and equipment. . . . . . 4 to 14 years
Capital equipment leases . . . . . . . . . . Over the lives of the 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.
F-6
<PAGE> 40
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
1/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNAUDITED DATA
The data for the six months ended June 30, 1994 and 1995 has been
derived from unaudited financial statements which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results of the unaudited
interim periods. Interim results are not necessarily indicative of results
for a full year.
2/INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards 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.
The provision for income taxes recorded in the Consolidated Statements
of Income and Retained Earnings is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
Federal income tax 1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Current. . . . . . . . . . . . . . . . . . $5,896 $9,067 $13,335
Deferred . . . . . . . . . . . . . . . . . 471 (629) (951)
State income tax . . . . . . . . . . . . . .
Current. . . . . . . . . . . . . . . . . . 705 949 1,890
Deferred . . . . . . . . . . . . . . . . . 22 (134) (300)
------ ------ -------
Financial statement. . . . . . . . . . . . .
income tax provision . . . . . . . . . . . $7,094 $9,253 $13,974
====== ====== =======
</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:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Assets/(Liabilities)
--------------------
Postretirement benefits. . . . . . . . . . . $28,872 $29,323
Payroll accruals . . . . . . . . . . . . . . 3,872 4,320
Bad debt reserves. . . . . . . . . . . . . . 1,383 1,673
Inventory. . . . . . . . . . . . . . . . . . 1,147 1,463
Other deferred tax assets. . . . . . . . . . 2,475 3,431
Prepaid pension. . . . . . . . . . . . . . . (2,294) (2,717)
Fixed asset depreciation . . . . . . . . . . (13,523) (13,513)
Fixed asset gains. . . . . . . . . . . . . . (624) (624)
Other deferred tax liabilities . . . . . . . (4,179) (4,976)
------- -------
$17,129 $18,380
======= =======
</TABLE>
Deferred tax assets included in Other Current Assets were $2,683 and
$3,146 in 1993 and 1994, respectively.
F-7
<PAGE> 41
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
2/INCOME TAXES (CONTINUED)
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:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
"Statutory" tax rate . . . . . . . . . . . . 34.0% 35.0% 35.0%
State and local income taxes,
net of federal benefit . . . . . . . . . . 2.8 2.9 3.4
Other, net . . . . . . . . . . . . . . . . . 4.1 .7 4.4
---- ---- ----
Effective tax rate . . . . . . . . . . . . . 40.9% 38.6% 42.8%
==== ==== ====
</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.
Shown below is a summary of shares reacquired and retired by the Company
in the three years ended December 31, 1992, 1993 and 1994 and the six months
ended June 30, 1994 and 1995:
<TABLE>
<CAPTION>
PREFERRED COMMON
REACQUIRED RETIRED REACQUIRED RETIRED
--------------------- -------------------------
<S> <C> <C> <C> <C>
1992 . . . . . . . . 1,082 907 204,303 208,797
1993 . . . . . . . . 717 514 142,889 128,633
1994 . . . . . . . . 967 1,285 159,938 179,737
June 30, 1994. . . . . 778 --- 109,676 ---
June 30, 1995. . . . . 165 --- 78,141 ---
</TABLE>
F-8
<PAGE> 42
<TABLE>
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
<CAPTION>
4/LONG-TERM DEBT
DECEMBER 31 JUNE 30,
------------ --------
Long-term debt was composed of: 1993 1994 1995
---- ---- ----
<S> <C> <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 $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 . . . . . . . . . . . . . . . . 30,000 27,275 24,550
12.25% note secured by a first
mortgage on various properties,
due in monthly installments
through June, 1999 . . . . . . . . . 12,575 10,343 9,122
5.68% to 9.23% capital equipment
leases, various maturities . . . . . 7,873 10,027 9,342
5.68% note, unsecured, maturing
June, 1998, installments of $2,000
due annually in each of the years
1994 through 1998. . . . . . . . . . 8,000 6,000 4,000
8.75% note, unsecured, maturing
November, 1995 . . . . . . . . . . . 2,500 --- ---
7.67% note, unsecured, maturing
April, 2000, installments of $2,000
due annually in each of the years
1996 through 2000. . . . . . . . . . --- --- 8,000
8.53% note, secured by facility,
due in quarterly installments
through March, 2005. . . . . . . . . --- --- 3,500
Variable rate, Industrial Revenue
Bonds, secured by facilities,
various maturities . . . . . . . . . 2,673 1,567 1,160
------- ------- -------
$63,621 $90,212 $94,674
======= ======= =======
</TABLE>
<TABLE>
Long-term debt matures as follows:
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1995
------------ --------
<S> <C> <C>
1996. . . . . . . . . . . . . . . . . . $10,906 $ 3,645
1997. . . . . . . . . . . . . . . . . . 10,882 13,399
1998. . . . . . . . . . . . . . . . . . 9,804 12,327
1999. . . . . . . . . . . . . . . . . . 6,245 8,773
2000-2005 . . . . . . . . . . . . . . . 52,375 56,530
------- -------
$90,212 $94,674
======= =======
</TABLE>
F-9
<PAGE> 43
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
4/LONG-TERM DEBT (CONTINUED)
The present value of future minimum lease payments under
capital leases as of June 30, 1995 was $12,407 of which $9,342 is
included in long-term debt.
Bank borrowings varied from a minimum of $46,000, $50,000 and
$54,000 to a maximum of $90,000, $123,000 and $132,000 in 1992,
1993 and 1994, respectively. For the first six months of 1995 bank
borrowings varied from a minimum of $77,000 to a maximum of
$151,000.
The average amount of bank borrowings outstanding during the
years ended December 1992, 1993 and 1994 and six months ended June
30, 1994 and 1995 amounted to approximately $69,000, $85,000,
$88,000, $79,000 and $129,000, respectively, at average interest
rates of 3.80%, 3.30%, 4.40%, 3.80% and 6.20%, respectively. The
averages are based on the daily amounts outstanding during each
period.
The Company had unused lines of credit of approximately
$133,000 as of June 30, 1995 and $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 June 30, 1995.
5/PENSION PLAN
Pension and related expense for the years ended December 31,
1992, 1993 and 1994 was $3,676, $3,556 and $4,635, respectively,
and for the six months ended June 30, 1994 and 1995 was $2,177 and
$2,382, 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.
F-10
<PAGE> 44
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
5/PENSION PLAN (CONTINUED)
<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>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Service cost-benefits earned during
the year . . . . . . . . . . . . . . . $3,303 $3,383 $4,249
Interest cost on projected benefit. . .
obligation . . . . . . . . . . . . . . 6,641 6,923 7,357
Actual return on plan assets. . . . . . (2,546) (9,472) 642
Net amortization of return on plan. . .
assets and unrecognized net asset. . . (4,389) 1,958 (8,660)
------ ------ ------
Total defined benefit plan expense. . . $3,009 $2,792 $3,588
====== ====== ======
</TABLE>
<TABLE>
The following table sets forth the plan's funded status for
the two years ended December 31:
<CAPTION>
Actuarial present value of benefit obligation: 1993 1994
---- ----
<S> <C> <C>
Vested benefits . . . . . . . . . . . . . . . . $61,765 $52,883
Nonvested benefits. . . . . . . . . . . . . . . 11,798 11,329
------- -------
Accumulated benefit obligation. . . . . . . . 73,563 64,212
------- -------
Projected benefit obligation
for service rendered to date. . . . . . . . 98,753 92,514
------- -------
Plan assets at fair value, primarily
common stocks and bonds . . . . . . . . . . . . 88,464 80,738
------- -------
Projected benefit obligation
in excess of plan assets. . . . . . . . . . . . (10,289) (11,776)
------- -------
Unrecognized prior service cost . . . . . . . . . 6 (12)
Unrecognized net loss . . . . . . . . . . . . . . 27,030 28,412
Unrecognized net asset at January 1, 1987 . . . . (12,743) (11,584)
------- -------
Net pension asset recognized in
the consolidated balance sheet . . . . . . . . . $ 4,004 $ 5,040
======= =======
</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 7.50% and 4.50%, and 8.50% and
5.50% in 1993 and 1994, respectively. The long-term rate of return
on assets used in determining defined benefit plan expense was
9.00% in 1992 and 1993, and 9.75% in 1994. 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.
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.
F-11
<PAGE> 45
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
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, 1993 or 1994.
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>
1993 1994
---- ----
<S> <C> <C>
Service cost-benefits earned during the year. . . $ 401 $ 536
Interest cost on accumulated
postretirement benefit obligation.. . . . . . . 6,111 6,149
Amortization of net loss from prior years . . . . --- 122
------ ------
Net periodic postretirement benefit expense . . . $6,512 $6,807
====== ======
</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>
1993 1994
---- ----
<S> <C> <C>
Retirees. . . . . . . . . . . . . . . . . . . . . $63,719 $60,743
Fully eligible active plan participants . . . . . 13,243 11,135
Other active plan participants. . . . . . . . . . 7,492 6,034
------- -------
Accumulated postretirement
benefit obligation . . . . . . . . . . . . . . . 84,454 77,912
Unrecognized net loss . . . . . . . . . . . . . . (11,454) (3,771)
------- -------
Accrued postretirement benefit cost . . . . . . . $73,000 $74,141
======= =======
</TABLE>
F-12
<PAGE> 46
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994 (AUDITED) AND
SIX MONTHS ENDED JUNE 30, 1994 AND 1995 (UNAUDITED)
(DOLLARS STATED IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
6/POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE (CONTINUED)
The discount rate used in determining net periodic
postretirement benefit expense was 8.75% and 7.50% for 1993 and
1994, respectively. The discount rate used to determine the
accumulated postretirement benefit obligation was 7.50% and 8.50%
at December 31, 1993 and 1994, respectively. The health care cost
trend rate used in determining net periodic postretirement benefit
expense for all years was 8.00% and 6.75% for 1993 and 1994,
respectively. The health care cost trend rate used to determine
the accumulated postretirement benefit obligation for all years was
6.75% at December 31, 1993 and 1994. 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 4,638,056, 4,778,747 and
4,640,998 in 1992, 1993 and 1994, respectively, and 4,672,911 and
4,557,639 for the six months ended June 30, 1994 and 1995,
respectively, adjusted for the declaration of a 5.00% stock
dividend in 1992 and a 6.25% stock dividend in 1994.
8/COMMITMENTS
Rental expense was $6,813, $6,941 and $8,420 in 1992, 1993 and
1994, respectively, and $4,210 and $4,100 for the six months ended
June 30, 1994 and 1995, 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 1992, 1993 and 1994 and the six months ended June 30,
1994 and 1995, income taxes paid totaled $6,166, $10,621, $16,783,
$6,497 and $9,009; interest paid totaled $9,714, $10,158, $11,987,
$5,083 and $7,564; and liabilities assumed in connection with
capitalized leases totaled $5,607, $0, $5,949, $4,131 and $600,
respectively.
F-13
<PAGE> 47
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee. . . . . $ 3,966
Printing fees and expenses . . . . . . . . . . . . . . . . . 13,000<F*>
Legal fees and expenses. . . . . . . . . . . . . . . . . . . 37,000<F*>
Accounting fees and expenses . . . . . . . . . . . . . . . . 8,000<F*>
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 8,034<F*>
--------
$ 70,000<F*>
========
<FN>
- -----------------
<F*> Estimated.
</TABLE>
ITEM 15. Indemnification of Directors and Officers.
-----------------------------------------
Sections 721 through 726 of the New York Business Corporation Law
provide as follows:
Section 721. NONEXCLUSIVITY OF STATUTORY PROVISIONS FOR
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification and advancement of expenses granted pursuant
to, or provided by, this article shall not be deemed exclusive of any
other rights to which a director or officer seeking indemnification or
advancement of expenses may be entitled, whether contained in the
certificate of incorporation or the by-laws or, when authorized by such
certificate of incorporation or by-laws, (i) a resolution of
shareholders, (ii) a resolution of directors, or (iii) an agreement
providing for such indemnification, provided that no indemnification may
be made to or on behalf of any director or officer if a judgment or
other final adjudication adverse to the director or officer establishes
that his acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled. Nothing contained
in this article shall affect any rights to indemnification to which
corporate personnel other than directors and officers may be entitled by
contract or otherwise under law.
Section 722. AUTHORIZATION FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
(a) A corporation may indemnify any person made, or threatened to
be made, a party to an action or proceeding (other than one by or in the
right of the corporation to procure a judgment in its favor), whether
civil or criminal, including an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the corporation served in
any capacity at the request of the corporation, by reason of the fact
that he, his testator or intestate, was a director or officer of the
corporation or served such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any
capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a purpose
which he reasonably believed to be in, or, in the case of service for
any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best interests of
the corporation and, in criminal actions or proceedings, in addition,
had no reasonable cause to believe that his conduct was unlawful.
II-1
<PAGE> 48
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not in itself create a presumption
that any such director or officer did not act, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the
best interests of the corporation or that he had reasonable cause to
believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to
be made, a party to an action by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he, his
testator or intestate, is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as
a director or officer of any other corporation of any type or kind,
domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or
officer acted, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to the best interests of the corporation, except
that no indemnification under this paragraph shall be made in respect of
(1) a threatened action, or a pending action which is settled or
otherwise disposed of, or (2) any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action was
brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled
to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed
to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a
person with respect to an employee benefit plan pursuant to applicable
law shall be considered fines; and action taken or omitted by a person
with respect to an employee benefit plan in the performance of such
person's duties for a purpose reasonably believed by such person to be
in the interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose which is not opposed to the best interests
of the corporation.
Section 723. PAYMENT OF INDEMNIFICATION OTHER THAN BY COURT
AWARD.
(a) A person who has been successful, on the merits or otherwise,
in the defense of a civil or criminal action or proceeding of the
character described in section 722 shall be entitled to indemnification
as authorized in such section.
(b) Except as provided in paragraph (a), any indemnification under
section 722 or otherwise permitted by section 721, unless ordered by a
court under section 724 (Indemnification of directors and officers by a
court), shall be made by the corporation, only if authorized in the
specific case:
(1) By the board acting by a quorum consisting of directors
who are not parties to such action or proceeding upon a finding
that the director or officer has met the standard of conduct set
forth in section 722 or established pursuant to section 721, as the
case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs;
II-2
<PAGE> 49
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is proper in
the circumstances because the applicable standard of conduct
set forth in such sections has been met by such director or
officer, or
(B) By the shareholders upon a finding that the director
or officer has met the applicable standard of conduct set
forth in such sections.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount as, and
to the extent, required by paragraph (a) of section 725.
Section 724. INDEMNIFICATION OF DIRECTORS AND OFFICERS BY A
COURT.
(a) Notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary resolution of the board or of
the shareholders in the specific case under section 723 (Payment of
indemnification other than by court award), indemnification shall be
awarded by a court to the extent authorized under section 722
(Authorization for indemnification of directors and officers), and
paragraph (a) of section 723. Application therefor may be made, in
every case, either:
(1) In the civil action or proceeding in which the expenses
were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which
case the application shall set forth the disposition of any
previous application made to any court for the same or similar
relief and also reasonable cause for the failure to make
application for such relief in the action or proceeding in which
the expenses were incurred or other amounts were paid.
(b) The application shall be made in such manner and form as may
be required by the applicable rules of court or, in the absence thereof,
by direction of a court to which it is made. Such application shall be
upon notice to the corporation. The court may also direct that notice
be given at the expense of the corporation to the shareholders and such
other persons as it may designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court
may allow a person such reasonable expenses, including attorneys' fees,
during the pendency of the litigation as are necessary in connection
with his defense therein, if the court shall find that the defendant has
by his pleadings or during the course of the litigation raised genuine
issues of fact or law.
Section 725. OTHER PROVISIONS AFFECTING INDEMNIFICATION OF
DIRECTORS AND OFFICERS.
(a) All expenses incurred in defending a civil or criminal action
or proceeding which are advanced by the corporation under paragraph (c)
of section 723 (Payment of indemnification other than by court award) or
allowed by a court under paragraph (c) of section 724 (Indemnification
of directors and officers by a court) shall be repaid in case the person
receiving such advancement or allowance is ultimately found, under the
procedure set forth in this article, not to be entitled to indem-
nification or, where indemnification is granted, to the extent the
expenses so advanced by the corporation or allowed by the court exceed
the indemnification to which he is entitled.
(b) No indemnification, advancement or allowance shall be made
under this article in any circumstance where it appears:
II-3
<PAGE> 50
(1) That the indemnification would be inconsistent with the
law of the jurisdiction of incorporation of a foreign corporation
which prohibits or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a by-law, a
resolution of the board or of the shareholders, an agreement or
other proper corporate action, in effect at the time of the accrual
of the alleged cause of action asserted in the threatened or
pending action or proceeding in which the expenses were incurred or
other amounts were paid, which prohibits or otherwise limits
indemnification; or
(3) If there has been a settlement approved by the court,
that the indemnification would be inconsistent with any condition
with respect to indemnification expressly imposed by the court in
approving the settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the
shareholders, the corporation shall, not later than the next annual
meeting of shareholders unless such meeting is held within three months
from the date of such payment, and, in any event, within fifteen months
from the date of such payment, mail to its shareholders of record at the
time entitled to vote for the election of directors a statement
specifying the persons paid, the amounts paid, and the nature and status
at the time of such payment of the litigation or threatened litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of
directors, or by agreement, then the corporation shall, not later than
the next annual meeting of shareholders, unless such meeting is held
within three months from the date of such action, and, in any event,
within fifteen months from the date of such action, mail to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the action taken.
(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer
shall be satisfied by compliance with the corresponding provisions of
section one thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations doing business in this state,
except as provided in section 1320 (Exemption from certain provisions).
Section 726. INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS.
(a) Subject to paragraph (b), a corporation shall have power to
purchase and maintain insurance:
(1) To indemnify the corporation for any obligation which it
incurs as a result of the indemnification of directors and officers
under the provisions of this article, and
(2) To indemnify directors and officers in instances in which
they may be indemnified by the corporation under the provisions of
this article, and
(3) To indemnify directors and officers in instances in which
they may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance
covering such directors and officers provides, in a manner
acceptable to the superintendent of insurance, for a retention
amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment
other than cost of defense, to or on behalf of any director or officer:
II-4
<PAGE> 51
(1) if a judgment or other final adjudication adverse to the
insured director or officer establishes that his acts of active and
deliberate dishonesty were material to the cause of action so
adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may
be included in a single contract or supplement thereto. Retrospective
rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons
provided in paragraph (c) of section 725 (Other provisions affecting
indemnification of directors or officers), mail a statement in respect
of any insurance it has purchased or renewed under this section,
specifying the insurance carrier, date of the contract, cost of the
insurance, corporate positions insured, and a statement explaining all
sums, not previously reported in a statement to shareholders, paid under
any indemnification insurance contract.
(e) This section is the public policy of this state to spread the
risk of corporate management, notwithstanding any other general or
special law of this state or of any other jurisdiction including the
federal government.
Article VIII of the Company's By-Laws provides:
To the full extent authorized by law, the corporation shall and
hereby does indemnify any person who shall at any time be made, or
threatened to be made, a party in any civil or criminal action or
proceeding by reason of the fact that he, his testator or his intestate
is or was a director or officer of the corporation or served another
corporation in any capacity at the request of the corporation.
Section 5.03(c) of the Voting Trust Agreement provides:
The Corporation covenants and agrees, and in the event the
Corporation shall not do so for any reason whatsoever the Participating
Shareholders in consideration of the Voting Trustees having agreed to
serve in that capacity for the benefit of the Participating Shareholders
covenant and agree ratably in accordance with the number of shares of
Common Stock represented by their respective Voting Trust Certificates,
to indemnify each Voting Trustee and each agent or attorney of the
Voting Trustees (including, without limitation, Agents, transfer agents
and registrars) for, and to hold him harmless against, any tax, loss,
liability or expense incurred for any reason other than his own
individual willful misconduct, arising out of or in connection with the
acceptance or administration of the 1987 Voting Trust, and the
performance of his duties and obligations hereunder and the exercise of
his rights and powers hereunder, including the costs and expenses of
defending himself against any claim of liability. The obligations under
this Section 5.03(c) of the Corporation and the Participating
Shareholders to indemnify the Voting Trustees and each agent or attorney
of the Voting Trustees (including, without limitation, Agents, transfer
agents and registrars) shall be payable from any funds or other assets
held by the Voting Trustees hereunder for the account of the Corporation
or the Participating Shareholders as the case may be.
Effective October 1, 1994, the Company renewed insurance from the
Federal Insurance Company (a member of the Chubb Group), a portion of
which insures employees, including directors and officers, against
liabilities imposed on them at an annual cost to the Company through
September 30, 1995 of $67,318.
II-5
<PAGE> 52
ITEM 16. Exhibits.
--------
4. Instruments defining the rights of security holders, including
--------------------------------------------------------------
indentures:
- ----------
(i) Restated Certificate of Incorporation, as amended, dated March
9, 1984, filed as Exhibit 3(i) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1984 (Commission File
No. 0-255) and incorporated herein by reference.
(ii) 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-1 (Registration No. 33-
10514) 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.
5. Opinion re legality
-------------------
Opinion of Whitman Breed Abbott & Morgan.
10. Material Contracts
------------------
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.
24. Consents
--------
(a) Consent of Price Waterhouse LLP.
(b) Consent of Whitman Breed Abbott & Morgan (contained in the
opinion filed as Exhibit 5 and incorporated herein by reference).
25. Powers of attorney
------------------
Powers of attorney of certain directors and officers of the company
(included on page II-8 of this registration statement).
ITEM 17. Undertakings.
------------
(i) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company or the Voting Trustees pursuant to
the foregoing provisions, or otherwise, the Company and the Voting
Trustees have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Company or the Voting Trustees of expenses incurred
or paid by a director, officer or controlling person of the Company or
the Voting Trustees in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company or the
Voting Trustees will, unless in the opinion of its counsel the matter
has been settled by
II-6
<PAGE> 53
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it or them is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-2 and has
duly caused this Registration Statement on Form S-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of
St. Louis, State of Missouri on the 31 day of August, 1995.
GRAYBAR ELECTRIC COMPANY, INC.
By: G.S. Tulloch, Jr.
---------------------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints C. L. Hall and G. S.
Tulloch, Jr., and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof.
II-8
<PAGE> 55
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-2 has been signed by the
following persons in the capacities indicated on August 31, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<C> <S>
C.L. Hall
- ----------------------------- Director and President (Principal Executive
(C.L. Hall) Officer and Principal Financial Officer)
J.R. Seaton
- ----------------------------- Director, Vice President and Comptroller
(J.R. Seaton) (Principal Accounting Officer)
DIRECTORS:
T.S. Gurganous I. Orloff
- ----------------------------- -------------------------------
(T.S. Gurganous) (I. Orloff)
J.R. Hade R.A. Reynolds
- ----------------------------- -------------------------------
(J.R. Hade) (R.A. Reynolds)
R.H. Haney G.S. Tulloch
- ----------------------------- -------------------------------
(R.H. Haney) (G.S. Tulloch)
G.W. Harper J.F. Van Pelt
- ----------------------------- -------------------------------
(G.W. Harper) (J.F. Van Pelt)
R.L. Mygrant J.W. Wolf
- ----------------------------- -------------------------------
(R.L. Mygrant) (J.W. Wolf)
R.D. Offenbacher
- -----------------------------
(R.D. Offenbacher)
</TABLE>
II-9
<PAGE> 56
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-2 has been signed by the
following persons, as Voting Trustees, on August 31, 1995.
Signatures
----------
J.R. Hade C.L. Hall
- ----------------------------- -------------------------------
(J.R. Hade) (C.L. Hall)
G.W. Harper R.L. Mygrant
- ----------------------------- -------------------------------
(G.W. Harper) (R.L. Mygrant)
R.D. Offenbacher
- -----------------------------
(R.D. Offenbacher)
II-10
<PAGE> 57
INDEX TO EXHIBITS
EXHIBITS
--------
4. Instruments defining the rights of security holders, including
indentures
(i) Restated Certificate of Incorporation, as amended,
dated March 9, 1984, filed as Exhibit 3(i) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1984 (Commission File No. 0-255) and incorporated herein by
reference.
(ii) 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-1
(Registration No. 33-10514) and incorporated herein by reference.
5. Opinion re legality
Opinion of Whitman Breed Abbott & Morgan
10. Material Contracts
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.
23. Consents
(a) Consent of Price Waterhouse LLP
(b) Consent of Whitman Breed Abbott & Morgan (contained in
the opinion filed as Exhibit 5 and incorporated herein by
reference).
24. Powers of attorney
Powers of attorney of certain directors and officers of the
Company (included on page II-8 of this registration statement).
<PAGE> 1
EXHIBIT 5
WHITMAN BREED ABBOTT & MORGAN
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 351-3000
August 31, 1995
Graybar Electric Company, Inc.
and
C.L. Hall
J.R. Hade
G.W. Harper
R.L. Mygrant
R.D. Offenbacher
As Voting Trustees under the
Voting Trust Agreement, dated
as of April 15, 1987 relating
to the Common Stock of
Graybar Electric Company, Inc.
34 North Meramec Avenue
St. Louis, Missouri 63105
Dear Sirs:
We refer to the Voting Trust Agreement, dated as of April
15, 1987 (the "Voting Trust Agreement"), relating to the common stock,
par value $1 per share with a stated value of $20 per share (the
"Common Stock"), of Graybar Electric Company, Inc., a New York
corporation (the "Company"), and to the Registration Statement on Form
S-2 (the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), to be filed with the Securities and
Exchange Commission (the "Commission") on August 31, 1995 by the
Company and the Voting Trustees (the "Voting Trustees") under the
Voting Trust Agreement. The Registration Statement covers a maximum
of 575,000 shares of Common Stock and Voting Trust Certificates to be
issued pursuant to the Voting Trust Agreement and the Company's Common
Stock Purchase Plan dated as of October 9, 1995 (the "Plan").
<PAGE> 2
Graybar Electric -2- August 31, 1995
Company, Inc.
We have examined the Voting Trust Agreement and the Plan.
We have also examined originals, or certified or photostatic copies,
of such records of the Company and the Voting Trustees and such other
documents as we have deemed relevant and necessary as the basis for
the opinions set forth below. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and
the authenticity of the originals of such copies.
Based upon our examination mentioned above, subject to the
assumptions stated and relying upon the statements of fact contained
in the documents that we have examined, we are of the following
opinions:
1. The 575,000 shares of Common Stock to be offered by the
Company, when issued and sold as contemplated by the Registration
Statement and the Plan, will have been validly issued and will be
fully paid and nonassessable, subject to Section 630 of the New York
Business Corporation Law (which provides that the ten largest
shareholders of the Company are liable under certain conditions for
debts, wages or salaries due and not paid by the Company to any
laborers, servants or employees, other than contractors, for services
performed by them for the Company).
2. The Voting Trust Agreement is a valid and lawful
agreement under the laws of the State of New York and the Voting Trust
Certificates will be, when issued in accordance with the provisions of
the Voting Trust Agreement, validly issued.
We consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement and to the reference to our firm
appearing under the caption "Legal Matters" in the Prospectus that
forms a part of the Registration Statement. In giving this consent,
we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the
General Rules and Regulations of the Commission.
Very truly yours,
Whitman Breed Abbott & Morgan
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form S-2 of our
report dated February 17, 1995 relating to the financial
statements of Graybar Electric Company, Inc., which appears
in such Prospectus. We also consent to the application of
such report to the Financial Statement Schedules for the
three years ended December 31, 1994 listed under Item 14(a)
of Graybar Electric Company's Annual Report on Form 10-K for
the year ended December 31, 1994 when such schedules are
read in conjunction with the financial statements referred
to in our report. The audits referred to in such report
also included these Financial Statement Schedules. We also
consent to the references to us under the headings "Experts"
and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected
Consolidated Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
August 31, 1995
