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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 March 31, 1997
-----------------------------
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
incorporation or organization) (I.R.S. Employer 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 April 30, 1997: 4,809,396
----------------------
(Number of Shares)
<PAGE> 2
<TABLE>
PART I
------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 43,734 $ 13,820
--------------- ---------------
Trade receivables 335,392 342,323
--------------- ---------------
Merchandise inventory 350,118 301,835
--------------- ---------------
Other current assets 13,175 13,245
--------------- ---------------
Total current assets 742,419 671,223
--------------- ---------------
PROPERTY
Land 21,955 21,894
--------------- ---------------
Buildings and permanent fixtures 258,009 260,864
--------------- ---------------
Capital equipment leases 26,138 26,138
--------------- ---------------
Less-Accumulated depreciation 120,921 122,444
--------------- ---------------
Net property 185,181 186,452
--------------- ---------------
DEFERRED FEDERAL INCOME TAXES 11,639 11,793
--------------- ---------------
OTHER ASSETS 12,882 12,168
--------------- ---------------
$ 952,121 $ 881,636
=============== ===============
CURRENT LIABILITIES
Notes payable to banks $ 133,066 $ 68,282
--------------- ---------------
Current portion of long-term debt 15,234 15,075
--------------- ---------------
Trade accounts payable 299,483 273,878
--------------- ---------------
Income taxes 3,064 ---
--------------- ---------------
Other accrued taxes 8,859 9,164
--------------- ---------------
Accrued payroll and benefit costs 18,008 35,923
--------------- ---------------
Dividends payable --- 5,214
--------------- ---------------
Other payables and accruals 26,375 31,703
--------------- ---------------
Total current liabilities 504,089 439,239
--------------- ---------------
POSTRETIREMENT BENEFITS LIABILITY 77,253 77,004
--------------- ---------------
LONG TERM DEBT 149,216 151,659
--------------- ---------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
<CAPTION>
SHARES
------
1997 1996
---- ----
<S> <C> <C>
Issued to shareholders 7,141 7,141
------------- -------------
In treasury, at cost (349) ---
------------- -------------
Outstanding 6,792 7,141 136 143
------------- ------------- --------------- ---------------
Common:
------
Stated value $20 per share
Authorized 7,500,000 shares
<CAPTION>
SHARES
------
1997 1996
---- ----
<S> <C> <C>
Issued to voting trustees 4,694,088 4,684,709
------------- -------------
Issued to shareholders 251,396 251,375
------------- -------------
In treasury, at cost (83,913) (20,035)
------------- -------------
Outstanding 4,861,571 4,916,049 97,231 98,321
------------- ------------- --------------- ---------------
Common shares subscribed 917 1,110
--------------- ---------------
Retained earnings 124,149 115,218
--------------- ---------------
Less-Subscriptions receivable 870 1,058
--------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 221,563 213,734
--------------- ---------------
$ 952,121 $ 881,636
=============== ===============
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
MARCH 31, 1997 MARCH 31, 1996
------------------ ------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 732,799 $ 694,138
------------------ ------------------
Less - Cash discounts 2,383 2,207
------------------ ------------------
NET SALES 730,416 691,931
------------------ ------------------
COST OF MERCHANDISE SOLD 594,110 567,464
------------------ ------------------
Gross margin 136,306 124,467
------------------ ------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 110,601 102,294
------------------ ------------------
DEPRECIATION AND AMORTIZATION 5,319 4,631
------------------ ------------------
Income from operations 20,386 17,542
------------------ ------------------
OTHER INCOME, net 1,829 897
------------------ ------------------
INTEREST EXPENSE 4,587 4,091
------------------ ------------------
Income before provision for income taxes 17,628 14,348
------------------ ------------------
PROVISION FOR INCOME TAXES
Current 7,079 6,159
------------------ ------------------
Deferred 154 (276)
------------------ ------------------
Total provision for income taxes 7,233 5,883
------------------ ------------------
NET INCOME $ 10,395 $ 8,465
================== ==================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 2.13 $ 1.72
================== ==================
DIVIDENDS
Preferred - $.25 per share $ 2 $ 2
------------------ ------------------
Common - $.30 per share 1,462 1,436
------------------ ------------------
$ 1,464 $ 1,438
================== ==================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
4
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 10,395 $ 8,465
-------------- ---------------
Adjustments to reconcile net income
to cash provided (used) by operations:
Depreciation and amortization 5,319 4,631
-------------- ---------------
Deferred income taxes 154 (276)
-------------- ---------------
Gain on sale of property (950) ---
-------------- ---------------
Changes in assets and liabilities:
Trade receivables 6,931 21,335
-------------- ---------------
Merchandise inventory (48,283) (26,556)
-------------- ---------------
Other current assets 70 118
-------------- ---------------
Other assets (714) (682)
-------------- ---------------
Trade accounts payable 25,605 11,035
-------------- ---------------
Accrued payroll and benefit costs (17,915) (20,748)
-------------- ---------------
Other accrued liabilities (2,320) 17,600
-------------- ---------------
(32,103) 6,457
-------------- ---------------
Net cash provided (used) by operations (21,708) 14,922
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 1,655 564
-------------- ---------------
Capital expenditures for property (4,753) (7,471)
-------------- ---------------
Net cash used by investing activities (3,098) (6,907)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in notes payable to banks 64,784 10,141
-------------- ---------------
Proceeds from long-term debt --- ---
-------------- ---------------
Repayment of long-term debt (954) (917)
-------------- ---------------
Principal payments under capital equipment leases (1,330) (1,041)
-------------- ---------------
Sale of common stock 183 7,497
-------------- ---------------
Purchase of treasury stock (1,285) (1,115)
-------------- ---------------
Dividends paid (6,678) (6,353)
-------------- ---------------
Net cash flow provided by financing activities 54,720 8,212
-------------- ---------------
NET INCREASE IN CASH 29,914 16,227
-------------- ---------------
CASH, BEGINNING OF YEAR 13,820 21,033
-------------- ---------------
CASH, END OF FIRST QUARTER $ 43,734 $ 37,260
============== ===============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
5
<PAGE> 6
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>
THREE MONTHS 1997 THREE MONTHS 1996
-------------------- ---------------------
<S> <C> <C>
Earnings for Three Months $ 10,395 $ 8,465
-------------------- ---------------------
Dividends on Preferred Stock 2 2
-------------------- ---------------------
Available for Common Stock $ 10,393 $ 8,463
-------------------- ---------------------
Average Common Shares Outstanding 4,885,827 4,931,136 <F*>
-------------------- ---------------------
Earnings Per Share $ 2.13 $ 1.72 <F*>
-------------------- ---------------------
<FN>
<F*> Restated for the declaration of a 5% stock dividend in 1996. Prior to
adjusting for the stock dividend, the average common shares outstanding
were 4,696,320.
</TABLE>
Note 3
- ------
In May, 1997, the Company purchased additional shares of Harris & Roome
Supply Limited (H&R) at a purchase price of $2,261 to bring its ownership
percentage to 78% of the outstanding shares of H&R. The effective date of
this transaction was February 1, 1997. The sales, income and total assets
of H&R are not material to the Company.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION & ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(Dollars Stated in Thousands)
RESULTS OF OPERATIONS
- ---------------------
Net sales in the first three months of 1997 were 5.6% higher than in
the first three months of 1996. The higher net sales resulted from
improvements in the market sectors of the economy in which the Company
operates.
Gross margin in the first three months of 1997 increased $11,839 (9.5%)
compared to the first three months of 1996 primarily due to increased sales
in the electrical and communication markets.
The increase in selling, general and administrative expenses in the
first three months of 1997 compared to the first three months of 1996
occurred largely because of adjustments in personnel complement and
adjustments in compensation and related expenses.
Interest expense increased in the first three months of 1997 compared
to the first three months of 1996 primarily due to increased levels of
borrowing incurred to finance higher aggregate levels of inventory and
receivables.
Other income in the first three months of 1997 included gains on sale
of property of $950.
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 $3,280 in the first three months of 1997 compared to
the same period in 1996.
7
<PAGE> 8
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
March 31, 1997, current assets exceeded current liabilities by $238,330, up
$6,346 from December 31, 1996. The current assets at March 31, 1997 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 March 31, 1997, the Company had available to it unused lines of
credit amounting to $220,500. These lines are available to meet short-term
cash requirements of the Company. Bank borrowings outstanding during 1997
through March 31 ranged from a minimum of $65,000 to a maximum of $133,066.
The Company has funded its capital requirements from operations, stock
issuances to its employees and long term debt. During the first three months
of 1997, cash used by operations amounted to $21,708 compared to $14,922 cash
provided by operations in the first three months of 1996. Cash provided from
the sale of common stock and proceeds received on stock subscriptions
amounted to $183 in the first three months of 1997. Additional cash of
approximately $366 will be provided in the remainder of 1997 as a result of
payments to be made for stock subscribed to by employees under the 1996
Common Stock Purchase Plan.
8
<PAGE> 9
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
No reports on Form 8-K have been filed during the quarter
for which this report is filed.
9
<PAGE> 10
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.
May 13, 1997 GRAYBAR ELECTRIC COMPANY, INC.
- ----------------------
(Date)
/S/ C. L. HALL
------------------------------------------------
C. L. HALL
PRESIDENT
/S/ J. R. SEATON
------------------------------------------------
J. R. SEATON
VICE PRESIDENT
AND COMPTROLLER
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 43,734
<SECURITIES> 0
<RECEIVABLES> 335,392
<ALLOWANCES> 0
<INVENTORY> 350,118
<CURRENT-ASSETS> 742,419
<PP&E> 306,102
<DEPRECIATION> 120,921
<TOTAL-ASSETS> 952,121
<CURRENT-LIABILITIES> 504,089
<BONDS> 149,216
<COMMON> 97,231
0
136
<OTHER-SE> 124,196
<TOTAL-LIABILITY-AND-EQUITY> 952,121
<SALES> 730,416
<TOTAL-REVENUES> 730,416
<CGS> 594,110
<TOTAL-COSTS> 594,110
<OTHER-EXPENSES> 115,920
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,587
<INCOME-PRETAX> 17,628
<INCOME-TAX> 7,233
<INCOME-CONTINUING> 10,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,395
<EPS-PRIMARY> 2.13
<EPS-DILUTED> 2.13
</TABLE>
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