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Previous: FIDELITY COMMONWEALTH TRUST, 13F-E, 1998-05-14 |
Next: CENTRAL RESERVE LIFE CORP, 10-Q, 1998-05-14 |
<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, 1998
------------------------
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 April 30, 1998: 5,090,583
------------------
(Number of Shares)
<PAGE> 2
PART I
------
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
--------------------- ---------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 49,223 $ 18,523
--------------------- ---------------------
Trade receivables 427,057 402,455
--------------------- ---------------------
Merchandise inventory 435,139 389,314
--------------------- ---------------------
Other current assets 13,602 13,748
--------------------- ---------------------
Total current assets 925,021 824,040
--------------------- ---------------------
PROPERTY
Land 22,703 22,868
--------------------- ---------------------
Buildings and permanent fixtures 284,676 281,508
--------------------- ---------------------
Capital equipment leases 36,101 26,138
--------------------- ---------------------
Less-Accumulated depreciation 140,732 136,485
--------------------- ---------------------
Net property 202,748 194,029
--------------------- ---------------------
DEFERRED FEDERAL INCOME TAXES 9,424 9,639
--------------------- ---------------------
OTHER ASSETS 21,332 24,113
--------------------- ---------------------
$1,158,525 $1,051,821
===================== =====================
CURRENT LIABILITIES
Notes payable to banks $ 211,655 $ 136,925
--------------------- ---------------------
Current portion of long-term debt 20,042 15,059
--------------------- ---------------------
Trade accounts payable 343,434 326,969
--------------------- ---------------------
Income taxes 11,386 ---
--------------------- ---------------------
Other accrued taxes 10,764 10,663
--------------------- ---------------------
Accrued payroll and benefit costs 19,367 41,924
--------------------- ---------------------
Dividends payable --- 5,246
--------------------- ---------------------
Other payables and accruals 33,254 44,856
--------------------- ---------------------
Total current liabilities 649,902 581,642
--------------------- ---------------------
POSTRETIREMENT BENEFITS LIABILITY 77,402 77,300
--------------------- ---------------------
LONG TERM DEBT 166,689 139,748
--------------------- ---------------------
2
<PAGE> 3
<CAPTION>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
MARCH 31, 1998 DECEMBER 31, 1997
--------------------- ---------------------
<S> <C> <C>
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
<CAPTION>
SHARES
------
1998 1997
---- ----
<S> <C> <C>
Issued to shareholders 6,009 6,009
------------- -------------
In treasury, at cost (500) (58)
------------- -------------
Outstanding 5,509 5,951 110 119
------------- ------------- --------------------- ---------------------
Common:
------
Stated value $20 per share
Authorized 7,500,000 shares
<CAPTION>
SHARES
------
1998 1997
---- ----
<S> <C> <C>
Issued to voting trustees 4,887,693 4,883,162
------------- -------------
Issued to shareholders 323,568 323,434
------------- -------------
In treasury, at cost (99,106) (19,124)
------------- -------------
Outstanding 5,112,155 5,187,472 102,243 103,749
------------- ------------- --------------------- ---------------------
Advance payments on
subscriptions to common
stock 36 37
--------------------- ---------------------
Retained earnings 162,239 149,226
--------------------- ---------------------
Accumulated other comprehensive income (Note 3) (96) ---
--------------------- ---------------------
TOTAL SHAREHOLDERS' EQUITY 264,532 253,131
--------------------- ---------------------
$1,158,525 $1,051,821
===================== =====================
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, 1998 MARCH 31, 1997
------------------ ------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $871,855 $732,799
------------------ ------------------
Less - Cash discounts 2,524 2,383
------------------ ------------------
NET SALES 869,331 730,416
------------------ ------------------
COST OF MERCHANDISE SOLD 710,189 594,110
------------------ ------------------
Gross margin 159,142 136,306
------------------ ------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 124,366 110,601
------------------ ------------------
DEPRECIATION AND AMORTIZATION 5,649 5,319
------------------ ------------------
Income from operations 29,127 20,386
------------------ ------------------
OTHER INCOME, net 1,753 1,829
------------------ ------------------
INTEREST EXPENSE 6,143 4,587
------------------ ------------------
Income before provision for income taxes 24,737 17,628
------------------ ------------------
PROVISION FOR INCOME TAXES
Current 9,973 7,079
------------------ ------------------
Deferred 213 154
------------------ ------------------
Total provision for income taxes 10,186 7,233
------------------ ------------------
NET INCOME $ 14,551 $ 10,395
================== ==================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 2.83 $ 1.93
================== ==================
DIVIDENDS
Preferred - $.25 per share $ 1 $ 2
------------------ ------------------
Common - $.30 per share 1,537 1,462
------------------ ------------------
$ 1,538 $ 1,464
================== ==================
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,
1998 1997
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 14,551 $ 10,395
---------------- ----------------
Adjustments to reconcile net income
to cash used by operations:
Depreciation and amortization 5,649 5,319
---------------- ----------------
Deferred income taxes 213 154
---------------- ----------------
Gain on sale of property (554) (950)
---------------- ----------------
Changes in assets and liabilities:
Trade receivables (24,602) 6,931
---------------- ----------------
Merchandise inventory (45,825) (48,283)
---------------- ----------------
Other current assets 146 70
---------------- ----------------
Other assets 2,781 (714)
---------------- ----------------
Trade accounts payable 16,465 25,605
---------------- ----------------
Accrued payroll and benefit costs (22,557) (17,915)
---------------- ----------------
Other accrued liabilities (11) (2,320)
---------------- ----------------
(68,295) (32,103)
---------------- ----------------
Net cash used by operations (53,744) (21,708)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 1,293 1,655
---------------- ----------------
Capital expenditures for property (5,145) (4,753)
---------------- ----------------
Net cash used by investing activities (3,852) (3,098)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in notes payable to banks 74,730 64,784
---------------- ----------------
Proceeds from long-term debt 25,000 ---
---------------- ----------------
Repayment of long-term debt (1,637) (954)
---------------- ----------------
Principal payments under capital equipment leases (1,401) (1,330)
---------------- ----------------
Sale of common stock 92 183
---------------- ----------------
Purchase of treasury stock (1,608) (1,285)
---------------- ----------------
Dividends paid (6,784) (6,678)
---------------- ----------------
Net cash flow provided by financing activities 88,392 54,720
---------------- ----------------
EFFECT OF CURRENCY TRANSLATION ADJUSTMENTS
ON CASH (96) ---
---------------- ----------------
NET INCREASE IN CASH 30,700 29,914
---------------- ----------------
CASH, BEGINNING OF YEAR 18,523 13,820
---------------- ----------------
CASH, END OF FIRST QUARTER $ 49,223 $ 43,734
================ ================
See accompanying Notes to Consolidated Financial Statements
</TABLE>
5
<PAGE> 6
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
----------------------------------------------------------
FOR THE QUARTERS ENDED
----------------------
MARCH 31, 1998 AND 1997
-----------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
ACCUMULATED
OTHER
COMPRE-
COMMON PREFERRED RETAINED HENSIVE
STOCK STOCK EARNINGS INCOME TOTAL
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
December 31, 1996 $98,373 $143 $115,218 $213,734
------------
Comprehensive Income:
Net Income 10,395 10,395
Currency Translation Adjustments,
Net of Tax
------------
Total Comprehensive Income 10,395
------------
Stock Issued 183 183
Stock Redeemed (1,278) (7) (1,285)
Dividends Declared (1,464) (1,464)
------------- ------------ ------------ ------------ ------------
March 31, 1997 $97,278 $136 $124,149 $221,563
============= ============ ============ ============ ============
<CAPTION>
ACCUMULATED
OTHER
COMPRE-
COMMON PREFERRED RETAINED HENSIVE
STOCK STOCK EARNINGS INCOME TOTAL
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
December 31, 1997 $103,786 $119 $149,226 $253,131
------------
Comprehensive Income:
Net Income 14,551 14,551
Currency Translation Adjustments,
Net of Tax $(96) (96)
------------
Total Comprehensive Income 14,455
------------
Stock Issued 92 92
Stock Redeemed (1,599) (9) (1,608)
Dividends Declared (1,538) (1,538)
------------ ------------ ------------ ------------ ------------
March 31, 1998 $102,279 $110 $162,239 $(96) $264,532
============ ============ ============ ============ ============
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>
THREE MONTHS 1998 THREE MONTHS 1997
--------------------- ---------------------
<S> <C> <C>
Earnings for Three Months $ 14,551 $ 10,395
--------------------- ---------------------
Dividends on Preferred Stock 1 2
--------------------- ---------------------
Available for Common Stock $ 14,550 $ 10,393
--------------------- ---------------------
Average Common Shares Outstanding 5,145,014 5,374,410<F*>
--------------------- ---------------------
Earnings Per Share $ 2.83 $ 1.93<F*>
--------------------- ---------------------
<FN>
<F*> Restated for the declaration of a 10% stock dividend in 1997. Prior to
adjusting for the stock dividend, the average common shares outstanding
were 4,885,827.
</TABLE>
Note 3
- ------
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
Comprehensive income is reported in the Consolidated Statements of Changes in
Shareholders' Equity.
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 three months of 1998 were 19% higher than in the
first three months of 1997. 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 1998 increased $22,836
(16.8%) compared to the first three months of 1997 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 1998 compared to the first three months of 1997
occurred largely because of adjustments in personnel complement and
adjustments in compensation and related expenses.
Interest expense increased in the first three months of 1998 compared
to the first three months of 1997 primarily due to increased levels of
borrowing incurred to finance higher aggregate levels of inventory and
receivables. Interest rates on 1998 short-term borrowings have been slightly
higher than for the same period in 1997.
Other income in the first three months of 1998 includes gains on sale
of property of $554.
The combined effect of the increase in gross margin, together with
increases in selling, general and administrative expenses, interest expense
and depreciation and amortization, resulted in an increase in pretax earnings
of $7,109 in the first three months of 1998 compared to the same period in
1997.
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
March 31, 1998, current assets exceeded current liabilities by $275,119, up
$32,721 from December 31, 1997. The current assets at March 31, 1998 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, 1998, the Company had available to it unused lines of
credit amounting to $155,000. These lines are available to meet short-term
cash requirements of the Company. Bank borrowings outstanding during 1998
through March 31 ranged from a minimum of $110,000 to a maximum of $211,655.
The Company has funded its capital requirements from operations, stock
issuances to its employees and long term debt. In January, 1998, the Company
received the proceeds from a seven-year note for $25,000 at a fixed interest
rate of 6.44% with principal payable in quarterly installments beginning in
April, 1998. In April, 1998, the Company received the proceeds from a
fifteen-year note for $75,000 at a fixed interest rate of 6.59% with
principal payable in semiannual installments beginning in October, 2003.
Both note agreements have 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 agreements. During the first three months
of 1998, cash used by operations amounted to $ 53,744 compared to $21,708
cash used by operations in the first three months of 1997.
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
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.
May 14, 1998 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 49,223
<SECURITIES> 0
<RECEIVABLES> 427,057
<ALLOWANCES> 0
<INVENTORY> 435,139
<CURRENT-ASSETS> 925,021
<PP&E> 343,480
<DEPRECIATION> 140,732
<TOTAL-ASSETS> 1,158,525
<CURRENT-LIABILITIES> 649,902
<BONDS> 166,689
<COMMON> 102,243
0
110
<OTHER-SE> 162,179
<TOTAL-LIABILITY-AND-EQUITY> 1,158,525
<SALES> 869,331
<TOTAL-REVENUES> 869,331
<CGS> 710,189
<TOTAL-COSTS> 710,189
<OTHER-EXPENSES> 130,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,143
<INCOME-PRETAX> 24,737
<INCOME-TAX> 10,186
<INCOME-CONTINUING> 14,551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,551
<EPS-PRIMARY> 2.83
<EPS-DILUTED> 2.83
</TABLE>
|
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