|
|
|
|
|
|
|
|
|
|
|
|
|
<PAGE> 1
CONFORMED
---------
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, 2000
-----------------------------------
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, 2000: 5,836,089
----------------------
(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, 2000 DECEMBER 31, 1999
-------------------- ---------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 53,622 $ 16,750
-------------------- ---------------------
Trade receivables 663,481 588,631
-------------------- ---------------------
Merchandise inventory 740,584 843,061
-------------------- ---------------------
Other current assets 3,727 6,524
-------------------- ---------------------
Total current assets 1,461,414 1,454,966
-------------------- ---------------------
PROPERTY
Land 22,043 21,997
-------------------- ---------------------
Buildings and permanent fixtures 330,871 321,332
-------------------- ---------------------
Capital equipment leases 26,162 31,525
-------------------- ---------------------
Less-Accumulated depreciation 162,105 161,948
-------------------- ---------------------
Net property 216,971 212,906
-------------------- ---------------------
DEFERRED FEDERAL INCOME TAXES 9,268 9,004
-------------------- ---------------------
OTHER ASSETS 27,695 27,920
-------------------- ---------------------
$1,715,348 $1,704,796
==================== =====================
CURRENT LIABILITIES
Notes payable to banks $ 347,320 $ 340,604
-------------------- ---------------------
Current portion of long-term debt 19,401 20,359
-------------------- ---------------------
Trade accounts payable 514,103 523,677
-------------------- ---------------------
Income taxes 19,761 --
-------------------- ---------------------
Other accrued taxes 13,787 13,552
-------------------- ---------------------
Accrued payroll and benefit costs 24,539 50,107
-------------------- ---------------------
Dividends payable -- 6,256
-------------------- ---------------------
Other payables and accruals 67,343 56,973
-------------------- ---------------------
Total current liabilities 1,006,254 1,011,528
-------------------- ---------------------
POSTRETIREMENT BENEFITS LIABILITY 77,708 77,708
-------------------- ---------------------
LONG TERM DEBT 253,982 255,897
-------------------- ---------------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
<CAPTION>
SHARES
------
2000 1999
---- ----
<S> <C> <C> <C> <C>
Issued to shareholders 3,412 3,412
------------- --------------
In treasury, at cost (259) --
------------- --------------
Outstanding 3,153 3,412 63 68
------------- -------------- -------------- --------------
Common:
------
Stated value $20 per share
Authorized 7,500,000 shares
<CAPTION>
SHARES
------
2000 1999
---- ----
<S> <C> <C> <C> <C>
Issued to voting trustees 5,599,029 5,587,485
------------- --------------
Issued to shareholders 338,125 337,757
------------- --------------
In treasury, at cost (77,086) (11,729)
------------- --------------
Outstanding 5,860,068 5,913,513 117,201 118,270
------------- -------------- -------------- --------------
Advance payments on
subscriptions to common stock 50 56
-------------- --------------
Retained earnings 260,297 241,473
-------------- --------------
Accumulated other comprehensive income (207) (204)
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 377,404 359,663
-------------- --------------
$1,715,348 $1,704,796
============== ==============
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, 2000 MARCH 31, 1999
------------------ ------------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $1,248,319 $988,470
------------------ ------------------
Less - Cash discounts 3,010 2,520
------------------ ------------------
NET SALES 1,245,309 985,950
------------------ ------------------
COST OF MERCHANDISE SOLD 1,024,992 812,131
------------------ ------------------
Gross margin 220,317 173,819
------------------ ------------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 170,479 142,441
------------------ ------------------
DEPRECIATION AND AMORTIZATION 7,018 6,310
------------------ ------------------
Income from operations 42,820 25,068
------------------ ------------------
OTHER INCOME, net 3,248 3,815
------------------ ------------------
INTEREST EXPENSE 11,058 5,790
------------------ ------------------
Income before provision for income taxes 35,010 23,093
------------------ ------------------
PROVISION FOR INCOME TAXES
Current 14,689 9,885
------------------ ------------------
Deferred (264) (320)
------------------ ------------------
Total provision for income taxes 14,425 9,565
------------------ ------------------
NET INCOME $ 20,585 $ 13,528
================== ==================
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 3.50 $ 2.28
================== ==================
DIVIDENDS
Preferred - $.25 per share $ 1 $ 1
------------------ ------------------
Common - $.30 per share 1,760 1,745
------------------ ------------------
$ 1,761 $ 1,746
================== ==================
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,
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 20,585 $ 13,528
-------------- --------------
Adjustments to reconcile net income
to cash provided (used) by operations:
Depreciation and amortization 7,018 6,310
-------------- --------------
Deferred income taxes (264) (320)
-------------- --------------
Gain on sale of property -- --
-------------- --------------
Changes in assets and liabilities:
Trade receivables (74,850) (54,719)
-------------- --------------
Merchandise inventory 102,477 (83,100)
-------------- --------------
Other current assets 2,797 1,226
-------------- --------------
Other assets 225 136
-------------- --------------
Trade accounts payable (9,574) 104,507
-------------- --------------
Accrued payroll and benefit costs (25,568) (23,971)
-------------- --------------
Other accrued liabilities 30,363 127
-------------- --------------
32,624 (49,804)
-------------- --------------
Net cash provided (used) by operations 53,209 (36,276)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 26 39
-------------- --------------
Capital expenditures for property (11,109) (6,903)
-------------- --------------
Net cash used by investing activities (11,083) (6,864)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in notes payable to banks 6,716 66,923
-------------- --------------
Proceeds from long-term debt -- --
-------------- --------------
Repayment of long-term debt (1,850) (2,619)
-------------- --------------
Principal payments under capital equipment leases (1,023) (1,791)
-------------- --------------
Sale of common stock 232 13,849
-------------- --------------
Purchase of treasury stock (1,312) (1,290)
-------------- --------------
Dividends paid (8,017) (7,225)
-------------- --------------
Net cash flow provided (used) by financing activities (5,254) 67,847
-------------- --------------
NET INCREASE IN CASH 36,872 24,707
-------------- --------------
CASH, BEGINNING OF YEAR 16,750 20,252
-------------- --------------
CASH, END OF FIRST QUARTER $ 53,622 $ 44,959
============== ==============
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, 2000 AND 1999
-----------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
ACCUMULATED
COMMON OTHER
STOCK COMPRE-
COMMON PREFERRED SUBSCRIBED, RETAINED HENSIVE
STOCK STOCK UNISSUED EARNINGS INCOME TOTAL
---------- ----------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998 $103,690 $ 108 $ 0 $193,838 $ (836) $296,800
----------
Net Income 13,528 13,528
Currency Translation Adjustments 157 157
----------
Comprehensive Income 13,685
----------
Stock Issued 13,788 13,788
Stock Redeemed (1,285) (5) (1,290)
Advance Payments 61 61
Dividends Declared (1,746) (1,746)
----------- ----------- ----------- ---------- ------------ ----------
March 31, 1999 $116,193 $ 103 $ 61 $205,620 $ (679) $321,298
=========== =========== =========== ========== ============ ==========
<CAPTION>
ACCUMULATED
COMMON OTHER
STOCK COMPRE-
COMMON PREFERRED SUBSCRIBED, RETAINED HENSIVE
STOCK STOCK UNISSUED EARNINGS INCOME TOTAL
---------- ----------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1999 $118,270 $ 68 $ 56 $241,473 $ (204) $359,663
----------
Net Income 20,585 20,585
Currency Translation Adjustments (3) (3)
----------
Comprehensive Income 20,582
----------
Stock Issued 238 238
Stock Redeemed (1,307) (5) (1,312)
Advance Payments (6) (6)
Dividends Declared (1,761) (1,761)
----------- ----------- ----------- ---------- ------------ ----------
March 31, 2000 $117,201 $ 63 $ 50 $260,297 $ (207) $377,404
=========== =========== =========== ========== ============ ==========
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 2000 THREE MONTHS 1999
--------------------- ---------------------
<S> <C> <C>
Earnings for Three Months $ 20,585 $ 13,528
--------------------- ---------------------
Dividends on Preferred Stock 1 1
--------------------- ---------------------
Available for Common Stock $ 20,584 $ 13,527
--------------------- ---------------------
Average Common Shares Outstanding 5,883,674 5,923,037<F*>
--------------------- ---------------------
Earnings Per Share $ 3.50 $ 2.28<F*>
--------------------- ---------------------
<FN>
<F*> Restated for the declaration of a 5% stock dividend in 1999. Prior to
adjusting for the stock dividend, the average common shares outstanding
were 5,640,988.
</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 three months of 2000 were 26.3% higher than in the
first three months of 1999. 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 2000 increased 26.8% compared
to the first three months of 1999 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 2000 compared to the first three months of 1999 occurred
largely because of growth in personnel complement and increases in
compensation and related expenses. In addition, continued implementation of a
company-wide customer service and logistics project throughout 1999 and 2000
resulted in higher selling, general and administrative expenses in the first
three months of 2000 compared to the first three months of 1999 due to
increases in the Company's number of facilities and related staffing and
start-up expenses. The increased expenses were anticipated by management and
are expected to provide future benefits to the Company's results of
operations.
Interest expense increased in the first three months of 2000 compared to
the first three months of 1999 primarily due to increased levels of borrowing
incurred to finance higher aggregate levels of inventory and
receivables. Interest rates on 2000 short-term borrowings have been higher
than for the same period in 1999.
Other income includes service charges for special services provided to
one customer of $1,290 and $1,000 in the first three months of 2000 and 1999,
respectively.
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 $11,917 in the first three months of 2000
compared to the same period in 1999.
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, 2000, current assets exceeded current liabilities by $455,160, up $11,722
from December 31, 1999. The current assets at March 31, 2000 were sufficient
to meet the cash needs required to pay current liabilities. The substantial
increase in accounts receivable resulted primarily from the growth in sales
experienced by the Company. While the average number of days of sales in
accounts receivable has remained relatively stable during 1999 and 2000,
inventory turnover has decreased during that same period. The decrease in
inventory turnover is due largely to a companywide customer service and
logistics project to redeploy inventory into a system of national zones,
regional zones and branch locations. Although the project objective is to
provide better customer service, reduce overall costs and reduce inventory as
a percentage of sales, management expected some temporary inventory increase,
unrelated to sales volume, during the transition to the new system. This
transition to the new customer service and logistics system is planned to be
complete by mid-year 2001. Merchandise inventory decreased during the first
quarter 2000 when compared to December 31, 1999 inventory levels. The Company
does not have any other plans or commitments which would require significant
amounts of additional working capital.
At March 31, 2000, the Company had available to it unused lines of
credit amounting to $155,964. These lines are available to meet short-term
cash requirements of the Company. Bank borrowings outstanding during 2000
through March 31 ranged from a minimum of $304,000 to a maximum of $426,000.
The Company has funded its capital requirements from operations, stock
issuances to its employees and long term debt. During the first three months
of 2000, cash provided by operations amounted to $53,209 compared to $36,276
cash used by operations in the first three months of 1999. Cash provided from
the sale of common stock and proceeds received on stock subscriptions
amounted to $232 in the first three months of 2000.
Capital expenditures for property for the three-month periods ended
March 31, 2000 and 1999 were $11,109 and $6,903, respectively. Purchases of
treasury stock for the three-month periods ended March 31, 2000 and 1999 were
$1,312 and $1,290, respectively. Dividends paid for the three-month periods
ended March 31, 2000 and 1999 were $8,017 and $7,225, respectively.
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 12, 2000 GRAYBAR ELECTRIC COMPANY, INC.
- -------------------
(Date)
/S/ C. L. HALL
---------------------------------
C. L. HALL
PRESIDENT
/S/ J. H. KIPPER
---------------------------------
J. H. KIPPER
VICE PRESIDENT
AND COMPTROLLER
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 53,622
<SECURITIES> 0
<RECEIVABLES> 663,481
<ALLOWANCES> 0
<INVENTORY> 740,584
<CURRENT-ASSETS> 1,461,414
<PP&E> 379,076
<DEPRECIATION> 162,105
<TOTAL-ASSETS> 1,715,348
<CURRENT-LIABILITIES> 1,006,254
<BONDS> 253,982
<COMMON> 117,201
0
63
<OTHER-SE> 260,140
<TOTAL-LIABILITY-AND-EQUITY> 1,715,348
<SALES> 1,245,309
<TOTAL-REVENUES> 1,245,309
<CGS> 1,024,992
<TOTAL-COSTS> 1,024,992
<OTHER-EXPENSES> 177,497
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,058
<INCOME-PRETAX> 35,010
<INCOME-TAX> 14,425
<INCOME-CONTINUING> 20,585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,585
<EPS-BASIC> 3.50
<EPS-DILUTED> 3.50
</TABLE>
|
|