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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Commission File Number 0-255
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- ---------------
GRAYBAR ELECTRIC COMPANY, INC
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 13 - 0794380
- ------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
POST OFFICE BOX 7231, ST. LOUIS, MO 63177
- ------------------------------------------------------------------------------
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code: (314) 512 - 9200
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
------ -----
Common Stock Outstanding at October 31, 1996: 4,701,300
------------------------
(Number of Shares)
<PAGE> 2
<TABLE>
PART I
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 47,527 $ 21,033
------------------ -----------------
Trade receivables 351,240 344,232
------------------ -----------------
Merchandise inventory 293,185 259,782
------------------ -----------------
Other current assets 12,221 12,800
------------------ -----------------
Total current assets 704,173 637,847
------------------ -----------------
PROPERTY
Land 21,534 19,921
------------------ -----------------
Buildings and permanent fixtures 255,429 228,323
------------------ -----------------
Capital equipment leases 26,138 22,732
------------------ -----------------
Less-Accumulated depreciation 119,582 110,843
------------------ -----------------
Net property 183,519 160,133
------------------ -----------------
DEFERRED FEDERAL INCOME TAXES 15,149 14,354
------------------ -----------------
OTHER ASSETS 12,017 10,946
------------------ -----------------
$914,858 $823,280
================== =================
CURRENT LIABILITIES
Notes payable to banks $ 75,050 $130,554
------------------ -----------------
Current portion of long-term debt 14,964 13,479
------------------ -----------------
Trade accounts payable 316,212 277,729
------------------ -----------------
Income taxes 3,720 ---
------------------ -----------------
Other accrued taxes 8,167 8,957
------------------ -----------------
Accrued payroll and benefit costs 27,783 37,350
------------------ -----------------
Dividends payable --- 4,915
------------------ -----------------
Other payables and accruals 31,430 8,982
------------------ -----------------
Total current liabilities 477,326 481,966
------------------ -----------------
POSTRETIREMENT BENEFITS LIABILITY 76,728 75,900
------------------ -----------------
LONG TERM DEBT 153,181 91,257
------------------ -----------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
<CAPTION>
SHARES
-------
1996 1995
---- ----
<S> <C> <C>
Issued to shareholders 7,504 7,504
------------- -------------
In treasury, at cost (321) ---
------------- -------------
Outstanding 7,183 7,504 144 150
------------- ------------- ------------------ -----------------
Common:
------
Stated value $20 per share
Authorized 7,500,000 shares
<CAPTION>
SHARES
-------
1996 1995
---- ----
<S> <C> <C>
Issued to voting trustees 4,613,441 4,228,414
------------- -------------
Issued to shareholders 246,500 244,315
------------- -------------
In treasury, at cost (152,619) (12,431)
------------- -------------
Outstanding 4,707,322 4,460,298 94,146 89,206
------------- ------------- ------------------ -----------------
Common shares subscribed 1,319 9,008
------------------ -----------------
Retained earnings 113,278 84,801
------------------ -----------------
Less-Subscriptions receivable 1,264 9,008
------------------ -----------------
TOTAL SHAREHOLDERS' EQUITY 207,623 174,157
------------------ -----------------
$ 914,858 $ 823,280
================== =================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
3
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
QUARTER ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 787,009 $ 731,067
------------------ ------------------
Less - Cash discounts 2,044 2,417
------------------ ------------------
NET SALES 784,965 728,650
------------------ ------------------
COST OF MERCHANDISE SOLD 648,864 600,420
------------------ ------------------
Gross margin 136,101 128,230
------------------ ------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 109,085 101,998
------------------ ------------------
DEPRECIATION AND AMORTIZATION 5,134 4,492
------------------ ------------------
Income from operations 21,882 21,740
------------------ ------------------
OTHER INCOME, net 3,516 903
------------------ ------------------
INTEREST EXPENSE 4,031 4,426
------------------ ------------------
Income before provision for income taxes 21,367 18,217
------------------ ------------------
PROVISION FOR INCOME TAXES
Current 9,046 7,046
------------------ ------------------
Deferred (268) (165)
------------------ ------------------
Total provision for income taxes 8,778 6,881
------------------ ------------------
NET INCOME 12,589 11,336
================== ==================
NET INCOME PER SHARE OF COMMON STOCK $ 2.67 $ 2.52
================== ==================
DIVIDENDS
Preferred - $.25 per share $ 1 $ 2
------------------ ------------------
Common - $.30 per share 1,413 1,348
------------------ ------------------
$ 1,414 $ 1,350
================== ==================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
4
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 2,237,973 $ 2,055,047
------------------ ------------------
Less - Cash discounts 6,634 7,043
------------------ ------------------
NET SALES 2,231,339 2,048,004
------------------ ------------------
COST OF MERCHANDISE SOLD 1,840,721 1,682,631
------------------ ------------------
Gross margin 390,618 365,373
------------------ ------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 317,087 295,174
------------------ ------------------
DEPRECIATION AND AMORTIZATION 14,605 13,177
------------------ ------------------
Income from operations 58,926 57,022
------------------ ------------------
OTHER INCOME, net 9,093 2,092
------------------ ------------------
INTEREST EXPENSE 12,422 12,542
------------------ ------------------
Income before provision for income taxes 55,597 46,572
------------------ ------------------
PROVISION FOR INCOME TAXES
Current 23,642 19,574
------------------ ------------------
Deferred (795) (479)
------------------ ------------------
Total provision for income taxes 22,847 19,095
------------------ ------------------
NET INCOME 32,750 27,477
================== ==================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 6.94 $ 6.05
================== ==================
DIVIDENDS
Preferred - $.75 per share $ 5 $ 6
------------------ ------------------
Common - $.90 per share 4,268 4,077
------------------ ------------------
$ 4,273 $ 4,083
================== ==================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
5
<PAGE> 6
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
--------------------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 32,750 $ 27,477
--------------------- --------------------
Adjustments to reconcile net income
to cash provided (used) by operations:
Depreciation and amortization 14,605 13,177
--------------------- --------------------
Deferred income taxes (795) (479)
--------------------- --------------------
Gain on sale of property (6,512) ---
--------------------- --------------------
Changes in assets and liabilities:
Trade receivables (7,008) (38,457)
--------------------- --------------------
Merchandise inventory (33,403) (57,437)
--------------------- --------------------
Other current assets 579 (680)
--------------------- --------------------
Other assets (1,071) (1,150)
--------------------- --------------------
Trade accounts payable 38,483 32,509
--------------------- --------------------
Accrued payroll and benefit costs (9,567) (6,310)
--------------------- --------------------
Other accrued liabilities 26,206 28,902
--------------------- --------------------
21,517 (29,925)
--------------------- --------------------
Net cash provided (used) by operations 54,267 (2,448)
--------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 8,773 474
--------------------- --------------------
Capital expenditures for property (35,752) (17,514)
--------------------- --------------------
Net cash used by investing activities (26,979) (17,040)
--------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable to banks (55,504) 50,049
--------------------- --------------------
Proceeds from long-term debt 72,000 14,000
--------------------- --------------------
Repayment of long-term debt (9,453) (7,460)
--------------------- --------------------
Principal payments under capital equipment leases (3,638) (2,770)
--------------------- --------------------
Sale of common stock 7,799 299
--------------------- --------------------
Purchase of treasury stock (2,810) (2,470)
--------------------- --------------------
Dividends paid (9,188) (8,884)
--------------------- --------------------
Net cash flow provided (used) by financing activities (794) 42,764
--------------------- --------------------
NET INCREASE IN CASH 26,494 23,276
--------------------- --------------------
CASH, BEGINNING OF YEAR 21,033 17,144
--------------------- --------------------
CASH, END OF THIRD QUARTER $ 47,527 $ 40,420
===================== ====================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AND OTHER INFORMATION
-------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
Note 1
- ------
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, the quarterly report includes all
adjustments, consisting of normal recurring accruals, necessary for the fair
presentation of the financial statements presented. Such interim financial
information is subject to year-end adjustments and independent audit.
Results for interim periods are not necessarily indicative of results
to be expected for the full year.
Note 2
- ------
<TABLE>
<CAPTION>
NINE MONTHS 1996 NINE MONTHS 1995
-------------------- --------------------
<S> <C> <C>
Earnings for Nine Months $ 32,750 $ 27,477
-------------------- --------------------
Dividends on Preferred Stock 5 6
-------------------- --------------------
Available for Common Stock $ 32,745 $ 27,471
-------------------- --------------------
Average Common Shares Outstanding 4,716,807 4,540,207
-------------------- --------------------
Earnings Per Share $ 6.94 $ 6.05
-------------------- --------------------
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
RESULTS OF OPERATIONS
- ---------------------
Net sales in the first nine months of 1996 were 9.0% higher than in
the first nine months of 1995. The higher net sales resulted from
improvements in the market sectors of the economy in which the Company
operates.
Gross margin in the first nine months of 1996 increased $25,245 (6.9%)
compared to the first nine months of 1995 primarily due to increased sales
in the electrical and communication markets.
The increase in selling, general and administrative expenses in the
first nine months of 1996 compared to the first nine months of 1995 occurred
largely because of adjustments in personnel complement and adjustments in
compensation and related expenses.
Interest expense decreased in the first nine months of 1996 compared
to the first nine months of 1995 primarily due to lower interest rates on
short-term borrowings.
Other income in the first nine months of 1996 included gains on sale
of property of $6,512.
The combined effect of the increases in gross margin and other income
and the decrease in interest expense, together with increases in selling,
general and administrative expenses and depreciation and amortization,
resulted in an increase in pretax earnings of $9,025 in the first nine
months of 1996 compared to the same period in 1995.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
The financial condition of the Company continues to be strong. At
September 30, 1996, current assets exceeded current liabilities by $226,847,
up $70,966 from December 31, 1995. The current assets at September 30, 1996
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 September 30, 1996, the Company had available to it unused lines of
credit amounting to $249,600. These lines are available to meet short-term
cash requirements of the Company. Bank borrowings outstanding during 1996
through September 30 ranged from a minimum of $38,200 to a maximum of
$168,000.
The Company has a $125,000 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 April, 1996, the agreement was
amended to increase the commitment to $125,000 from the $80,000 commitment
in 1995. There have been no borrowings against this credit line through
September 30, 1996.
The Company has funded its capital requirements from operations, stock
issuances to its employees and long term debt. In May, 1996, the Company
received the proceeds from a fifteen-year note for $65,000 at a fixed
interest rate of 7.36% with principal payable in semiannual installments
beginning in May, 2001. 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 July, 1996, the Company received the proceeds from a ten-year note for
$7,000 at a fixed interest rate of 7.74% with principal payable in quarterly
installments beginning in November, 1996. During the first nine months of
1996, cash provided by operations amounted to $54,267 compared to $2,448
cash used by operations in the first nine months of 1995. Cash provided
from the sale of common stock and proceeds received on stock subscriptions
amounted to $7,799 in the first nine months of 1996.
9
<PAGE> 10
PART II: OTHER INFORMATION
----------------------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished in accordance with provisions of Item
601 of Regulation S-K.
(27) Financial Data Schedule (submitted in EDGAR format
only).
(b) Reports on Form 8-K
Form 8-K was filed with the Commission on June 19, 1996
reporting a change in Registrant's Certifying Accountant.
10
<PAGE> 11
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 12, 1996 GRAYBAR ELECTRIC COMPANY, INC.
---------------------
(Date)
/S/ C. L. HALL
------------------------------------------
C. L. HALL
PRESIDENT
/S/ J. R. SEATON
------------------------------------------
J. R. SEATON
VICE PRESIDENT
AND COMPTROLLER
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 47,527
<SECURITIES> 0
<RECEIVABLES> 351,240
<ALLOWANCES> 0
<INVENTORY> 293,185
<CURRENT-ASSETS> 704,173
<PP&E> 303,101
<DEPRECIATION> 119,582
<TOTAL-ASSETS> 914,858
<CURRENT-LIABILITIES> 477,326
<BONDS> 153,181
<COMMON> 94,146
0
144
<OTHER-SE> 113,333
<TOTAL-LIABILITY-AND-EQUITY> 914,858
<SALES> 2,231,339
<TOTAL-REVENUES> 2,231,339
<CGS> 1,840,721
<TOTAL-COSTS> 1,840,721
<OTHER-EXPENSES> 331,692
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,422
<INCOME-PRETAX> 55,597
<INCOME-TAX> 22,847
<INCOME-CONTINUING> 32,750
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,750
<EPS-PRIMARY> 6.94
<EPS-DILUTED> 6.94
</TABLE>
|
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