|
|
|
|
|
|
|
|
|
|
|
|
|
<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, 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 (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 July 31, 1997: 4,794,355
-----------------
(Number of Shares)
<PAGE> 2
<TABLE>
PART I
------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
-------------------- ---------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 52,212 $ 13,820
-------------------- ---------------------
Trade receivables 381,444 342,323
-------------------- ---------------------
Merchandise inventory 367,397 301,835
-------------------- ---------------------
Other current assets 13,361 13,245
-------------------- ---------------------
Total current assets 814,414 671,223
-------------------- ---------------------
PROPERTY
Land 22,352 21,894
-------------------- ---------------------
Buildings and permanent fixtures 271,199 260,864
-------------------- ---------------------
Capital equipment leases 26,138 26,138
-------------------- ---------------------
Less-Accumulated depreciation 128,843 122,444
-------------------- ---------------------
Net property 190,846 186,452
-------------------- ---------------------
DEFERRED FEDERAL INCOME TAXES 12,074 11,793
-------------------- ---------------------
OTHER ASSETS 9,946 12,168
-------------------- ---------------------
$ 1,027,280 $ $881,636
==================== =====================
CURRENT LIABILITIES
Notes payable to banks $ 129,186 $ 68,282
-------------------- ---------------------
Current portion of long-term debt 15,681 15,075
-------------------- ---------------------
Trade accounts payable 358,139 273,878
-------------------- ---------------------
Income taxes 4,969 --
-------------------- ---------------------
Other accrued taxes 7,694 9,164
-------------------- ---------------------
Accrued payroll and benefit costs 24,564 35,923
-------------------- ---------------------
Dividends payable -- 5,214
-------------------- ---------------------
Other payables and accruals 32,331 31,703
-------------------- ---------------------
Total current liabilities 572,564 439,239
-------------------- ---------------------
POSTRETIREMENT BENEFITS LIABILITY 77,502 77,004
-------------------- ---------------------
LONG TERM DEBT 145,006 151,659
-------------------- ---------------------
2
<PAGE> 3
<CAPTION>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
JUNE 30, 1997 DECEMBER 31, 1996
-------------------- ---------------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
SHARES
------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Issued to shareholders 7,141 7,141
----------- -----------
In treasury, at cost (576) --
----------- -----------
Outstanding 6,565 7,141 131 143
----------- ----------- -------------------- ---------------------
<CAPTION>
Common:
------
Stated value $20 per share
Authorized 7,500,000 shares
SHARES
------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Issued to voting trustees 4,713,697 4,684,709
----------- -----------
Issued to shareholders 252,161 251,375
----------- -----------
In treasury, at cost (156,102) (20,035)
----------- -----------
Outstanding 4,809,756 4,916,049 96,195 98,321
----------- ----------- -------------------- ---------------------
Common shares subscribed 795 1,110
-------------------- ---------------------
Retained earnings 135,838 115,218
-------------------- ---------------------
Less-Subscriptions receivable 751 1,058
-------------------- ---------------------
TOTAL SHAREHOLDERS' EQUITY 232,208 213,734
-------------------- ---------------------
$ 1,027,280 $ 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
JUNE 30, 1997 JUNE 30, 1996
--------------- ---------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 849,789 $ 756,826
--------------- ---------------
Less - Cash discounts 2,712 2,383
--------------- ---------------
NET SALES 847,077 754,443
--------------- ---------------
COST OF MERCHANDISE SOLD 695,941 624,393
--------------- ---------------
Gross margin 151,136 130,050
--------------- ---------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 119,568 105,708
--------------- ---------------
DEPRECIATION AND AMORTIZATION 5,622 4,840
--------------- ---------------
Income from operations 25,946 19,502
--------------- ---------------
OTHER INCOME, net 1,440 4,680
--------------- ---------------
INTEREST EXPENSE 5,050 4,300
--------------- ---------------
Income before provision for income taxes 22,336 19,882
--------------- ---------------
PROVISION FOR INCOME TAXES
Current 9,637 8,437
--------------- ---------------
Deferred (435) (251)
--------------- ---------------
Total provision for income taxes 9,202 8,186
--------------- ---------------
NET INCOME 13,134 11,696
=============== ===============
NET INCOME PER SHARE OF COMMON STOCK $ 2.73 $ 2.34
=============== ===============
DIVIDENDS
Preferred - $.25 per share $ 1 $ 2
--------------- ---------------
Common - $.30 per share 1,444 1,419
--------------- ---------------
$ 1,445 $ 1,421
=============== ===============
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, 1997 JUNE 30, 1996
---------------- ----------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $ 1,582,588 $ 1,450,964
---------------- ----------------
Less - Cash discounts 5,095 4,590
---------------- ----------------
NET SALES 1,577,493 1,446,374
---------------- ----------------
COST OF MERCHANDISE SOLD 1,290,051 1,191,857
---------------- ----------------
Gross margin 287,442 254,517
---------------- ----------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 230,169 208,002
---------------- ----------------
DEPRECIATION AND AMORTIZATION 10,941 9,471
---------------- ----------------
Income from operations 46,332 37,044
---------------- ----------------
OTHER INCOME, net 3,269 5,577
---------------- ----------------
INTEREST EXPENSE 9,637 8,391
---------------- ----------------
Income before provision for income taxes 39,964 34,230
---------------- ----------------
PROVISION FOR INCOME TAXES
Current 16,716 14,596
---------------- ----------------
Deferred (281) (527)
---------------- ----------------
Total provision for income taxes 16,435 14,069
---------------- ----------------
NET INCOME 23,529 20,161
================ ================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 4.85 $ 4.07
================ ================
DIVIDENDS
Preferred - $.50 per share $ 3 $ 4
---------------- ----------------
Common - $.60 per share 2,906 2,855
---------------- ----------------
$ 2,909 $ 2,859
================ ================
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,
1997 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 23,529 $ 20,161
-------------- --------------
Adjustments to reconcile net income
to cash provided by operations:
Depreciation and amortization 10,941 9,471
-------------- --------------
Deferred income taxes (281) (527)
-------------- --------------
Gain on sale of property (1,340) (3,879)
-------------- --------------
Changes in assets and liabilities:
Trade receivables (29,106) (7,556)
-------------- --------------
Merchandise inventory (58,269) (24,423)
-------------- --------------
Other current assets 231 581
-------------- --------------
Other assets (3,094) (1,146)
-------------- --------------
Trade accounts payable 80,002 29,726
-------------- --------------
Accrued payroll and benefit costs (11,359) (15,229)
-------------- --------------
Other accrued liabilities 1,842 18,350
-------------- --------------
(10,433) 5,368
-------------- --------------
Net cash provided by operations 13,096 25,529
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 2,870 5,679
------------- --------------
Capital expenditures for property (11,261) (25,374)
------------- --------------
Net cash used by investing activities (8,391) (19,695)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in notes payable to banks 54,227 (36,787)
-------------- --------------
Proceeds from long-term debt -- 65,000
-------------- --------------
Repayment of long-term debt (8,451) (8,553)
-------------- --------------
Principal payments under capital equipment leases (1,820) (1,580)
-------------- --------------
Sale of common stock 587 7,652
-------------- --------------
Purchase of treasury stock (2,733) (2,291)
-------------- --------------
Dividends paid (8,123) (7,774)
-------------- --------------
Net cash flow provided by financing activities 33,687 15,667
-------------- --------------
NET INCREASE IN CASH 38,392 21,501
-------------- --------------
CASH, BEGINNING OF YEAR 13,820 21,033
-------------- --------------
CASH, END OF SECOND QUARTER $ 52,212 $ 42,534
============== ==============
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 1997 SIX MONTHS 1996
---------------- ------------------
<S> <C> <C>
Earnings for Six Months $ 23,529 $ 20,161
---------------- ------------------
Dividends on Preferred Stock 3 4
---------------- ------------------
Available for Common Stock $ 23,526 $ 20,157
---------------- ------------------
Average Common Shares Outstanding 4,850,777 4,954,113 <F*>
---------------- ------------------
Earnings Per Share $ 4.85 $ 4.07 <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 4,718,203.
</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.
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 1997 were 9.1% higher than in the
first six 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 six months of 1997 increased $32,925 (12.9%)
compared to the first six 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 six months of 1997 compared to the first six months of 1996 occurred
largely because of adjustments in personnel complement and adjustments in
compensation and related expenses.
Interest expense increased in the first six months of 1997 compared to
the first six 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 six months of 1997 included gains on sale of
property of $1,340.
The combined effect of the increase in gross margin and the decrease in
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 $5,734 in the first six months of 1997 compared
to the same period in 1996.
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, 1997, current assets exceeded current liabilities by $241,850, up $9,866
from December 31, 1996. The current assets at June 30, 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 June 30, 1997, the Company had available to it unused lines of credit
amounting to $204,000. These lines are available to meet short-term cash
requirements of the Company. Bank borrowings outstanding during 1997 through
June 30 ranged from a minimum of $65,000 to a maximum of $139,000.
The Company has funded its capital requirements from operations, stock
issuances to its employees and long term debt. During the first six months of
1997, cash provided by operations amounted to $13,096 compared to $25,529 cash
provided by operations in the first six months of 1996. Cash provided from the
sale of common stock and proceeds received on stock subscriptions amounted to
$587 in the first six months of 1997. Additional cash of approximately $250
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.
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 12, 1997. 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
4,507,072 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
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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 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
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 52,212
<SECURITIES> 0
<RECEIVABLES> 381,444
<ALLOWANCES> 0
<INVENTORY> 367,397
<CURRENT-ASSETS> 814,414
<PP&E> 319,689
<DEPRECIATION> 128,843
<TOTAL-ASSETS> 1,027,280
<CURRENT-LIABILITIES> 572,564
<BONDS> 145,006
<COMMON> 96,195
0
131
<OTHER-SE> 135,882
<TOTAL-LIABILITY-AND-EQUITY> 1,027,280
<SALES> 1,577,493
<TOTAL-REVENUES> 1,577,493
<CGS> 1,290,051
<TOTAL-COSTS> 1,290,051
<OTHER-EXPENSES> 241,110
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,637
<INCOME-PRETAX> 39,964
<INCOME-TAX> 16,435
<INCOME-CONTINUING> 23,529
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,529
<EPS-PRIMARY> 4.85
<EPS-DILUTED> 4.85
</TABLE>
|
|