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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 June 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
POST OFFICE BOX 7231, ST. LOUIS, MO 63177
------------------------------------------------------------------------
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code: (314) 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 July 31, 1996: 4,717,275
--------------------
(Number of Shares)
<PAGE> 2
PART I
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
June 30, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 42,534 $ 21,033
----------------- -----------------
Trade receivables 351,788 344,232
----------------- -----------------
Merchandise inventory 284,205 259,782
----------------- -----------------
Other current assets 12,219 12,800
----------------- -----------------
Total current assets 690,746 637,847
----------------- -----------------
PROPERTY
Land 20,586 19,921
----------------- -----------------
Buildings and permanent fixtures 248,788 228,323
----------------- -----------------
Capital equipment leases 26,138 22,732
----------------- -----------------
Less-Accumulated depreciation 116,776 110,843
----------------- -----------------
Net property 178,736 160,133
----------------- -----------------
DEFERRED FEDERAL INCOME TAXES 14,881 14,354
----------------- -----------------
OTHER ASSETS 12,092 10,946
----------------- -----------------
$896,455 $823,280
================= =================
CURRENT LIABILITIES
Notes payable to banks $ 93,767 $130,554
----------------- -----------------
Current portion of long-term debt 14,318 13,479
----------------- -----------------
Trade accounts payable 307,455 277,729
----------------- -----------------
Income taxes 3,314 ---
----------------- -----------------
Other accrued taxes 6,517 8,957
----------------- -----------------
Accrued payroll and benefit costs 22,121 37,350
----------------- -----------------
Dividends payable --- 4,915
----------------- -----------------
Other payables and accruals 25,906 8,982
----------------- -----------------
Total current liabilities 473,398 481,966
----------------- -----------------
POSTRETIREMENT BENEFITS LIABILITY 76,452 75,900
----------------- -----------------
LONG TERM DEBT 149,785 91,257
----------------- -----------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
June 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> <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> <C> <C>
Issued to voting trustees 4,606,060 4,228,414
------------- -------------
Issued to shareholders 246,463 244,315
------------- -------------
In treasury, at cost (126,664) (12,431)
------------- -------------
Outstanding 4,725,859 4,460,298 94,517 89,206
------------- ------------- ----------------- -----------------
Common shares subscribed 1,468 9,008
----------------- -----------------
Retained earnings 102,103 84,801
----------------- -----------------
Less-Subscriptions receivable 1,412 9,008
----------------- -----------------
Total shareholders' equity 196,820 174,157
----------------- -----------------
$896,455 $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
June 30, 1996 June 30, 1995
--------------- ---------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $756,826 $694,429
--------------- ---------------
Less - Cash discounts 2,383 2,403
--------------- ---------------
NET SALES 754,443 692,026
--------------- ---------------
COST OF MERCHANDISE SOLD 624,393 570,595
--------------- ---------------
Gross margin 130,050 121,431
--------------- ---------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 105,708 100,103
--------------- ---------------
DEPRECIATION AND AMORTIZATION 4,840 4,307
--------------- ---------------
Income from operations 19,502 17,021
--------------- ---------------
OTHER INCOME, net 4,680 256
--------------- ---------------
INTEREST EXPENSE 4,300 4,326
--------------- ---------------
Income before provision for income taxes 19,882 12,951
--------------- ---------------
PROVISION FOR INCOME TAXES
Current 8,437 5,525
--------------- ---------------
Deferred (251) 76
--------------- ---------------
Total provision for income taxes 8,186 5,601
--------------- ---------------
NET INCOME 11,696 7,350
=============== ===============
NET INCOME PER SHARE OF COMMON STOCK $ 2.46 $ 1.62
=============== ===============
DIVIDENDS
Preferred - $.25 per share $ 2 $ 2
--------------- ---------------
Common - $.30 per share 1,419 1,359
--------------- ---------------
$ 1,421 $ 1,361
=============== ===============
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
4
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
SIX MONTHS ENDED
June 30, 1996 June 30, 1995
----------------- -----------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $1,450,964 $1,323,980
----------------- -----------------
Less - Cash discounts 4,590 4,626
----------------- -----------------
NET SALES 1,446,374 1,319,354
----------------- -----------------
COST OF MERCHANDISE SOLD 1,191,857 1,082,211
----------------- -----------------
Gross margin 254,517 237,143
----------------- -----------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 208,002 193,176
----------------- -----------------
DEPRECIATION AND AMORTIZATION 9,471 8,685
----------------- -----------------
Income from operations 37,044 35,282
----------------- -----------------
OTHER INCOME, net 5,577 1,189
----------------- -----------------
INTEREST EXPENSE 8,391 8,116
----------------- -----------------
Income before provision for income taxes 34,230 28,355
----------------- -----------------
PROVISION FOR INCOME TAXES
Current 14,596 12,528
----------------- -----------------
Deferred (527) (314)
----------------- -----------------
Total provision for income taxes 14,069 12,214
----------------- -----------------
NET INCOME 20,161 16,141
================= =================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 4.27 $ 3.54
================= =================
DIVIDENDS
Preferred - $.50 per share $ 4 $ 4
----------------- -----------------
Common - $.60 per share 2,855 2,729
----------------- -----------------
$ 2,859 $ 2,733
================= =================
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>
SIX MONTHS ENDED JUNE 30,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 20,161 $ 16,141
------------ ------------
Adjustments to reconcile net income
to cash provided (used) by operations:
Depreciation and amortization 9,471 8,685
------------ ------------
Deferred income taxes (527) (314)
------------ ------------
Gain on sale of property (3,879) ---
------------ ------------
Changes in assets and liabilities:
Trade receivables (7,556) (26,110)
------------ ------------
Merchandise inventory (24,423) (54,199)
------------ ------------
Other current assets 581 (600)
------------ ------------
Other assets (1,146) (1,359)
------------ ------------
Trade accounts payable 29,726 25,193
------------ ------------
Accrued payroll and benefit costs (15,229) (13,057)
------------ ------------
Other accrued liabilities 18,350 19,224
------------ ------------
5,368 (42,537)
------------ ------------
Net cash provided (used) by operations 25,529 (26,396)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 5,679 239
------------ ------------
Capital expenditures for property (25,374) (11,632)
------------ ------------
Net cash used by investing activities (19,695) (11,393)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable to banks (36,787) 54,780
------------ ------------
Proceeds from long-term debt 65,000 14,000
------------ ------------
Repayment of long-term debt (8,553) (6,498)
------------ ------------
Principal payments under capital equipment leases (1,580) (1,114)
------------ ------------
Sale of common stock 7,652 201
------------ ------------
Purchase of treasury stock (2,291) (1,566)
------------ ------------
Dividends paid (7,774) (7,534)
------------ ------------
Net cash flow provided by financing activities 15,667 52,269
------------ ------------
NET INCREASE IN CASH 21,501 14,480
------------ ------------
CASH, BEGINNING OF YEAR 21,033 17,144
------------ ------------
CASH, END OF SECOND QUARTER $ 42,534 $ 31,624
============ ============
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>
Six Months 1996 Six Months 1995
------------------- -------------------
<S> <C> <C>
Earnings for Six Months $ 20,161 $ 16,141
------------------- -------------------
Dividends on Preferred Stock 4 4
------------------- -------------------
Available for Common Stock $ 20,157 $ 16,137
------------------- -------------------
Average Common Shares Outstanding 4,718,203 4,557,639
------------------- -------------------
Earnings Per Share $ 4.27 $ 3.54
------------------- -------------------
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
RESULTS OF OPERATIONS
- ---------------------
Net sales in the first six months of 1996 were 9.6% higher than in
the first six 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 six months of 1996 increased $17,374 (7.3%)
compared to the first six 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
six months of 1996 compared to the first six months of 1995 occurred largely
because of adjustments in personnel complement and adjustments in compensation
and related expenses.
Interest expense increased in the first six months of 1996 compared to
the first six months of 1995 primarily due to increased levels of borrowing
incurred to finance higher aggregate levels of inventory and receivables.
Other income in the first six months of 1996 included gains on sale of
property of $3,879.
The combined effect of the increases in gross margin and other income,
together with increases in selling, general and administrative expenses,
interest expense and depreciation and amortization, resulted in an increase
in pretax earnings of $5,875 in the first six 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
June 30, 1996, current assets exceeded current liabilities by $217,348, up
$61,467 from December 31, 1995. The current assets at June 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 June 30, 1996, the Company had available to it unused lines of credit
amounting to $255,500. These lines are available to meet short-term cash
requirements of the Company. Bank borrowings outstanding during 1996 through
June 30 ranged from a minimum of $57,000 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 June 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. During the
first six months of 1996, cash provided by operations amounted to $25,529
compared to $26,396 cash used by operations in the first six months of 1995.
Cash provided from the sale of common stock and proceeds received on stock
subscriptions amounted to $7,652 in the first six months of 1996. Additional
cash of approximately $249 will be provided in the remainder of 1996 as a
result of payments to be made for stock subscribed to by employees under the
1995 Common Stock Purchase Plan.
9
<PAGE> 10
PART II: OTHER INFORMATION
----------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders occurred on June 13, 1996.
All of the nominees named in the Information Statement filed with
the Commission and mailed to shareholders in accordance with the
provisions of Regulation 14-C were elected. The names of the
nominees elected follow; all received 4,516,686 votes, no negative
votes were cast.
1. A. A. Brzoski
2. T. S. Gurganous
3. C. L. Hall
4. R. H. Haney
5. G. W. Harper
6. G. J. McCrea
7. R. L. Mygrant
8. R. D. Offenbacher
9. I. Orloff
10. R. A. Reynolds
11. J. R. Seaton
12. G. S. Tulloch, Jr.
13. C. R. Udell
14. J. F. Van Pelt
15. J. W. Wolf
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished in accordance with provisions of Item
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.
August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 42,534
<SECURITIES> 0
<RECEIVABLES> 351,788
<ALLOWANCES> 0
<INVENTORY> 284,205
<CURRENT-ASSETS> 690,746
<PP&E> 295,512
<DEPRECIATION> 116,776
<TOTAL-ASSETS> 896,455
<CURRENT-LIABILITIES> 473,398
<BONDS> 149,785
<COMMON> 94,517
0
144
<OTHER-SE> 102,159
<TOTAL-LIABILITY-AND-EQUITY> 896,455
<SALES> 1,446,374
<TOTAL-REVENUES> 1,446,374
<CGS> 1,191,857
<TOTAL-COSTS> 1,191,857
<OTHER-EXPENSES> 217,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,391
<INCOME-PRETAX> 34,230
<INCOME-TAX> 14,069
<INCOME-CONTINUING> 20,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,161
<EPS-PRIMARY> 4.27
<EPS-DILUTED> 4.27
</TABLE>
|
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