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Previous: DAVIS SERIES INC, PRES14A, 2000-08-10 |
Next: GRAYBAR ELECTRIC CO INC, 10-Q, EX-27, 2000-08-10 |
<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 June 30, 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 July 31, 2000: 5,792,930
------------------------
(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, 2000 DECEMBER 31, 1999
------------------- ---------------------
CURRENT ASSETS
<S> <C> <C>
Cash $ 69,794 $ 16,750
------------------- ---------------------
Trade receivables 701,622 588,631
------------------- ---------------------
Merchandise inventory 714,352 843,061
------------------- ---------------------
Other current assets 4,370 6,524
------------------- ---------------------
Total current assets 1,490,138 1,454,966
------------------- ---------------------
PROPERTY
Land 22,044 21,997
------------------- ---------------------
Buildings and permanent fixtures 338,186 321,332
------------------- ---------------------
Capital equipment leases 20,380 31,525
------------------- ---------------------
Less-Accumulated depreciation 158,047 161,948
------------------- ---------------------
Net property 222,563 212,906
------------------- ---------------------
DEFERRED FEDERAL INCOME TAXES 10,203 9,004
------------------- ---------------------
OTHER ASSETS 29,502 27,920
------------------- ---------------------
$1,752,406 $1,704,796
=================== =====================
CURRENT LIABILITIES
Notes payable to banks $ 403,310 $ 340,604
------------------- ---------------------
Current portion of long-term debt 20,817 20,359
------------------- ---------------------
Trade accounts payable 510,392 523,677
------------------- ---------------------
Income taxes 10,969 --
------------------- ---------------------
Other accrued taxes 13,640 13,552
------------------- ---------------------
Accrued payroll and benefit costs 35,342 50,107
------------------- ---------------------
Dividends payable 0 6,256
------------------- ---------------------
Other payables and accruals 46,076 56,973
------------------- ---------------------
Total current liabilities 1,040,546 1,011,528
------------------- ---------------------
POSTRETIREMENT BENEFITS LIABILITY 77,708 77,708
------------------- ---------------------
LONG TERM DEBT 242,475 255,897
------------------- ---------------------
</TABLE>
2
<PAGE> 3
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------- ---------------------
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 (354) --
------------- -----------
Outstanding 3,058 3,412 61 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 5,627,908 5,587,485
------------- -----------
Issued to shareholders 338,865 337,757
------------- -----------
In treasury, at cost (150,734) (11,729)
------------- -----------
Outstanding 5,816,039 5,913,513 116,321 118,270
------------- ----------- ------------------- ---------------------
Advance payments on
subscriptions to common
stock 48 56
------------------- ---------------------
Retained earnings 275,817 241,473
------------------- ---------------------
Accumulated other comprehensive
income (570) (204)
------------------- ---------------------
TOTAL SHAREHOLDERS' EQUITY 391,677 359,663
------------------- ---------------------
$1,752,406 $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
JUNE 30, 2000 JUNE 30, 1999
--------------- ---------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $1,295,918 $1,042,035
--------------- ---------------
Less - Cash discounts 3,524 2,728
--------------- ---------------
NET SALES 1,292,394 1,039,307
--------------- ---------------
COST OF MERCHANDISE SOLD 1,059,211 848,057
--------------- ---------------
Gross margin 233,183 191,250
--------------- ---------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 186,815 150,768
--------------- ---------------
DEPRECIATION AND AMORTIZATION 7,168 6,243
--------------- ---------------
Income from operations 39,200 34,239
--------------- ---------------
OTHER INCOME, net 1,064 2,870
--------------- ---------------
INTEREST EXPENSE 11,464 6,806
--------------- ---------------
Income before provision for income taxes 28,800 30,303
--------------- ---------------
PROVISION FOR INCOME TAXES
Current 12,465 12,946
--------------- ---------------
Deferred (935) (467)
--------------- ---------------
Total provision for income taxes 11,530 12,479
--------------- ---------------
NET INCOME 17,270 17,824
=============== ===============
NET INCOME PER SHARE OF COMMON STOCK $ 2.96 $ 2.94<F*>
=============== ===============
DIVIDENDS
Preferred - $.25 per share $ 1 $ 1
--------------- ---------------
Common - $.30 per share 1,749 1,727
--------------- ---------------
$ 1,750 $ 1,728
=============== ===============
<FN>
<F*>Restated for the declaration of a 5% stock dividend in 1999.
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, 2000 JUNE 30, 1999
--------------- ---------------
<S> <C> <C>
GROSS SALES, net of returns and allowances $2,544,237 $2,030,505
--------------- ---------------
Less - Cash discounts 6,534 5,248
--------------- ---------------
NET SALES 2,537,703 2,025,257
--------------- ---------------
COST OF MERCHANDISE SOLD 2,084,203 1,660,188
--------------- ---------------
Gross margin 453,500 365,069
--------------- ---------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 357,294 293,209
--------------- ---------------
DEPRECIATION AND AMORTIZATION 14,186 12,553
--------------- ---------------
Income from operations 82,020 59,307
--------------- ---------------
OTHER INCOME, net 4,312 6,685
--------------- ---------------
INTEREST EXPENSE 22,522 12,596
--------------- ---------------
Income before provision for income taxes 63,810 53,396
--------------- ---------------
PROVISION FOR INCOME TAXES
Current 27,154 22,831
--------------- ---------------
Deferred (1,199) (787)
--------------- ---------------
Total provision for income taxes 25,955 22,044
--------------- ---------------
NET INCOME 37,855 31,352
=============== ===============
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 6.46 $ 5.24
=============== ===============
DIVIDENDS
Preferred - $.50 per share $ 2 $ 3
--------------- ---------------
Common - $.60 per share 3,509 3,472
--------------- ---------------
$ 3,511 $ 3,475
=============== ===============
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,
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS
Net Income $ 37,855 $ 31,352
------------- -------------
Adjustments to reconcile net income
to cash provided (used) by operations:
Depreciation and amortization 14,186 12,553
------------- -------------
Deferred income taxes (1,199) (787)
------------- -------------
Gain on sale of property -- (543)
------------- -------------
Changes in assets and liabilities:
Trade receivables (112,991) (59,118)
------------- -------------
Merchandise inventory 128,709 (116,810)
------------- -------------
Other current assets 2,154 (562)
------------- -------------
Other assets (1,582) 2,387
------------- -------------
Trade accounts payable (13,285) 84,838
------------- -------------
Accrued payroll and benefit costs (14,765) (17,264)
------------- -------------
Other accrued liabilities (206) (4,597)
------------- -------------
1,021 (99,903)
------------- -------------
Net cash provided (used) by operations 38,876 (68,551)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 110 1,007
------------- -------------
Capital expenditures for property (20,199) (11,943)
------------- -------------
Net cash used by investing activities (20,089) (10,936)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in notes payable to banks 62,706 128,631
------------- -------------
Proceeds from long-term debt -- --
------------- -------------
Repayment of long-term debt (14,945) (9,489)
------------- -------------
Principal payments under capital equipment leases (1,773) (2,655)
------------- -------------
Sale of common stock 823 14,049
------------- -------------
Purchase of treasury stock (2,787) (2,682)
------------- -------------
Dividends paid (9,767) (8,954)
------------- -------------
Net cash flow provided by financing activities 34,257 118,900
------------- -------------
NET INCREASE IN CASH 53,044 39,413
------------- -------------
CASH, BEGINNING OF YEAR 16,750 20,252
------------- -------------
CASH, END OF SECOND QUARTER $ 69,794 $ 59,665
============= =============
See accompanying Notes to Consolidated Financial Statements
</TABLE>
6
<PAGE> 7
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
----------------------------------------------------------
FOR THE SIX MONTHS ENDED
------------------------
JUNE 30, 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 31,352 31,352
Currency Translation Adjustments 393 393
--------
Comprehensive Income 31,745
--------
Stock Issued 13,989 13,989
Stock Redeemed (2,677) (5) (2,682)
Advance Payments 60 60
Dividends Declared (3,475) (3,475)
-------- ------- ------- -------- -------- --------
June 30, 1999 $115,002 $ 103 $ 60 $221,715 $ (443) $336,437
======== ======= ======= ======== ======== ========
<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 37,855 37,855
Currency Translation Adjustments (366) (366)
--------
Comprehensive Income 37,489
--------
Stock Issued 831 831
Stock Redeemed (2,780) (7) (2,787)
Advance Payments (8) (8)
Dividends Declared (3,511) (3,511)
-------- ------- ------- -------- -------- --------
June 30, 2000 $116,321 $ 61 $ 48 $275,817 $ (570) $391,677
======== ======= ======= ======== ======== ========
See accompanying Notes to Consolidated Financial Statements
</TABLE>
7
<PAGE> 8
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 2000 SIX MONTHS 1999
----------------- -----------------
<S> <C> <C>
Earnings for Six Months $ 37,855 $ 31,352
----------------- -----------------
Dividends on Preferred Stock 2 3
----------------- -----------------
Available for Common Stock $ 37,853 $ 31,349
----------------- -----------------
Average Common Shares Outstanding 5,857,977 5,984,258<F*>
----------------- -----------------
Earnings Per Share $ 6.46 $ 5.24<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 5,699,293.
</TABLE>
Note 3
------
Comprehensive income is reported in the Consolidated Statements of
Changes in Shareholders' Equity. Comprehensive income for the quarters ended
June 30, 2000 and 1999 was $16,907 and $18,060, respectively.
8
<PAGE> 9
Note 4
------
The Company entered into an accounts receivable securitization program in
June 2000 which provides for the sale of the Company's trade accounts
receivables to a wholly owned, bankruptcy remote, special purpose subsidiary,
Graybar Commerce Corporation. The trade accounts receivable purchases are
financed through the issuance of commercial paper under a revolving liquidity
facility. Under the securitization program, Graybar Commerce Corporation has
granted a security interest in its trade accounts receivable. The Company
has $100 million available for additional borrowing under the program at June
30, 2000, subject to eligible trade accounts receivable. There have been no
borrowings under the securitization program through June 30, 2000.
9
<PAGE> 10
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 2000 were 25.3% higher than in the
first six 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 six months of 2000 increased 24.2% compared to
the first six 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
six months of 2000 compared to the first six 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 six months
of 2000 compared to the first six 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 six months of 2000 compared to
the first six 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 $2,380 and $2,000 in the first six 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 $10,414 in the first six months of 2000
compared to the same period in 1999.
10
<PAGE> 11
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, 2000, current assets exceeded current liabilities by $449,592, up $6,154
from December 31, 1999. The current assets at June 30, 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 company-wide 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 and reduce overall costs, 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 six months of 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 June 30, 2000, the Company had available to it unused lines of credit
amounting to $201,681. These lines are available to meet short-term cash
requirements of the Company. Bank borrowings outstanding during 2000 through
June 30 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 six months
of 2000, cash provided by operations amounted to $38,876 compared to $68,551
cash used by operations in the first six months of 1999. Cash provided from
the sale of common stock and proceeds received on stock subscriptions
amounted to $823 in the first six months of 2000.
Capital expenditures for property for the six-month periods ended June
30, 2000 and 1999 were $20,199 and $11,943, respectively. Purchases of
treasury stock for the six-month periods ended June 30, 2000 and 1999 were
$2,787 and $2,682, respectively. Dividends paid for the six-month periods
ended June 30, 2000 and 1999 were $9,767 and $8,954, respectively.
11
<PAGE> 12
PART II: OTHER INFORMATION
----------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders occurred on June 8, 2000.
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 5,502,174 votes, no negative
votes were cast.
1. R. A. Cole
2. T. F. Dowd
3. T. S. Gurganous
4. C. L. Hall
5. R. H. Haney
6. G. W. Harper
7. J. H. Hinshaw
8. G. D. Hodges
9. J. C. Loff
10. G. J. McCrea
11. R. D. Offenbacher
12. R. A. Reynolds, Jr.
13. C. R. Udell
14. J. F. Van Pelt
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.
12
<PAGE> 13
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 10, 2000 GRAYBAR ELECTRIC COMPANY, INC.
------------------------
(Date)
/s/ R. A. REYNOLDS, JR.
------------------------------
R. A. REYNOLDS, JR.
PRESIDENT
/s/ J. H. KIPPER
------------------------------
J. H. KIPPER
VICE PRESIDENT
AND COMPTROLLER
13
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