-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, UH3Oj1BXCmMDUc6vYjuHzhJs4MOc3od4oq9YU8yaSeucDdjmsibyXteU3PA2MC60 wc40xN/lYDaNKKQnrGjsPw== 0000950114-95-000044.txt : 19950602 0000950114-95-000044.hdr.sgml : 19950602 ACCESSION NUMBER: 0000950114-95-000044 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAYBAR ELECTRIC CO INC CENTRAL INDEX KEY: 0000205402 STANDARD INDUSTRIAL CLASSIFICATION: 5063 IRS NUMBER: 130794380 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-00255 FILM NUMBER: 95523380 BUSINESS ADDRESS: STREET 1: 34 N MERAMEC AVE CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3147273900 MAIL ADDRESS: STREET 1: P O BOX 7231 CITY: ST LOUIS STATE: MO ZIP: 63177 10-K405 1 1994 FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K COMMISSION FILE NUMBER 0-255 (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994. ----------------- 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 Identification No.) incorporation or organization) 34 North Meramec Avenue, St. Louis, Missouri 63105 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Post Office Box 7231, St. Louis, Missouri 63177 - ------------------------------------------------------------------------------- (Mailing Address) (Zip Code) Registrant's telephone number, including area code: (314) 727-3900 ------------------- Securities registered pursuant to Section 12(b) of the Act: None ---------- Securities registered pursuant to Section 12(g) of the Act: Preferred Stock - Par Value $20 Common Stock - Par Value $1 Per Share with a Stated Value of $20 Voting Trust Certificates relating to such Shares of Common Stock of the Registrant Common Stock outstanding at March 27, 1995 - 4,564,371 Shares 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, and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Paragraph 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) The aggregate stated value of the Common Stock outstanding and, with respect to rights of disposition, beneficially owned by nonaffiliates (as defined in Rule 405 under the Securities Act of 1933) of the registrant on March 27, 1995, was approximately $91,287,420. Pursuant to a Voting Trust Agreement, dated as of April 15, 1987, approximately 95% of the outstanding shares of Common Stock are held of record by four Voting Trustees who are each directors of the registrant and who collectively exercise all voting rights with respect to such shares. The registrant is 100% owned by its active and retired employees, and there is no public trading market for the registrant's Common Stock. The registrant has the option to repurchase, at the price at which it was issued, each outstanding share of Common Stock in the event of the owner's death, termination of employment other than by retirement, or desire to dispose of such shares. Historically all shares of Common Stock have been issued for $20 per share, and the registrant has always exercised its repurchase option and expects to continue to do so. The documents listed below have been incorporated by reference into the indicated Part of this Annual Report on Form 10-K: (1) Annual Report to Shareholders Part II, Items 5-8 for the fiscal year ended December 31, 1994. (2) Information Statement relating Part III, Items 10-13 to the 1995 Annual Meeting of Shareholders. 2 PART I ------ Item 1. Business - ------- -------- Graybar Electric Company, Inc. (the "Company") is engaged internationally in the distribution of electrical and communications equipment and supplies primarily to contractors, industrial plants, telephone companies, power utilities, and commercial users. All products sold by the Company are purchased by the Company from others. The Company was incorporated under the laws of the State of New York on December 11, 1925 to take over the wholesale supply department of Western Electric Company, Incorporated. The location and telephone number of the principal executive offices of the Company are 34 North Meramec Avenue, St. Louis, Missouri (314) 727-3900, and the mailing address of the principal executive offices is P.O. Box 7231, St. Louis, Missouri 63177. Suppliers - --------- The Company acts as a distributor of the products of more than 1,000 manufacturers. The relationship of the Company with a number of its principal suppliers goes back many years. It is customarily a nonexclusive national or regional distributorship terminable upon 30 to 90 days notice by either party. During 1994, the Company purchased a significant portion of its products from its three largest suppliers. The termination by any of these companies, within a short period of time, of a significant number of their agreements with the Company might have an immediate material adverse effect on the business of the Company, but the Company believes that within a reasonable period of time it could find alternate sources of supply adequate to alleviate such adverse effect. 2 3 Products Distributed - -------------------- The Company distributes more than 100,000 different products and, therefore, is able to supply its customers with a wide variety of electrical and communications products. The products distributed by the Company consist primarily of wire, conduit, wiring devices, tools, motor controls, transformers, lamps, lighting fixtures and hardware, power transmission equipment, telephone station apparatus, key systems, PBXs, data products for local area networks or wide area networks, fiber optic products, and CATV products. These products are sold to customers such as contractors (both industrial and residential), industrial plants, telephone companies, private and public utilities, and commercial users. On December 31, 1994 and 1993, the Company had orders on hand which totalled approximately $189,349,000 and $174,928,000, respectively. The Company believes that the increase from 1993 to 1994 reflects the improvements in the market sectors of the economy in which the Company operates. The Company expects that approximately 85% of the orders on hand at December 31, 1994 will be filled within the twelve-month period ending December 31, 1995. Historically, orders on hand for the Company's products have been firm, but customers from time to time request cancellation and the Company has historically allowed such cancellations. Marketing - --------- The Company sells its products through a network of distributing houses located in 15 geographical districts throughout the United States. In each district the Company maintains a main distributing house and a number of branch distributing houses, each of which carries an inventory of supply materials and operates as a wholesale distributor for the territory in which it is located. The main distributing house in each district carries a substantially larger inventory than the branch houses so that the branch houses can call upon the main distributing house for additional items of inventory. In addition, the Company maintains two (2) zone warehouses with special inventories so all locations can call upon them for additional items. The Company also has subsidiary operations with distribution facilities located in Puerto Rico, Mexico, Panama, Guam, Singapore and Canada. 3 4 The distribution facilities operated by the Company are shown in the following table:
Location of Main Number of Distributing Number of Distributing House Houses in District Distributing Houses - ------------------ ---------------------- ------------------- Graybar Holdings Limited ------------------------ Boston, MA 9 Canada 2 Cincinnati, OH 9 Dallas, TX 29 Graybar Electric (Ontario) Ltd. ------------------------------- Glendale Heights, IL 14 Canada 5 Miami, FL 1 Minneapolis, MN 17 Graybar Electric Ltd. --------------------- New York, NY 12 Canada 21 Norcross, GA 18 Philadelphia, PA 7 Phoenix, AZ 24 Graybar International Guam, Inc. -------------------------------- Pittsburgh, PA 8 Tamuning, Guam 1 Richmond, VA 13 Seattle, WA 20 Graybar de Mexico, S.A. de CV. ------------------------------ St. Louis, MO 14 Juarez, Mexico 1 Tampa, FL 24 Mexico City, Mexico 1 Zone Distributing Graybar-P&M International - ----------------- ------------------------- Houses PTE, Ltd. - ------ --------- Bethlehem, PA 1 Singapore 1 Peoria 1 Graybar International, Inc. Graybar Free Zone, S.A. - --------------------------- ----------------------- Puerto Rico 1 Panama 1
Where the specialized nature or size of a particular shipment warrants, the Company has products shipped directly from its suppliers to the place of use, while in other cases orders are filled from the Company's inventory. On a dollar volume basis, over one-half of the orders are filled from the Company's inventory and the remainder are shipped directly from the supplier to the place of use. The Company generally finances its inventory from internally generated funds and from long and short-term borrowings. 4 5 The Company distributes its products to more than 200,000 customers, which fall into five general classes. The following list shows the estimated percentage of the Company's total sales for each of the three years ended December 31, attributable to each of these classes:
CLASS OF CUSTOMERS PERCENTAGE OF SALES ------------------ ------------------- 1994 1993 1992 ----------- --------- ---------- Electrical contractors 39.2% 40.8% 42.4% Industrial plants 30.9 31.3 29.9 Telecommunication companies 21.7 18.7 17.3 Private and public power utilities 6.3 7.0 7.8 Miscellaneous 1.9 2.2 2.6 ----------- --------- ---------- 100.0% 100.0% 100.0% =========== ========= ==========
At December 31, 1994, the Company employed approximately 2,100 persons in sales capacities. Approximately 950 of these sales personnel were sales representatives who work in the field making sales to customers at the work site. The remainder of the sales personnel were sales and marketing managers, and telemarketing, advertising, quotation, counter and clerical personnel. Competition - ----------- The Company believes that it is the largest distributor of electrical products not affiliated with a manufacturing company, and one of the three largest distributors of such products in the United States. The field is highly competitive, and the Company estimates that the three largest distributors of electrical products account for only a small portion of the total market, with the balance of the market being accounted for by independent distributors and manufacturers operating on a local, state-wide or regional basis. The Company believes that its competitive position is primarily a result of its ability to supply its customers through a network of conveniently located distribution facilities with a broad range of electrical and telecommunications materials within a short period of time. Price is also important, particularly where the Company is asked to submit bids to contractors in connection with large construction jobs. 5 6 Employees - --------- At December 31, 1994, the Company employed approximately 5,600 persons on a full-time basis. Approximately 140 of these persons were covered by union contracts. The Company has not had a material work stoppage and considers its relations with its employees to be good. Item 2. Properties - ------- ---------- As of December 31, 1994 the Company operated offices and distribution facilities in 238 locations. Of these, 132 were owned by the Company, and the balance were leased. The leases are for varying terms, the majority having a duration of less than five years. The Company's distribution facilities consist primarily of warehouse space. A small portion of the space in each facility is used for offices. Distribution facilities vary in size from approximately 2,400 square feet to 129,000 square feet, the average being approximately 29,000 square feet. As of December 31, 1994, approximately $45.2 million in debt of the Company was secured by mortgages on thirty-three buildings. Twenty of these facilities are subject to a first mortgage securing a 12.25% note, of which approximately $12.5 million in principal amount remains outstanding. Seven of these facilities are subject to a first mortgage securing a 9.23% note, of which $30.0 million in principal amount remains outstanding. Distribution houses in Salt Lake City, Utah; Pinellas County and Polk County, Florida; Tucson, Arizona; Beaumont, Texas and Glendale Heights, Illinois are subject to mortgages securing Industrial Revenue Bonds at variable interest rates with payments totaling $2.7 million due periodically to 2004. Item 3. Legal Proceedings - ------- ----------------- The Company has been named, together with numerous other companies, as a co-defendant in actions by approximately 1,000 plaintiffs which have been filed in various federal and state courts in Arkansas, Louisiana, Maryland, Minnesota, Mississippi, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Texas, Washington, and West Virginia. The plaintiffs allege personal injuries due to exposure to asbestos products and seek substantial damages. The majority of the complaints do not identify any products containing asbestos allegedly sold by the Company. 6 7 However, since all products sold by the Company have been and are purchased from suppliers, if a plaintiff were to successfully establish an asbestos-related injury claim with respect to a product sold by the Company, the Company believes it would normally have a claim against its supplier. Furthermore, the Company believes it has product liability insurance coverage available to cover these claims. Accordingly, based on information now known to the Company, in the opinion of management the ultimate disposition of the asbestos-related claims against the Company will not have a materially adverse effect on the Company. Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- No matter was submitted to a vote of shareholders during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K. PART II ------- Item 5. Market for the Registrant's Common Stock and Related - ------- ---------------------------------------------------- Shareholder Matters ------------------- The Company is wholly owned by its active and retired employees, and there is no public trading market for its Common Stock, par value $1 per share with a stated value of $20 per share. No shareholder may sell, transfer or otherwise dispose of shares of Common Stock without first offering the Company the option to purchase such shares at the price at which they were issued. The Company also has the option to purchase the Common Stock of any shareholder who dies or ceases to be an employee of the Company for any cause other than retirement on a Company pension. In the past all shares issued by the Company have been issued at $20 per share, and the Company has always exercised its repurchase option, and expects to continue to do so. The information as to number of holders of Common Stock and frequency and amount of dividends, required to be included pursuant to this Item 5, is included under the captions "Capital Stock Data" and "Dividend Data" on page 1 of the Company's Annual Report to Shareholders for the year ended December 31, 1994, (the "1994 Annual Report") furnished to the Securities and Exchange Commission (the "Commission") pursuant to Rule 14c-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and such information is incorporated herein by reference. 7 8 In May, 1994, the Company entered into a ten-year note agreement that includes 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 agreement. Item 6. Selected Financial Data - ------- ----------------------- The selected financial data for the Company as of December 31, 1994 and for the five years then ended, which is required to be included pursuant to this Item 6, is included under the caption "Selected Consolidated Financial Data" on page 15 of the 1994 Annual Report and is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition - ------- ----------------------------------------------------------- and Results of Operations ------------------------- Management's discussion and analysis required to be included pursuant to this Item 7 is included under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 16 and 17 of the 1994 Annual Report and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data - ------- ------------------------------------------- The financial statements required by this Item 8 are listed in Item 14(a)(1) of this Annual Report on Form 10-K under the caption "Index to Financial Statements." Such financial statements specifically referenced from the 1994 Annual Report in such list are incorporated herein by reference. There is no supplementary financial information required by this item which is applicable to the Company. Item 9. Disagreements on Accounting and Financial Disclosure - ------- ---------------------------------------------------- None. 8 9 PART III -------- Item 10. Directors and Executive Officers of the Registrant - -------- -------------------------------------------------- The information with respect to the directors and executive officers of the Company required to be included pursuant to this Item 10 will be included under the caption "Directors and Executive Officers -- Nominees for Election as Directors" in the Company's Information Statement relating to the 1995 Annual Meeting (the "Information Statement"), to be filed with the Commission pursuant to Rule 14c-5 under the Exchange Act, and is incorporated herein by reference. Item 11. Executive Compensation - -------- ---------------------- The information with respect to executive compensation required to be included pursuant to this Item 11 will be included under the captions "Executive Compensation" and "Pension Plan" in the Information Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management - -------- -------------------------------------------------------------- The information with respect to the security ownership of beneficial owners of more than 5% of the Common Stock, the directors of the Company and all directors and officers of the Company, which is required to be included pursuant to this Item 12, will be included in the introductory language and under the caption "Directors and Executive Officers -- Nominees for Election as Directors" in the Information Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions - -------- ---------------------------------------------- The information with respect to any reportable transactions, business relationships and indebtedness between the Company and the beneficial owners of more than 5% of the Common Stock, the directors or nominees for director of the Company, the executive officers of the Company or the members of the immediate families of such individuals, required to be included pursuant to this Item 13, will be included under the caption "Directors and Executive Officers" in the Information Statement and is incorporated herein by reference. 9 10 PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K - -------- ---------------------------------------------------------------- (a) Documents filed as part of this report: -------------------------------------- The following financial statements and Report of Independent Accountants are included on the indicated pages in the 1994 Annual Report and are incorporated by reference in this Annual Report on Form 10-K: 1. Index to Financial Statements ----------------------------- (i) Consolidated Statements of Income and Retained Earnings for each of the three years ended December 31, 1994 (page 18). (ii) Consolidated Balance Sheets, as of December 31, 1994 and December 31, 1993 (page 19). (iii) Consolidated Statements of Cash Flows for each of the three years ended December 31, 1994 (page 20). (iv) Notes to Consolidated Financial Statements (pages 21 to 24). (v) Report of Independent Accountants relating to above mentioned financial statements and notes for each of the three years ended December 31, 1994 (page 25). 2. Index to Financial Schedules ---------------------------- The following schedules for each of the three years ended December 31, 1994, to the Financial Statements and Report of Independent Accountants thereon is included on the indicated pages in this Annual Report on Form 10-K: (i) Schedule IX. Reserves (page 15). (ii) Report of Independent Accountants on Financial Statement Schedules (page 14). All schedules other than those indicated above are omitted because of the absence of the conditions under which they are required or because the required information is set forth in the financial statements and the accompanying notes thereto. 10 11 3. Exhibits -------- The following exhibits required to be filed as part of this Annual Report on Form 10-K have been included: (3) Articles of incorporation and by-laws (i) Restated Certificate of Incorporation dated March 9, 1984 filed as exhibit 3(i) to the Company's Annual Report on Form 10-K for the year ended December 31, 1984 (Commission File No. 0-255) and incorporated herein by reference. (ii) By-laws as amended through August 1, 1991 filed as exhibit 6(a)(19) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991 (Commission File No. 0-255) and incorporated herein by reference. (4)and(9) Instruments defining the rights of security holders, including indentures and voting trust agreements. Voting Trust Agreement dated as of April 15, 1987, attached as Annex A to the Prospectus, dated January 20, 1987, constituting a part of the Registration Statement on Form S-13 (Registration No. 2-57861) and incorporated herein by reference. The Company hereby agrees to furnish to the Commission upon request a copy of each instrument omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. (10) Material contracts. (i) Management Incentive Plan, filed as Exhibit 4(a)(1) to the Annual Report on Form 10-K for the year ended December 31, 1972 (Commission File No. 0-255), as amended by the Amendment effective January 1, 1974, filed as Exhibit 13-c to the Registration Statement on Form S-1 (Registration No. 2-51832), the Amendment effective January 1, 1977, filed as Exhibit 13(d) to the Registration Statement on Form S-1 (Registration No. 2-59744), and the Amendment effective January 1, 1980, filed as Exhibit 5(f) to the Registration Statement on Form S-7 (Registration No. 2-68938) and incorporated herein by reference. (13) Annual Report to Shareholders for 1994 (except for those portions which are expressly incorporated by reference in this Annual Report on Form 10-K, this exhibit is furnished for the information of the Commission and is not deemed to be filed as part of this Annual Report on Form 10-K). (21) List of subsidiaries of the Company. (b) Reports on Form 8-K: -------------------- No reports on Form 8-K were filed during the last quarter of the Company's fiscal year ended December 31, 1994. 11 12 SIGNATURES ---------- Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 27th day of March, 1995. GRAYBAR ELECTRIC COMPANY, INC. By /s/ E. A. McGrath ----------------------------------------- (E. A. McGRATH, President) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Company, in the capacities indicated, on March 27, 1995. /s/ E. A. McGrath - --------------------------------------- Director and President (E. A. McGrath) (Principal Executive Officer and Principal Financial Officer) /s/ J. R. Seaton - --------------------------------------- Director, Vice President (J. R. Seaton) and Comptroller (Principal Accounting Officer) /s/ J. R. Hade - --------------------------------------- Director (J. R. Hade) /s/ C. L. Hall - --------------------------------------- Director (C. L. Hall) /s/ R. H. Haney - --------------------------------------- Director (R. H. Haney) /s/ G. W. Harper - --------------------------------------- Director (G. W. Harper) /s/ R. L. Mygrant - --------------------------------------- Director (R. L. Mygrant) /s/ R. D. Offenbacher - --------------------------------------- Director (R. D. Offenbacher) 12 13 /s/ I. Orloff - --------------------------------------- Director (I. Orloff) /s/ R. A. Reynolds - --------------------------------------- Director (R. A. Reynolds) /s/ A. A. Thompson - --------------------------------------- Director (A. A. Thompson) /s/ G. S. Tulloch, Jr. - --------------------------------------- Director (G. S. Tulloch, Jr.) /s/ J. F. Van Pelt - --------------------------------------- Director (J. F. Van Pelt) /s/ J. W. Wolf - --------------------------------------- Director (J. W. Wolf) 13 14 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To The Board of Directors of Graybar Electric Company, Inc. Our audits of the consolidated financial statements referred to in our report dated February 17, 1995 appearing on page 25 of the 1994 Annual Report to Shareholders of Graybar Electric Company, Inc., (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP St. Louis, Missouri February 17, 1995 -14- 15 GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES ----------------------------------------------- SCHEDULE IX-RESERVES --------------------
Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Balance at Additions Balance Beginning Charged to at End of Period Income Deductions of Period --------- ---------- ---------- --------- Description ----------- FOR THE YEAR ENDED DECEMBER 31, 1994: Reserve deducted from assets to which it applies- Allowance for doubtful accounts $ 3,497,000 $ 2,287,000 $ 1,983,000 $ 3,801,000 Allowance for cash discounts 448,000 8,886,000 8,839,000 495,000 ----------- ----------- ----------- ----------- Total $ 3,945,000 $11,173,000 $10,822,000 $ 4,296,000 =========== =========== =========== =========== FOR THE YEAR ENDED DECEMBER 31, 1993: Reserve deducted from assets to which it applies- Allowance for doubtful accounts $ 3,485,000 $ 2,061,000 $ 2,049,000 $ 3,497,000 Allowance for cash discounts 464,000 8,290,000 8,306,000 448,000 ----------- ----------- ----------- ----------- Total $ 3,949,000 $10,351,000 $10,355,000 $ 3,945,000 =========== =========== =========== =========== FOR THE YEAR ENDED DECEMBER 31, 1992: Reserve deducted from assets to which it applies- Allowance for doubtful accounts $ 3,433,000 $ 2,328,000 $ 2,276,000 $ 3,485,000 Allowance for cash discounts 415,000 8,292,000 8,243,000 464,000 ----------- ----------- ----------- ----------- Total $ 3,848,000 $10,620,000 $10,519,000 $ 3,949,000 =========== =========== =========== =========== Amount of trade receivables written off against the reserve provided. Discounts allowed to customers.
15 16 INDEX TO EXHIBITS 17 INDEX TO EXHIBITS ----------------- Exhibits -------- (3) Articles of incorporation and by-laws. (i) Restated Certificate of Incorporation dated March 9, 1984................ (ii) By-laws as amended through August 1, 1991................................ (4)and(9) Instruments defining the rights of security holders, including indentures and voting trust agreements. Voting Trust Agreement dated as of April 15, l987, attached as Annex A to the Prospectus, dated January 20, 1987, constituting a part of the Registration Statement on Form S-13 (Registration No. 2-57861).......... (10) Material contracts. (i) Management Incentive Plan, filed as Exhibit 4(a)(1) to the Annual Report on Form 10-K for the year ended December 31, 1972 (Commission File No. 0-255), as amended by the Amendment effective January 1, 1974, filed as Exhibit 13-c to the Registration Statement on Form S-1 (Registration No. 2- 51832), the Amendment effective January 1, 1977, filed as Exhibit 13(d) to the Registration Statement on Form S-1 (Registration No. 2-59744), and the Amendment effective January 1, 1980, filed as Exhibit 5(f) to the Registration Statement on Form S-7 (Registration No. 2-68938).................. (13) Annual Report to Shareholders for 1994 (except for those portions which are expressly incorporated by reference in this Annual Report on Form 10-K, this exhibit is furnished for the information of the Commission and is not deemed to be filed as part of this Annual Report on Form 10-K) (21) List of subsidiaries of the Company -------------- Incorporated by reference in this Annual Report on Form 10-K.
16 EX-13 2 ANNUAL REPORT 1 EXHIBIT 13 ANNUAL REPORT TO SHAREHOLDERS FOR 1994 2 G R A Y B A R 1 9 9 4 A N N U A L R E P O R T 1 2 5 Y E A R S * 1 8 6 9 - 1 9 9 4 3 - ------------------------------------------------------------------------------- [PHOTO] In 1994 the Company celebrated the 125th anniversary of its founding. Graybar Directors, photographed in December 1994, are shown in front of an anniversary display in the lobby of the Graybar Building. 1. Robert L. Mygrant Tampa District Manager 2. Richard H. Haney Atlanta District Manager 3. Carl L. Hall Executive Vice President 4. Edward A. McGrath President 5. Aubrey A. Thompson Senior Vice President - Sales and Marketing 6. Irving Orloff Vice President - Commercial and Industrial 7. George S. Tulloch Vice President, Secretary and General Counsel 8. Richard D. Offenbacher St. Louis District Manager 9. Robert A. Reynolds Vice President - Marketing Services 10. Frank L. Hipp San Francisco District Manager 11. John W. Wolf Vice President and Treasurer 12. James R. Hade Senior Vice President - Distribution 13. John R. Seaton Vice President and Comptroller 14. Golden W. Harper Vice President--Operations 15. Jack F. Van Pelt Vice President--Human Resources - ------------------------------------------------------------------------------- 4 - ------------------------------------------------------------------------------- COMPANY'S BUSINESS Graybar Electric Company, Inc. is engaged internationally in the distribution of electrical and communications equipment and supplies primarily to contractors, industrial plants, telephone companies, power utilities, and commercial users. All products sold by the Company are purchased by the Company from others. MARKETS SERVED Electrical Contractor Commercial & Industrial Voice & Data Communications Power Utility International Front cover: The photographs show a model Graybar Flagship Counter, which was the Company's exhibit at the 1994 NECA Exposition and Convention. CAPITAL STOCK DATA Number of Equity Security Holders as of December 31, 1994:
- -------------------------------------------------------------------------- Title of Class Number of Security Holders - -------------------------------------------------------------------------- Preferred Stock 125 Common Stock 116 Voting Trust Certificates for Common Stock 4,012 - ------------------------------------------------------------------------
DIVIDEND DATA Common Stock, par value $1; stated value $20.
Dividends declared for year: 1994 1993 1992 - -------------------------------------------------------------------------- First Quarter $ .30 $ .30 $ .30 Second Quarter .30 .30 .30 Third Quarter .30 .30 .30 Fourth Quarter $1.10 $1.10 $1.10 - --------------------------------------------------------------------------
In September, 1994 a six and one quarter percent stock dividend was declared and shares representing this dividend were issued in January, 1995. CONTENTS Graybar Officers and Directors Inside Front Cover President's Letter 2 Market Review 4 Operations Review 10 Financial Review 15 Selected Consolidated Financial Data 15 Management's Discussion & Analysis of Financial Condition and Results of Operations 16 Consolidated Financial Statements 18 Report of Independent Accountants 25 District Management 26 Locations 28
- --------------------------------------- 1 ------------------------------------- 5 LETTER TO OUR SHAREHOLDERS - ------------------------------------------------------------------------------- Nineteen ninety-four was a good year for our Company. Sales of more than $2.3 billion represented an increase of 15.9 percent over last year and set an all-time record. At the start of 1994 we merged the Miami District with Tampa and merged the Houston District with Dallas. The economies of scale provided by continued improvements in technology are at last becoming a reality. We know that central processing, purchasing, and at least some of our accounting functions can be consolidated for a better end product. We are beginning to achieve the long-awaited productivity gains as well. At the close of 1994, we announced the merger of the Los Angeles and Phoenix Districts into an Electrical District headquartered in Phoenix, and the merger of the San Francisco and Seattle Districts into an Electrical District headquartered in Seattle. We also announced the consolidation of the communications business from those four original districts into a new Western Communications and Data District headquartered in Bellevue, Washington. Nineteen ninety- four was a good year for our Company. Sales of more than $2.3 billion set an all-time record. By separating the electrical supply and communication portions of our business, we expect faster profitable growth for Graybar in both market areas. We have specialized people working within specialized organizations. We are fortunate to have Richard Haney head the electrical business group and Robert Reynolds the communications/data organization. The time to capitalize in both our major markets and to press the technology gains for market share is now. We are increasing our sales volume, increasing the speed and accuracy of many of our procedures, and at the same time lowering costs. We are convinced that this strategy, while still in its early stages, is part of the reason our sales increase on a percentage basis is greater than the percentage of sales increase reported by many of our suppliers. The new Distribution Centers in Los Angeles and Houston are part of this ongoing strategy. The Distribution Center allows us to fill the customer's order in one complete shipment, rather than in multiple shipments. In the past, multiple shipments from branch and zone locations "filled the order" but did not always provide the most desirable service to the customer. Nor were multiple shipments accomplished at the lowest cost to Graybar. Today, bar-coded product, locator systems, and "paperless" warehousing are realities. In Houston, for example, the combination of a main house inventory, zone warehouse, and wire service center greatly enhances our ability to ship complete orders. This increases accuracy and lowers costs. A number of suppliers are working with us on "vendor-managed inventories," "distributor manufacturer integration," and "supplier- assisted inventory management systems." These are all variations of a theme, and all use technology to help us keep a sharp eye on stocks based on what the customer is buying. Now, electronically, we can "hand" our supplier a report of daily sales of their products. This allows the supplier to help us replenish stock, formulate orders, and arrange shipments based on what our customers are buying, rather than on what Graybar is purchasing. This provides better customer service at a lower cost to Graybar. By using these inventory management tools, we are seeing higher fill rates, faster turns, and lower inventory levels. - -------------------------------------- 2 -------------------------------------- 6 LETTER TO OUR SHAREHOLDERS - ------------------------------------------------------------------------------- Our international interests are concentrated in North America and the Caribbean. We continue, however, to serve customers around the world. This was exemplified recently by an order from Fuji, of Japan, for material destined for the Philippines. Some products are being supplied from South America and many from the United States to complete a multi- year, multimillion-dollar construction project. In February of 1994, we increased our share of ownership of Harris & Roome Supply, Ltd., of Nova Scotia. We are still minority shareholders. In May, we purchased a minority interest in R.E.D. Electronics of Toronto. R.E.D. concentrates in the higher-end technology of the data markets and complements the strong electrical supply presence we now have in Canada. We have chosen to close Panama and Dubai but we continue sales to these areas from Miami International and Houston, respectively. Improvements in technology, training, and the Graybar Quality Process continue: * Our dedicated employees at the Information Systems Department produced the new GraybarNet(R), the on-line customer order-entry system. It is now available in the popular Windows(R) format. * Information Systems also implemented the "Hot Key," allowing Graybar Customer Service Representatives to directly check suppliers' stocks of selected items. This speeds up our response time when the customer needs a non-stock item immediately. * Employees used Pathfinder, Graybar's interactive training network, in record numbers. Activity on Pathfinder exceeded expectations and sharpened our skills. * The Company conducted two major data and communications conferences -- one in St. Louis and one in Chicago. Each meeting drew hundreds of our employees from all over the country and many of our top suppliers. The emphasis was on training our people to take best advantage of the unprecedented opportunities in today's voice and data markets. * Employees at the Long Island City Branch and New York District Headquarters earned ISO 9002 certification for Long Island City. ISO certification is an internationally recognized standard of high commitment to the Quality Process. In September we welcomed Carl Hall as Executive Vice President and President-designate. We are indeed fortunate to have Carl. His wide experience with our Company and his enthusiasm for our future will serve him well in the years to come. I know he will successfully guide us through the challenges ahead. We missed Ralph Sackett as a Director and fellow employee when he retired in 1994 after 42 years of contribution and achievement at Graybar. We were saddened by his death so soon after he retired. In Ralph we had a valued and respected friend. We celebrated Graybar's 125th Anniversary across the country in a variety of ways -- and we recalled in those celebrations the wonderful legacy of earlier generations of our Graybar family. In this, my last letter to you, our shareholders, I want to assure you that the Graybar tradition of integrity still guides the Company. Through both the brightest and darkest of days, we have shared successes and failures. But whatever I and the other officers have accomplished, we have accomplished with close adherence to those principles that have guided Graybar from the beginning. And for your support, encouragement, and confidence in me, I shall never adequately express my appreciation. /s/ E. A. McGrath Edward A. McGrath St. Louis, Missouri President March 1995 - -------------------------------------- 3 -------------------------------------- 7 MARKET REVIEW - ------------------------------------------------------------------------------- Construction Market ===================================-------------------------------------------- The Construction Market, which represented 40 percent of Graybar sales in 1994, continues to be our largest market. This market includes our traditional base of contractors, as well as a growing number of "engineering constructors" who manage and purchase materials for major construction projects. Our sales to the Construction Market in 1994 increased at a rate greater than that of the construction industry as a whole, indicating that Graybar is gaining market share. We continued our emphasis on stock sales and product merchandising at the counter, producing major gains in profitable warehouse shipments and counter sales. Our volume of direct business was little changed compared to the year before. We are using technology to help us improve service to our construction customers and lower our internal costs: * The electronic "paperless" warehouse allows us to receive material, monitor stocks, select orders and ship them faster -- and more accurately -- than we could before. * Inventories are deployed where they make the most sense for our customers. Stocks are quickly replenished based on what customers are buying. * Centralized purchasing allows us to combine orders to take advantage of volume purchase discounts. Engineering constructors are the fastest-growing segment of the Construction Market. We expect this industry trend to continue in 1995 and beyond. Graybar is responding with dedicated personnel and services geared specifically to these customers. In 1994, for example, the Company piloted the "On Site" project site inventory program. Materials are bar-coded, delivered to the job site, and replenished daily as needed. "On Site" provides cost savings for both Graybar and the customer by maintaining required stocks where they are needed most -- at the job site. "On Site" will be offered to additional construction customers in 1995. In 1994, we reinforced our Company's commitment to build lighting sales with specialized training. Graybar held three lamp and lighting conferences at the General Electric (GE) Nela Park Lighting Institute. Approximately 120 employees representing all Graybar districts participated. In addition, the Company conducted advanced lighting seminars in Chicago, Las Vegas, and Charlotte. Participants at each seminar prepared lighting marketing plans that focused on opportunities in the retrofit market, Graybar Financial Services, and with the Environmental Protection Agency's Green Lights(R) energy conservation program. In 1994, the Company participated in two major contractor expositions and conventions -- the National Electrical Contractors Association (NECA) convention and the Independent Electrical Contractors (IEC) convention. Graybar made a strong impression on NECA delegates with a highly popular exhibit that set NECA attendance records. At IEC, Graybar and GE Lighting co-hosted a reception and dinner for more than 300 delegates. The Company's strong presence at these events reinforced our customers' awareness of Graybar value-added services. Sales to the residential construction market were robust and produced significantly higher profits for the Company. Lower mortgage interest rates and an overall stronger economy contributed to housing construction. Our biggest sales gain, however, came from Graybar's traditionally strong position with the local contractors who use Graybar's local stocks and sales support. - -------------------------------------- 4 -------------------------------------- 8 MARKET REVIEW - ------------------------------------------------------------------------------- Commercial & Industrial Markets ==================================--------------------------------------------- Graybar is strongly committed to the Commercial and Industrial (C&I) Markets, and continues to invest in people and other resources to serve these important customers. As a result, combined sales in the Commercial & Industrial Markets in 1994 increased dramatically over the prior year. Gross margins produced by these markets are among the highest of any market the Company serves. Industrial Market sales and margins increased significantly in 1994. Double-digit growth was achieved with national and local customers as well as in the original equipment manufacturer (OEM) and industrial communications market areas. Graybar industrial sales growth exceeded the growth rate of the industry, indicating that we continue to grow our market share. Stock sales grew substantially, led by increases in sales of wire and cable, conduit and raceway, distribution equipment, fuses, fittings, industrial enclosures, transformers, and motor control equipment. Graybar also achieved strong growth in the Commercial Market. Our commitment to sales and service specialization contributed to exceptionally strong growth with commercial customers who use voice and data products. These efforts were supported through appropriate local inventories backed by our network of Zone Service Centers. National Account sales continue to be a major portion of our total Industrial Market. Particular attention has been devoted to this market through the appointment of a Vice President-National Accounts and Integrated Supply. A new position, Manager-National Account Services, was added to coordinate National Account services between Graybar branches and customer facilities. We added National Sales Managers in order to broaden account coverage and develop closer relationships with strategic customers. Our service offering has been extended to meet the rapidly changing requirements of the industrial marketplace, ranging from just-in-time delivery to outsourcing, bin stock replacement, and managing the storeroom on the customer's premises. Training of Sales Representatives, Customer Service Representatives, and sales management continues to be a priority. In January, we hosted a training conference for all District C&I Market Managers. Conference participants discussed the Company's growing service capabilities to meet the changing requirements of our industrial customers. Four regional C&I seminars and lighting schools were held, providing product and market training to more than 100 Sales Managers, Sales Representatives and Customer Service support personnel. Product training specific to Graybar was provided by GE Lighting, Square D Industrial Control Products and Intermediate Distributor Training Schools. Pathfinder training modules, which are now prerequisites for these schools, are improving the technical knowledge of our people. Advertising and promotion played an increasingly important role in our marketing efforts. During the year, we participated in industry- sponsored trade shows hosted by the American Society of Hospital Engineers and Building Owners and Managers Association. Our booths included displays of Graybar capabilities and were co-hosted by major suppliers supporting those industries. Local districts participated in regional trade shows sponsored by the American Institute of Plant Engineers. Branches around the country promoted Graybar distribution services to commercial and industrial customers. Representing the Company at the 1994 New Jersey Industrial Show are Ed Krysz, Newark Branch Manager; Ronald Mushinsky and Pat McHugh, Sales Representatives; Donna Ferguson, Financial Manager; and Jack Brautigan, Sales Manager. [PHOTO] - -------------------------------------- 5 -------------------------------------- 9 MARKET REVIEW - ------------------------------------------------------------------------------- In 1994 Graybar instituted the new Elisha Gray Excellence in Communications Award. The winners were Cathy Tekien, Senior Sales Representative at Cleveland; Karl Griffith, Senior National Product Specialist at the General Department; Shirra Sanchez, Branch Manager at Houston Telcom; and (not shown) Steve Thomas, Senior Sales Representative at Nashville. At the Company's second National Communications Sales Training Conference, Al Eddings, Manager, Distance Learning, demonstrates Pathfinder. [PHOTO] [PHOTO] Communications and Data Markets ==================================--------------------------------------------- Comm/Data Products The Company achieved significant market growth in 1994 as business customers moved to connect more and more of their computer systems into local and remote networks. Our sales growth outpaced the market, reaching record levels. The Company is increasing its share of an expanding market. Unshielded twisted pair cable remained the medium of choice, and demand exceeded manufacturers' capacity. Fiber optic cable continues to gain acceptance among users as they see the value of its high capacity. The cost of fiber optic networks continues to decrease. The Company continued to benefit from the technical support group at headquarters. This group provides pre-sales technical support for many data products and what the industry calls "active electronics." Our Flagship Counters also contributed to comm/data sales growth through merchandising and expanded availability of products. Every Graybar counter now displays a wide variety of comm/data products. We are continuing to specialize and aggressively train our sales organization. This has two major, positive effects: a well-trained sales force increases sales at the same time it makes Graybar a more effective distributor for our suppliers. Graybar's technical expertise will help us understand the emerging technologies of computer/telephone integration and the requirements of the "work-at-home" business. This all translates to broader service offerings for our customers. Interconnect Market Sales to the Interconnect Market exceeded budgeted growth, and we continued to gain market share. In this market, price competition is being replaced by competition based on service and technical competence. The Company achieved high sales growth in the traditional product families such as PBXs and key systems. These products are now equipped with more features such as integrated call distributing, call accounting, voice messaging, the ability to connect local area networks, and full data communications capability. Key systems are now programmable by personal computers. The new key systems offer many features, including automatic call distribution, statistical call distribution, call monitoring, queue control, and others. These features evolve rapidly, and trained Graybar personnel offer our customers valuable product information. The Zone Service Centers and the new Distribution Centers enabled us to respond quickly to increases in product demand as well as changing technologies. - -------------------------------------- 6 -------------------------------------- 10 MARKET REVIEW - ------------------------------------------------------------------------------- Telephone Company Market Graybar sales to Regional Bell Operating Companies and independently-owned telephone companies were up in 1994. These customers are showing an interest in moving into the cable television market. This is in response to the perception that cable television companies may offer telephone service. In support of our customers' interest, we are now stocking many products for cable television systems in the Zone Service Centers. A Graybar Digest publication presenting our cable television product list was in production during the last quarter of 1994. It is scheduled for distribution to telephone company customers in 1995. In November, our Independent Telephone Company Advisory Council met in Charlotte, North Carolina, during the national Outside Plant Show. Council members discussed new products in detail and reviewed the business concerns facing this industry. Trade Shows We continue to promote Graybar capabilities in the voice and data markets through our participation in regional and national trade shows. During 1994, we increased the promotion of Graybar's service offerings with demonstrations on Pathfinder and GraybarNet. Graybar districts and local branches also conducted trade shows and special event promotions in every major market area. In March, and again in October, we held Graybar's first two National Communications Sales Training Conferences. The conferences were held in St. Louis and Chicago. More than 75 suppliers supported the conferences. A total of approximately 600 Graybar delegates attended the conferences and toured exhibits of the latest communications and data products. Our suppliers also were delighted that more than 1,000 Graybar customers visited the exhibits the day before the conferences opened. Employees were also given the opportunity to participate in 110 technical seminars conducted by suppliers, Graybar technical support personnel, and the national marketing staff. On the occasion of the Company's 125th anniversary, Square D President Charles W. Denny (right) presented a restored 1928 Square D safety switch to Edward A. McGrath, President. [PHOTO] Power Utility Market ==================================--------------------------------------------- There is increasing competition in the Power Utility Market, which is a result of the needs for less expensive and more readily available power. Public utility commissions in several states have enacted legislation allowing low-cost power generators to compete for business beyond their traditional boundaries. High-cost power generators are doing all they can to become more competitive. All of this may be good for the power utility customers, but it has created unprecendented change within the industry. Through the change, Graybar sales are increasing as more utilities see the value of our distribution service offerings. Utilities continue to seek cost reductions, and in so doing will look to the distributor to be part of the solution. Our leadership position in distribution services will enable us to capitalize on these opportunities. We would like to recognize the contributions of the late Ralph L. Sackett, who served as Vice President-Utility Markets until his retirement early in 1994. Ralph was instrumental in promoting Graybar to the Power Utility Market, and he is missed by his many friends in the industry. - -------------------------------------- 7 -------------------------------------- 11 MARKET REVIEW - ------------------------------------------------------------------------------- Company co-founder Elisha Gray's printing telegraph, forerunner of the stock ticker, was the Company's first major success. [PHOTO] International Markets ==================================--------------------------------------------- Overall international sales were up slightly in 1994. Graybar is participating in major electrical and communications/data projects around the world. North America Both Graybar Ontario and Harris & Roome Supply, Ltd., of Halifax, Nova Scotia, enjoyed strong sales in 1994. In May, Graybar purchased a minority interest in R.E.D. Electronics of Ontario. R.E.D., a major distributor of communications and data products, complements our well- established electrical products business in Canada. Graybar de Mexico established a full-stocking facility in Mexico City. The devaluation of the Mexican currency in December has left the market in turmoil and will cause us to modify our original marketing plans. Latin America/Caribbean We closed the Graybar Free Zone office in Panama and are focusing on major projects in this market that we can serve through Miami International. This branch had a very good year in 1994 and has strengthened the Company's presence throughout the market area in both electrical and communications/data. Graybar Puerto Rico experienced a difficult year, but the market remains strong. The operation has been completely restructured. The facility will be remodeled and a Flagship Counter will be in place in early 1995. Asia-Pacific The Pacific Rim remains the fastest-growing market in the world. Graybar increased its ownership in Graybar P&M - Singapore and moved to a new location. The San Francisco International Group ended the year with strong sales in Japan, the Philippines, and China. They closed the year with a multi-million dollar order for electrical products that will be used in a major construction project in the Philippines. Middle East/Africa Graybar sold its interest in the Dubai operation and will concentrate on this market through the Houston International Group. - -------------------------------------- 8 -------------------------------------- 12 MARKET REVIEW - ------------------------------------------------------------------------------- Marketing Support ==================================--------------------------------------------- Counters Graybar counters contributed to our banner year in 1994 with a substantial increase in sales. Communications products played a significant role in sales growth, while electrical products maintained a strong position. The Company continued counter remodeling and expansion in 1994. A total of 35 Graybar counters were upgraded to Flagship Counters in 1994. The new Flagship concept increases counter traffic and improves customer service through effective merchandising. This merchandising strategy makes products highly visible and provides a consistent product mix at every location. Customers can shop in the merchandising areas, generating additional sales. A model Flagship Counter was exhibited at the 1994 NECA Exposition and Convention in Chicago. This award-winning exhibit showcased the Company's superior counter service offerings to key contractor customers. The Company will continue to promote this merchandising center concept in all Graybar locations. Graybar Financial Services Our finance subsidiary, Graybar Financial Services (GFS), enjoyed a record year in 1994. Currently, approximately 4,300 customers have leases or loans in place with GFS. Nine hundred interconnects and contractors offered GFS leasing options to their customers in 1994. In that year, 3,600 of these customers -- the end users -- chose GFS to finance millions of dollars of tools, test equipment, electrical upgrades, communication systems, data networks, and other projects. In 1994, a centralized GFS customer group was created at Graybar corporate headquarters to improve service to GFS customers. Also in 1994, the Company introduced the GFS leasing program in Canada for customers of Graybar Ontario, Ltd., Harris & Roome, and R.E.D. Electronics. GFS continues to educate and train employees, Graybar customers, and end users on leasing options. In 1994, GFS published a quarterly newsletter for distribution throughout the Company, participated in Pathfinder, advertised in trade journals and other promotional literature, participated in local and national trade shows, and conducted GFS training seminars. Advertising and Sales Promotion The Company's 125th anniversary was an important theme in 1994 advertising and sales promotion literature. Thirty-eight suppliers participated with Graybar in national promotions supported by trade journal advertising. Graybar's communications catalog continues to be updated. In 1994 the sections on station apparatus, key/PABX and message processing products were updated. Sections on tools, safety equipment, and test equipment were updated and combined. The wire and cable section was reprinted. The Company produced three Telcom Digests with specific, market- oriented themes, such as fiber optic products, premises wiring, and voice products. In 1994 Graybar and several key suppliers implemented a new series of brochures for the Communications and Data Markets. These colorful, supplier-furnished brochures conform to a common format developed by Graybar and are designed to promote product-specific solutions for customers. - -------------------------------------- 9 -------------------------------------- 13 OPERATIONS REVIEW - ------------------------------------------------------------------------------- Graybar observed the 125th anniversary of the founding of the Company in 1869 by Elisha Gray, the inventor, and Enos Barton, the entrepreneur. [PHOTO] Elisha Gray Operations ==================================--------------------------------------------- Customer Service During 1994, the Company's primary focus was training for improved customer service. In conjunction with Square D Company, we introduced "Excellence in Customer Service" (ECS), a two-day service skills program. This class helped sharpen the communications skills that all front-line personnel must have to identify, satisfy, and then exceed the expectations of Graybar's customers. In 1994, all Managers, Customer Service participated in this training. The plan for 1995 is to present ECS to all branch employees who have direct contact with customers, such as Customer Service Representatives, Counter Sales Representatives, Quotations Personnel, Truck Drivers and Switchboard Operators. In conjunction with the ECS course, all employees have completed the Pathfinder training module, "Continuous Service Improvement." This module instructs employees in the proper procedures for measuring and resolving service issues. Taken together, this training will help Graybar employees build solid relationships with individual customers and learn to provide a superior level of service for all customers. Purchasing In 1994 we moved from pilot project to full implementation of the Supplier Assisted Inventory Management (SAIM) program with two key suppliers. With SAIM, the supplier electronically monitors Graybar stock levels of specific products, and then automatically replenishes those stocks based on agreed-upon levels. This process makes the most of our inventory investment, reduces Graybar's procurement costs, and improves customer service by keeping needed merchandise in stock. The SAIM program has proven very effective. During implementation, nearly 100 Graybar buyers, purchasing supervisors, and managers attended seminars explaining the mechanics and benefits of the program. During 1995 the program will be expanded to include additional suppliers. The first section of the Inventory Management manual was completed in 1994. This manual is a training reference for Graybar buyers, purchasing supervisors, managers and other interested employees. The manual details the Company's philosophy and approach to managing our inventory asset for maximum profitability. Additional sections of this manual are under development. It will serve as the training foundation for Graybar buyers. Other training activities included circulating to all Purchasing Departments a twelve-hour video training series on purchasing practices. Several new purchasing enhancements were introduced in 1994. One of the most significant developments was an improved process for replenishing merchandise at our counters. With the growth in the number of Flagship Counters, it is critical to maintain proper levels of stock on display. The new "stocking decision" report is a helpful tool for analyzing sales of non-stock items and highlighting items that should be considered for stock. In addition, major changes were made to the month-end analysis reports resulting in improved measurements of in- stock service capabilities and return on investment. In 1994 we made significant progress in improving Graybar's inventory asset. We are working closely with key suppliers to balance our stocks nationally. This, along with a concerted effort to eliminate unwanted merchandise, helps to substantially improve the Company's return on our merchandise investment. - -------------------------------------- 10 ------------------------------------- 14 OPERATIONS REVIEW - ------------------------------------------------------------------------------- Enos Barton guided the Company for more than 40 years. [PHOTO] Enos Barton Distribution Centers In the fall of 1994, Graybar opened Distribution Centers in Los Angeles and Houston. Inventories from the former Pacific and Gulf Zone Service Centers were combined with stocks tailored to the local markets. By centralizing inventory, we can now ship one complete order to the customer rather than several partial orders. This improves service to the customer and makes better use of our investment dollars. Graybar's Distribution Centers employ the most current technologies in material handling and storage. Bar coding, radio- frequency scanning equipment, and "paperless" processing provide improved accuracy and better customer service. Zone Service Centers The Zone Service Centers, along with the Distribution Centers, are important to Graybar's commitment to quality service. Acting as an extension of each branch, the Zone Service Centers and the Distribution Centers provide back-up inventory available for prompt delivery to our customers. Central stock, redeployment of existing stock, and strategic placement of new items continue to improve Graybar's service offering. Cost Containment In 1994 the Company moved aggressively to control costs by entering into strategic partnerships with key service providers. One example is an agreement with AT&T to furnish both voice and data communications services. In the past, these services had been provided by multiple carriers. The new agreement has resulted in significant savings for Graybar. Agreements with our national trucking firms provided an additional reduction in the cost of doing business. Volume incentives from United Parcel Service provided substantial cost savings on a major portion of our shipping expense. 1994 Real Estate New Locations: Beaverton, Oregon City of Industry, California (Los Angeles Distribution Center) Conway, Arkansas Englewood, Colorado Houston, Texas (Distribution Center) Livonia, Michigan Lubbock, Texas Mexico City, Mexico North Dallas, Texas Rock Hill, South Carolina Santa Maria, California Sherman, Texas Acquisitions: Carthage, Texas Kilgore, Texas Longview, Texas Beaufort, South Carolina Hilton Head, South Carolina Total locations as of December 31, 1994 were 238. - -------------------------------------- 11 ------------------------------------- 15 OPERATIONS REVIEW - ------------------------------------------------------------------------------- Information Systems ==================================--------------------------------------------- Our Information Systems Department technicians continue to develop information tools to help us profitably manage Graybar's business. We are seeing solid returns on the Company's investments in information technology. A new version of GraybarNet, the Company's remote electronic order-entry system for customers, was released in 1994. The new GraybarNet operates on personal computers in a highly popular software format. Customer response has been exceptional and several hundred customers now use this offering. Graybar customer service personnel now have a valuable new tool, the "Hot Key," which allows Graybar personnel to access selected suppliers' computer systems to obtain stock availability and pricing information. Supplier information can be accessed while the Customer Service Representative is entering the order. Using Hot Key, an order then can be placed electronically with the supplier. We will add additional suppliers to Hot Key in 1995. The Company installed local area networks in every district during the year. We were then able to standardize on office automation software and install it company-wide. This allowed us to provide better word processing and spreadsheet tools. Electronic mail is now available as well. Our mini-computers, which were used by the districts to manage their printing requirements, were replaced with new UNIX systems. This new hardware will do much more for the districts than manage their printing. The UNIX systems will allow local managers access to sales and inventory data on the mainframe via a "Decision Support System" (DSS). With DSS, local managers will be able to create ad hoc reports to study sales and inventory data on specific accounts and products. This will give them an important information tool to help them manage their business. DSS is scheduled for installation in all districts during 1995. Our telephone data network was upgraded during the third quarter of 1994. Subsequently, Graybar combined its voice and data communications services with a significant reduction in company-wide telephone expense. Electronic Data Interchange (EDI), which allows a customer's computer to place orders directly with Graybar's computer system, continues to be a growing service offering. In 1994 we developed new software that provides "event driven" EDI to those customers who need it. This version of EDI provides even faster transmission of information between the computer systems. In addition, IS created several new "transaction sets," business documents generated by EDI, to support customer and supplier requirements. - -------------------------------------- 12 ------------------------------------- 16 OPERATIONS REVIEW - ------------------------------------------------------------------------------- Graybar retirees take pride in the Company they helped build. Shown here are retirees representing the Cleveland District. Standing are Bill Crotser, Isabel Lee, Wally Kiewel, Bob Urmetz, Herman Lotarski, and Vince Chazinski. In front are Anne Marinch, Annie Souris, and Al Jarosz. [PHOTO] Human Resources ==================================--------------------------------------------- Personnel In 1994, the Board of Directors elected Carl L. Hall to the position of Executive Vice President. Mr. Hall will succeed Edward A. McGrath as President when Mr. McGrath retires in 1995. At the time of his election, Mr. Hall was District Manager at Chicago. He has served as a Director since 1989. The Board also elected a new Director, Richard D. Offenbacher, District Manager at St. Louis. The Company appointed two District Managers in 1994: Richard A. Cole, Chicago, and Robert L. Nowak, Minneapolis. Graybar districts continued to specialize their marketing functions in 1994. Several districts appointed Market Managers in keeping with the Company goal of providing specialized marketing support to all branches. The Company also appointed one District Operating Manager and one District Financial Manager in 1994. Graybar continued the process of grouping selected branches into trading areas. Trading areas allow two or more locations to combine their sales and marketing resources at the same time they share certain administrative responsibilities. In 1994, Robert A. Reynolds was appointed Vice President-Marketing Services at corporate headquarters. Anthony A. Brzoski was appointed Vice President-Utility and Communications Markets. Also appointed at the General Department were four National Sales Managers, two National Product Managers, four General Managers-International, one Sales Manager-International, and a Manager, Graybar Financial Services. During the year, management formulated a realignment of the Company which became effective January 1, 1995. Two business groups, one for distribution of electrical supplies and one for distribution of communications and data products, were formed. Effective the same date, Richard H. Haney was appointed Group Vice President-Electrical Business, and Robert A. Reynolds was appointed Group Vice President-Comm/Data Business. - -------------------------------------- 13 ------------------------------------- 17 OPERATIONS REVIEW - ------------------------------------------------------------------------------- Training The Company's training efforts were focused in five primary areas in 1994: sales, quality and customer service, product, management, and employee development. Pathfinder, Graybar's interactive computer-based training network, has become an integral part of the Company's training strategy. Pathfinder modules address our five primary areas of training emphasis. There are approximately 190 modules currently on the network. In addition to the training programs mentioned in the Market Review and Operations Review sections of this Report, the Company's High- Performance Selling and Excellence in Customer Service programs graduated 916 employees in 1994. The Graybar Management Training Seminar completed its eleventh year. Two classes were conducted by the officers, with 40 managers completing the week-long course. [PHOTO] Graybar employees in Long Island City made their branch the first Graybar location to achieve the prestigious ISO 9002 certification. [PHOTO] - -------------------------------------- 14 ------------------------------------- 18 FINANCIAL REVIEW - ------------------------------------------------------------------------------- Selected Consolidated Financial Data (Stated in thousands except for per share data)
1994 1993 1992 1991 1990 ===================================================================================================== Sales $2,364,461 $2,041,473 $1,902,354 $1,743,544 $1,894,626 Less--Cash discounts (8,839) (8,306) (8,243) (8,170) (9,903) - ----------------------------------------------------------------------------------------------------- Net Sales 2,355,622 2,033,167 1,894,111 1,735,374 1,884,723 - ----------------------------------------------------------------------------------------------------- Cost of Merchandise Sold (1,934,925) (1,668,007) (1,564,929) (1,431,255) (1,565,717) - ----------------------------------------------------------------------------------------------------- Interest Expense (12,003) (9,810) (10,054) (13,092) (13,962) - ----------------------------------------------------------------------------------------------------- Provision for Income Taxes Current (15,225) (10,016) (6,601) (6,356) (9,961) Deferred 1,251 763 (493) (534) 1,633 - ----------------------------------------------------------------------------------------------------- Total provision for income taxes (13,974) (9,253) (7,094) (6,890) (8,328) - ----------------------------------------------------------------------------------------------------- Income Before Cumulative Effect of Accounting Change 18,702 14,745 10,232 9,515 11,985 - ----------------------------------------------------------------------------------------------------- Cumulative effect on prior years of change in accounting for postretirement benefits -- (45,000) -- -- -- - ----------------------------------------------------------------------------------------------------- Net Income (Loss) 18,702 (30,255) 10,232 9,515 11,985 - ----------------------------------------------------------------------------------------------------- Income (Loss) Applicable to Common Stock 18,694 (30,265) 10,222 9,504 11,973 - ----------------------------------------------------------------------------------------------------- Average Common Shares Outstanding 4,641 4,779 4,638 4,814 4,931 - ----------------------------------------------------------------------------------------------------- Income (Loss) per Share of Common Stock 4.03 (6.33) 2.20 1.97 2.43 - ----------------------------------------------------------------------------------------------------- Cash dividends per share 2.00 2.00 2.00 2.00 2.00 - ----------------------------------------------------------------------------------------------------- Retained Earnings Balance, beginning of year 52,486 91,733 93,837 92,910 89,776 Add--Net income (loss) 18,702 (30,255) 10,232 9,515 11,985 - ----------------------------------------------------------------------------------------------------- 71,188 61,478 104,069 102,425 101,761 - ----------------------------------------------------------------------------------------------------- Less dividends Preferred ($1.00 per share) (8) (10) (10) (11) (12) Common (in cash) (8,729) (8,982) (8,282) (8,577) (8,839) Common (in stock) (5,370) -- (4,044) -- -- - ----------------------------------------------------------------------------------------------------- (14,107) (8,992) (12,336) (8,588) (8,851) - ----------------------------------------------------------------------------------------------------- Balance, end of year 57,081 52,486 91,733 93,837 92,910 Proceeds on stock subscriptions, shares unissued 39 51 -- 67 72 Stock Outstanding Preferred 164 183 197 219 223 Common 91,859 89,098 85,719 85,132 87,687 - ----------------------------------------------------------------------------------------------------- Total Shareholders' Equity 149,143 141,818 177,649 179,255 180,892 - ----------------------------------------------------------------------------------------------------- Total Assets 719,786 610,512 557,036 518,480 541,358 Long-term Debt $ 90,212 $ 63,621 $ 64,655 $ 70,338 $ 79,189 ===================================================================================================== Adjusted for the declaration of 6.25% and 5% stock dividends in 1994 and 1992, respectively. Prior to adjusting for the stock dividends, the average common shares outstanding for 1993, 1992, 1991 and 1990 were 4,498, 4,157, 4,315 and 4,420, respectively. This summary should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this annual report.
- -------------------------------------- 15 ------------------------------------- 19 FINANCIAL REVIEW - ------------------------------------------------------------------------------- Management's Discussion and Analysis of Financial Condition and Results of Operations (Stated in thousands except for share and per share data) RESULTS OF OPERATIONS 1994 Compared to 1993 Net sales in 1994 were 15.9% higher than in 1993. The higher net sales resulted from improvements in the market sectors of the economy in which the Company operates. The impact of inflation on sales and cost of sales was not significant in 1994. Gross margin in 1994 increased $55,537 (15.2%) compared to 1993 primarily due to the increased sales in the electrical and communications markets. The increase in selling, general and administrative expenses in 1994 compared to 1993 occurred largely because of adjustments in personnel complement and adjustments in compensation and related expenses. Interest charges increased in 1994 compared to 1993 primarily due to increased levels of borrowing incurred to finance higher levels of inventory and receivables. Interest rates on 1994 short-term borrowings have been generally higher than for the same period in 1993. The combined effect of the increase in gross margin and the decrease in other income, together with the increases in selling, general and administrative expenses, interest charges and depreciation and amortization, resulted in an increase in income before provision for income taxes and cumulative effect of the accounting change of $8,678 in 1994 compared to 1993. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," on January 1, 1993 on the immediate recognition basis. The after-tax impact of the accounting change decreased 1993 earnings $45,000, or $9.42 per share. 1993 Compared to 1992 Net sales in 1993 were 7.3% higher than in 1992. The higher net sales resulted from improvements in the market sectors of the economy in which the Company operates. The impact of inflation on sales and cost of sales was not significant in 1993. Gross margin in 1993 increased $35,978 (10.9%) compared to 1992 primarily due to the increased sales in the electrical and communications markets together with a generally higher gross margin rate in those markets. The increase in selling, general and administrative expenses in 1993 compared to 1992 occurred largely because of adjustments in personnel complement and adjustments in compensation and related expenses. Interest charges decreased in 1993 compared to 1992 primarily due to lower interest rates on short-term borrowings. The combined effect of the increases in gross margin and other income and the decrease in interest charges, together with the increases in selling, general and administrative expenses and depreciation and amortization, resulted in an increase in income before provision for income taxes and cumulative effect of the accounting change of $6,672 in 1993 compared to 1992. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," on January 1, 1993. SFAS No. 106 requires current recognition of postretirement benefit costs as opposed to recognizing these costs on a cash basis. SFAS No. 106 was adopted by the Company on the immediate recognition basis. The after-tax impact of the accounting change decreased 1993 earnings $45,000, or $9.42 per share. While adoption of SFAS No. 106 had an adverse effect on the 1993 reported results of operations and shareholders' equity, cash flows were not affected. - -------------------------------------- 16 ------------------------------------- 20 FINANCIAL REVIEW - ------------------------------------------------------------------------------- Management's Discussion and Analysis of Financial Condition and Results of Operations (Stated in thousands except for share and per share data) 1992 Compared to 1991 Net sales in 1992 were 9.1% higher than in 1991. The higher net sales resulted from improvements in the market sectors of the economy in which the Company operates. The impact of inflation on sales and cost of sales was not significant in 1992. Gross margin in 1992 increased $25,063 (8.2%) compared to 1991 primarily due to the increased sales in the electrical and communications markets. The increase in selling, general and administrative expenses in 1992 compared to 1991 occurred largely because of adjustments in compensation and related expenses including an increase in the Company's contribution to the profit sharing and savings plan. Interest charges decreased in 1992 compared to 1991 primarily due to lower interest rates on short-term borrowings. The combined effect of the increases in gross margin and other income, together with the decrease in interest charges and increases in selling, general and administrative expenses and depreciation and amortization, resulted in an increase in pretax earnings of $921 in 1992 compared to 1991. FINANCIAL CONDITION AND LIQUIDITY The financial condition of the Company continues to be strong. At December 31, 1994, current assets exceeded current liabilities by $136,134, up $16,215 from December 31, 1993. The current assets at December 31, 1994 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 December 31, 1994, the Company had available to it unused lines of credit amounting to $129,000. These lines are available to meet short- term cash requirements of the Company. Bank borrowings outstanding during 1994 and 1993 varied from a minimum of $54,000 and $50,000 to a maximum of $132,000 and $123,000, respectively. In May, 1992, the Company entered into a $50,000 Revolving Credit Loan Agreement with a group of banks at an interest rate based on the London Interbank Offered Rate (LIBOR). The credit agreement has various covenants which limit the Company's ability to make investments, incur debt, dispose of property, and issue equity securities. The Company is also required to maintain certain financial ratios as defined in the agreement. The Company intends to utilize this credit line primarily as a secondary source of borrowing for short-term financing requirements. There have been no borrowings against this credit line through December 31, 1994. The Company has funded its capital requirements from operations, stock issuances to its employees and long-term debt. In May, 1994, the Company received the proceeds from a ten-year note for $35,000 at a fixed interest rate of 6.25% with principal payable in five equal, annual installments in each of the years 2000 through 2004. The note agreement has 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 agreement. Cash provided by operations during 1994 amounted to $16,453, which was $10,153 more than the cash provided by operations in 1993. Cash provided from the sale of common stock and proceeds received on stock subscriptions amounted to $578 and $6,288 in 1994 and 1993, respectively. Additional cash of approximately $447 will be provided in 1995 as a result of payments to be made for stock subscribed to by employees under the 1992 Common Stock Purchase Plan. - -------------------------------------- 17 ------------------------------------- 21 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Consolidated Statements of Income and Retained Earnings (Stated in thousands except for share and per share data)
For the Years Ended December 31, 1994 1993 1992 ====================================================================================== Sales, net of returns and allowances $2,364,461 $2,041,473 $1,902,354 Less--Cash discounts (8,839) (8,306) (8,243) - -------------------------------------------------------------------------------------- Net Sales 2,355,622 2,033,167 1,894,111 - -------------------------------------------------------------------------------------- Cost of Merchandise Sold (1,934,925) (1,668,007) (1,564,929) - -------------------------------------------------------------------------------------- Gross Margin 420,697 365,160 329,182 Selling, General and Administrative expenses (339,557) (299,910) (271,615) Taxes, other than income taxes (21,952) (19,915) (18,361) Depreciation and amortization (15,999) (14,379) (13,729) - -------------------------------------------------------------------------------------- Income from operations 43,189 30,956 25,477 Other Income, net 1,490 2,852 1,903 Interest Expense (12,003) (9,810) (10,054) - -------------------------------------------------------------------------------------- Income Before Provision for Income Taxes and Cumulative Effect of Accounting Change 32,676 23,998 17,326 - -------------------------------------------------------------------------------------- Provision for Income Taxes Current (15,225) (10,016) (6,601) Deferred 1,251 763 (493) - -------------------------------------------------------------------------------------- Total provision for income taxes (13,974) (9,253) (7,094) - -------------------------------------------------------------------------------------- Income before cumulative effect of accounting change 18,702 14,745 10,232 - -------------------------------------------------------------------------------------- Cumulative effect on prior years of change in accounting for postretirement benefits, net of $28,000 tax benefit --- (45,000) --- - -------------------------------------------------------------------------------------- Net Income (Loss) 18,702 (30,255) 10,232 - -------------------------------------------------------------------------------------- Retained Earnings, beginning of year 52,486 91,733 93,837 Cash dividends- Preferred, $1.00 per share each year (8) (10) (10) Common, $2.00 per share each year (8,729) (8,982) (8,282) Common Stock dividend (5,370) --- (4,044) - -------------------------------------------------------------------------------------- Retained Earnings, end of year $ 57,081 $ 52,486 $ 91,733 - -------------------------------------------------------------------------------------- Income per Share of Common Stock Before Cumulative Effect of Accounting Change $ 4.03 $ 3.09 $ 2.20 - -------------------------------------------------------------------------------------- Net Income (Loss) per share of Common Stock $ 4.03 $ (6.33) $ 2.20 - -------------------------------------------------------------------------------------- See accompanying Notes to Consolidated Financial Statements
- -------------------------------------- 18 ------------------------------------- 22 CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------
Consolidated Balance Sheets December 31, (Stated in thousands except for share and per share data) 1994 1993 =========================================================================================== ASSETS =========================================================================================== Current Assets Cash $ 17,144 $ 17,332 Trade receivables (less allowances of $4,296 and $3,945, respectively) 301,525 256,634 Merchandise inventory 211,482 167,927 Other current assets 12,273 10,099 - ------------------------------------------------------------------------------------------- Total current assets 542,424 451,992 - ------------------------------------------------------------------------------------------- Property, at cost Land 19,297 16,812 Buildings 131,081 121,339 Furniture and fixtures 79,542 68,666 Capital equipment leases 32,235 29,612 - ------------------------------------------------------------------------------------------- 262,155 236,429 Less--Accumulated depreciation 108,722 99,494 - ------------------------------------------------------------------------------------------- 153,433 136,935 - ------------------------------------------------------------------------------------------- Deferred Income Taxes 15,234 14,446 - ------------------------------------------------------------------------------------------- Other Assets 8,695 7,139 - ------------------------------------------------------------------------------------------- $719,786 $610,512 - ------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------- Current Liabilities Notes payable to banks $ 80,488 $ 82,194 Current portion of long-term debt 13,457 11,000 Trade accounts payable 258,656 193,843 Accrued payroll and benefit costs 35,075 27,643 Other accrued taxes 7,475 6,375 Dividends payable 4,801 4,910 Other payables and accruals 6,338 6,108 - ------------------------------------------------------------------------------------------- Total current liabilities 406,290 332,073 - ------------------------------------------------------------------------------------------- Postretirement Benefits Liability 74,141 73,000 - ------------------------------------------------------------------------------------------- Long-term Debt 90,212 63,621 - ------------------------------------------------------------------------------------------- Shares at December 31, 1994 1993 - ------------------------------------------------------------------------------------------- Shareholders' Equity Capital stock- Preferred, par value $20 per share, authorized 300,000 shares-- Issued to shareholders 8,248 9,533 In treasury, at cost (60) (378) - ------------------------------------------------------------------------------------------- Outstanding 8,188 9,155 164 183 - ------------------------------------------------------------------------------------------- Common, stated value $20 per share, authorized 5,000,000 shares-- Issued to voting trustees 4,347,757 4,239,403 Issued to shareholders 250,893 240,991 In treasury, at cost (5,708) (25,507) - ------------------------------------------------------------------------------------------- Outstanding 4,592,942 4,454,887 91,859 89,098 - ------------------------------------------------------------------------------------------- Common shares subscribed 486 1,088 Retained earnings 57,081 52,486 - ------------------------------------------------------------------------------------------- 149,590 142,855 Less--Subscriptions receivable 447 1,037 - ------------------------------------------------------------------------------------------- Total Shareholders' Equity 149,143 141,818 - ------------------------------------------------------------------------------------------- $719,786 $610,512 - ------------------------------------------------------------------------------------------- See accompanying Notes to Consolidated Financial Statements
- -------------------------------------- 19 ------------------------------------- 23 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Consolidated Statements of Cash Flows (Stated in thousands)
For the Years Ended December 31, 1994 1993 1992 ================================================================================================ Cash Flows from Operations Income before cumulative effect of accounting change $18,702 $14,745 $10,232 ================================================================================================ Adjustments to reconcile income before cumulative effect of accounting change to cash provided by operations- Depreciation and amortization 15,999 14,379 13,729 Deferred income taxes (1,251) (763) 493 Changes in assets and liabilities: Trade receivables (44,891) (19,226) (36,287) Merchandise inventory (43,555) (5,524) (10,351) Other current assets (2,174) (1,556) (2,171) Other assets (1,556) 448 (285) Trade accounts payable 64,813 1,609 45,182 Accrued payroll and benefit costs 7,432 1,948 8,862 Other accrued liabilities 2,934 240 (682) ================================================================================================ (2,249) (8,445) 18,490 ================================================================================================ Net cash flow provided by operations 16,453 6,300 28,722 ================================================================================================ Cash Flows From Investing Activities Proceeds from sale of property 415 277 1,131 Capital expenditures for property (26,963) (13,264) (9,626) ================================================================================================ Net cash flow used by investing activities (26,548) (12,987) (8,495) ================================================================================================ Cash Flows From Financing Activities Net (decrease) increase in notes payable to banks (1,706) 12,196 3,998 Proceeds from long-term debt 35,000 10,000 -- Repayment of long-term debt (7,892) (5,699) (6,909) Principal payments under capital equipment leases (4,009) (3,812) (2,467) Sale of common stock 578 6,288 562 Purchase of treasury stock (3,218) (2,872) (4,108) Dividends paid (8,846) (8,620) (8,444) ================================================================================================ Net cash flow provided (used) by financing activities 9,907 7,481 (17,368) ================================================================================================ Net (Decrease) Increase in Cash (188) 794 2,859 ================================================================================================ Cash, Beginning of Year 17,332 16,538 13,679 - ------------------------------------------------------------------------------------------------ Cash, End of Year $17,144 $17,332 $16,538 - ------------------------------------------------------------------------------------------------ See accompanying Notes to Consolidated Financial Statements
- -------------------------------------- 20 ------------------------------------- 24 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Notes to Consolidated Financial Statements for the Years Ended December 31, 1994, 1993 and 1992 (Stated in thousands except for share and per share data) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Graybar Electric Company, Inc. and its subsidiary companies. All significant intercompany balances and transactions have been eliminated. Merchandise Inventory Inventory is stated at the lower of cost (determined using the last-in, first-out (LIFO) cost method) or market. LIFO accounting is generally a conservative method of accounting that, compared with other inventory accounting methods, provides better matching of current costs with current revenues. Had the first-in, first-out (FIFO) method been used, inventory would have been approximately $25,360 and $19,690 greater than reported under the LIFO method at December 31, 1994 and 1993, respectively. Revenue Recognition Revenue from the sale of the Company's products is recognized upon shipment to the customer. Costs of the products are recorded as cost of merchandise sold when the related revenue is recognized. Property and Depreciation The Company provides for depreciation using the straight-line method over the following estimated useful lives of the assets: - ---------------------------------------------------------- Buildings 42 years - ---------------------------------------------------------- Permanent fixtures-- Over the lives of the leased property respective leases - ---------------------------------------------------------- Furniture, fixtures and equipment 4 to 14 years - ---------------------------------------------------------- Capital equipment Over the lives of the leases respective leases - ----------------------------------------------------------
At the time property is retired, or otherwise disposed of, the asset and related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to other income. Equipment under capital leases is recorded in property with the corresponding obligations carried in long-term debt. The amount capitalized is the present value at the beginning of the lease term of the aggregate minimum lease payments. Maintenance and repairs are expensed as incurred. Renewals and betterments that extend the life of the property are capitalized. The Company capitalizes interest expense on major construction and development projects while in progress. Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company distributes its products to a large number of customers in the electrical contractor, industrial plant and communications markets. Most of the Company's business activity is with customers in the United States; however, the Company has limited sales activity in several international locations. The Company performs ongoing credit evaluations of its customers, and a significant portion of trade receivables is secured by lien or bond rights. In addition, export sales are usually guaranteed by letter of credit or advance payment arrangements. The Company maintains allowances for potential credit losses and such losses historically have been within management's expectations. 2. INCOME TAXES Effective January 1, 1992, the Company adopted Statement of Financial Accounting Standard No. 109 (SFAS No. 109), "Accounting for Income Taxes." No cumulative adjustment was required as a result of the adoption of SFAS No. 109 due to the Company's previous use of the liability method of accounting for income taxes. The provision for income taxes recorded in the Consolidated Statements of Income and Retained Earnings is as follows:
Years Ended December 31: 1994 1993 1992 - ------------------------------------------------------------------------- Federal income tax Current $13,335 $9,067 $5,896 Deferred (951) (629) 471 State income tax Current 1,890 949 705 Deferred (300) (134) 22 - ------------------------------------------------------------------------- Financial statement income tax provision $13,974 $9,253 $7,094 - -------------------------------------------------------------------------
- -------------------------------------- 21 ------------------------------------- 25 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Deferred income taxes are provided based upon differences between the financial statement and tax bases of assets and liabilities. The following deferred taxes are recorded at December 31:
Assets/(Liabilities) 1994 1993 - ------------------------------------------------------------- Postretirement benefits $ 29,323 $ 28,872 Payroll accruals 4,320 3,872 Bad debt reserves 1,673 1,383 Inventory 1,463 1,147 Other deferred tax assets 3,431 2,475 Prepaid pension (2,717) (2,294) Fixed asset depreciation (13,513) (13,523) Fixed asset gains (624) (624) Other deferred tax liabilities (4,976) (4,179) - ------------------------------------------------------------- $ 18,380 $ 17,129 - -------------------------------------------------------------
Deferred tax assets included in Other Current Assets were $3,146 and $2,683 in 1994 and 1993, respectively. A reconciliation between the "statutory" federal income tax rate and the effective tax rate in the Consolidated Statements of Income and Retained Earnings is as follows:
Years Ended December 31: 1994 1993 1992 - ------------------------------------------------------------------------ "Statutory" tax rate 35.0% 35.0% 34.0% State and local income taxes, net of federal benefit 3.4 2.9 2.8 Other, net 4.4 .7 4.1 - ------------------------------------------------------------------------ Effective tax rate 42.8% 38.6% 40.9% - ------------------------------------------------------------------------
3. CAPITAL STOCK The Company's capital stock is owned by its employees and retirees. Neither common nor preferred stock may be sold by the holder thereof, except by first offering it to the Company. The Company may buy any common shares so offered at the price at which they were issued ($20) with appropriate adjustments for current dividends, or may call all or part of the preferred stock at par plus accrued dividends. During 1992, the Company offered to eligible employees the right to subscribe to 480,000 shares of common stock at $20 per share in accordance with the provisions of the Company's Common Stock Purchase Plan dated October 7, 1992. This resulted in the subscription of 363,681 shares ($7,274). Subscribers under the Plan elected to make payments under one of the following options: (i) all shares subscribed for prior to January 22, 1993; (ii) a portion of such shares prior to January 22, 1993, and the balance in monthly installments through payroll deductions (or in certain cases where a subscriber is no longer on the Company's payroll, through pension deductions or direct monthly payments) over a 34-month period; or (iii) all shares pursuant to the installment method. Shares were issued and Voting Trust Certificates were delivered to subscribers as of January 22, 1993, in the case of shares paid for prior to January 22, 1993. Shares will be issued and Voting Trust Certificates will be delivered to subscribers on a quarterly basis, as of the tenth day of March, June, September and December to the extent full payments of shares are made in the case of subscriptions under the installment method. Shown below is a summary of shares reacquired and retired by the Company in the three years ended December 31:
Preferred Common Reacquired Retired Reacquired Retired - ------------------------------------------------------------------------------------------------ Years ended December 31: 1994 967 1,285 159,938 179,737 1993 717 514 142,889 128,633 1992 1,082 907 204,303 208,797 - ------------------------------------------------------------------------------------------------
4. LONG-TERM DEBT
December 31, Long-term debt was composed of: 1994 1993 - ------------------------------------------------------------------------ 6.25% note, unsecured, maturing June, 2004, installments of $7,000 due annually in each of the years 2000 through 2004 $35,000 $ -- 9.23% note secured by a first mortgage on various properties, maturing June, 2005, installments of $2,725 due annually in each of the years 1995 through 2004 with final payment of $2,750 due in 2005 27,275 30,000 12.25% note secured by a first mortgage on various properties, due in monthly installments through June, 1999 10,343 12,575 5.68% to 9.23% capital equipment leases, various maturities 10,027 7,873 5.68% note, unsecured, maturing June, 1998, installments of $2,000 due annually in each of the years 1994 through 1998 6,000 8,000 8.75% note, unsecured, maturing November, 1995 -- 2,500 Variable rate, Industrial Revenue Bonds, secured by facilities, various maturities 1,567 2,673 - ------------------------------------------------------------------------ $90,212 $63,621 - ------------------------------------------------------------------------
- -------------------------------------- 22 ------------------------------------- 26 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- Long-term debt matures as follows: - ------------------------------------ 1996 $10,906 1997 10,882 1998 9,804 1999 6,245 2000-2005 52,375 - ------------------------------------ $90,212 - ------------------------------------
The present value of future minimum lease payments under capital leases as of December 31, 1994 was $12,921 of which $10,027 is included in long-term debt. Bank borrowings varied from a minimum of $54,000 and $50,000 to a maximum of $132,000 and $123,000 in 1994 and 1993, respectively. The average amount of bank borrowings outstanding during 1994 and 1993 amounted to approximately $88,000 and $85,000 at average interest rates of 4.40% and 3.30%, respectively. The averages are based on the daily amounts outstanding during each year. The Company had unused lines of credit of approximately $129,000 as of December 31, 1994. Certain lines require maintenance of compensating balances of up to 5% of the available lines of credit. In May, 1994, the Company received the proceeds from a ten-year note for $35,000 at a fixed interest rate of 6.25%. The note agreement has 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 agreement. In May, 1992, the Company entered into a $50,000 Revolving Credit Loan Agreement with a group of banks at an interest rate based on the London Interbank Offered Rate (LIBOR). The credit agreement has various covenants which limit the Company's ability to make investments, incur debt, dispose of property, and issue equity securities. The Company is also required to maintain certain financial ratios as defined in the agreement. There have been no borrowings against this credit line through December 31, 1994. 5. PENSION PLAN Pension and related expense was $4,635, $3,556 and $3,676 for each of three years ended December 31, 1994, 1993 and 1992, respectively. The Company has a noncontributory defined benefit pension plan covering substantially all full-time employees. The plan provides retirement benefits based on an employee's final average earnings and years of service. Employees become 100% vested after 5 years of service, regardless of age. The Company's funding policy is to contribute the net periodic pension cost accrued each year, provided that the contribution will not be less than the ERISA minimum nor greater than the maximum tax deductible amount. The actuarially computed components of the defined benefit pension plan expense for the three years ended December 31, are as follows:
1994 1993 1992 ------------------------------- Service cost-benefits earned during the year $ 4,249 $ 3,383 $ 3,303 Interest cost on projected benefit obligation 7,357 6,923 6,641 Actual return on plan assets 642 (9,472) (2,546) Net amortization of return on plan assets and unrecognized net asset (8,660) 1,958 (4,389) ------- ------- ------- Total defined benefit plan expense $ 3,588 $ 2,792 $ 3,009 ======= ======= =======
The following table sets forth the plan's funded status for the two years ended December 31:
1994 1993 ------------------- Actuarial present value of benefit obligation: Vested benefits $52,883 $61,765 Nonvested benefits 11,329 11,798 ------- ------- Accumulated benefit obligation 64,212 73,563 ------- ------- Projected benefit obligation for service rendered to date 92,514 98,753 ------- ------- Plan assets at fair value, primarily common stocks and bonds 80,738 88,464 ------- ------- Projected benefit obligation in excess of plan assets (11,776) (10,289) ------- ------- Unrecognized prior service cost (12) 6 Unrecognized net loss 28,412 27,030 Unrecognized net asset at January 1, 1987 (11,584) (12,743) ------- ------- Net pension asset recognized in the consolidated balance sheet $ 5,040 $ 4,004 ======= =======
The discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 8.50% and 5.50%, and 7.50% and 4.50% in 1994 and 1993, respectively. The long-term rate of return on assets used in determining defined benefit plan expense was 9.75% in 1994, and 9.00% in 1993 and 1992. The average remaining service lives of plan participants used to calculate the amortization of the unrecognized net asset at January 1, 1987 was 18 years. - -------------------------------------- 23 ------------------------------------- 27 CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- The Company also provides a defined contribution profit sharing and savings plan covering substantially all of its full-time employees. Annual contributions by the Company to the plan are at the discretion of management and are generally determined based on the profitability of the Company. Employees may also contribute to the plan subject to limitations imposed by federal tax law and ERISA. 6. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The Company and its subsidiaries provide certain health care and life insurance benefits for retired employees through the Retiree Welfare Plan (the Plan). Substantially all of the Company's employees may become eligible to participate in the Plan if they reach normal retirement age while working for the Company. Benefits are provided through insurance coverage with premiums based on the benefits paid during the year. The Company funds the Plan on a pay-as-you-go basis and, accordingly, the Plan had no assets at December 31, 1994 or 1993. The Company elected to immediately recognize the cumulative effect of adoption of SFAS No. 106 pertaining to years prior to 1993 through a one-time adjustment which decreased 1993 net income by $45,000, net of a $28,000 income tax effect. Periodic postretirement benefit expense for the two years ended December 31, is as follows:
1994 1993 ------------------------------ Service cost-benefits earned during the year $ 536 $ 401 Interest cost on accumulated postretirement benefit obligation 6,149 6,111 Amortization of net loss from prior years 122 --- ------ ------ Net periodic postretirement benefit expense $6,807 $6,512 ====== ======
The following table sets forth the accumulated postretirement benefit obligation for the Company's postretirement benefit plans for the two years ended December 31:
1994 1993 ------------------- Retirees $60,743 $63,719 Fully eligible active plan participants 11,135 13,243 Other active plan participants 6,034 7,492 ------- ------- Accumulated postretirement benefit obligation 77,912 84,454 Unrecognized net loss (3,771) (11,454) ------- ------- Accrued postretirement benefit cost $74,141 $73,000 ======= =======
The discount rate used in determining net periodic postretirement benefit expense was 7.50% and 8.75% for 1994 and 1993, respectively. The discount rate used to determine the accumulated postretirement benefit obligation was 8.50% and 7.50% at December 31, 1994 and 1993, respectively. The health care cost trend rate used in determining net periodic postretirement benefit expense for all years was 6.75% and 8.00% for 1994 and 1993, respectively. The health care cost trend rate used to determine the accumulated postretirement benefit obligation for all years was 6.75% at December 31, 1994 and 1993. A one percentage point increase in the health care cost trend rate would not have a material impact on the net periodic postretirement benefit expense or the accumulated postretirement benefit obligation. 7. NET INCOME PER SHARE OF COMMON STOCK The computation of net income per share of common stock is based on the weighted average number of common shares outstanding during each year. The average numbers of shares used in computing net income per share of common stock were 4,640,998, 4,778,747 and 4,638,056 in 1994, 1993 and 1992, respectively, adjusted for the declaration of a 6.25% stock dividend in 1994 and a 5.00% stock dividend in 1992. 8. COMMITMENTS Rental expense was $8,420, $6,941 and $6,813 in 1994, 1993 and 1992, respectively. Future minimum rental payments required under operating leases that have either initial or remaining noncancellable lease terms in excess of one year as of December 31, 1994 are as follows:
Years ending December 31: - ------------------------------------------------ 1995 $8,182 1996 6,394 1997 4,176 1998 3,002 1999 2,314 Subsequent to 1999 3,182 - ------------------------------------------------
9. STATEMENTS OF CASH FLOWS During 1994, 1993 and 1992 income taxes paid totaled $16,783, $10,621 and $6,166; interest paid totaled $11,987, $10,158 and $9,714 and liabilities assumed in connection with capitalized leases totaled $5,949, $0 and $5,607, respectively. - -------------------------------------- 24 ------------------------------------- 28 REPORT OF INDEPENDENT ACCOUNTANTS - ------------------------------------------------------------------------------- One Boatmen's Plaza Telephone 314 425 0500 St. Louis, MO 63101 Price Waterhouse LLP REPORT OF INDEPENDENT ACCOUNTANTS February 17, 1995 To the Shareholders and Board of Directors of Graybar Electric Company, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and retained earnings and of cash flows present fairly, in all material respects, the financial position of Graybar Electric Company, Inc. and its subsidiaries (the Company) at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 6 to the financial statements, the Company changed its method of accounting for postretirement benefits other than pensions effective January 1, 1993. /s/ Price Waterhouse LLP Price Waterhouse LLP - -------------------------------------- 25 ------------------------------------- 29 DISTRICT MANAGEMENT AS OF DECEMBER 31, 1994 - ------------------------------------------------------------------------------- ======================================== New York District ======================================== Frank Mossa Manager Robert E. Wierzbicki Communications Market Manager Michael Patoka Operating Manager Robert J. Bracchi Financial Manager ======================================== Boston District ======================================== William L. King Manager Donald M. Block C&I and Utility Market Manager Gerald G. Pollick Operating Manager Richard C. Hird Financial Manager ======================================== Philadelphia District ======================================== Gerard J. McCrea Manager Gerard J. Kollar Construction Market Manager Matthew W. Meacle Operating Manager Joseph P. Peduto Financial Manager ======================================== Pittsburgh District ======================================== Steven M. Schooley Manager Richard C. Kelly Construction Market Manager C. Robert Smith Operating Manager Brent D. Morgan Financial Manager ======================================== Cincinnati District ======================================== Lawrence R. Giglio Manager James D. Hooper C&I Market Manager David L. Mitchell Operating Manager Stephen C. Beckmann Financial Manager ======================================== Atlanta District ======================================== Richard H. Haney Manager H. Bennett Wall C&I and Utility Market Manager William E. Meyer, Jr. Construction Market Manager Allen C. Feige Operating Manager Darrel D. Schilling Financial Manager ======================================== Richmond District ======================================== Thomas S. Gurganous Manager J. Wayne Andrews C&I Market Manager Wallace H. Hancock Construction Market Manager Michael R. Gross Communications Market Manager Ernest L. Chappell, Jr. Operating Manager David E. Metz Financial Manager ======================================== Tampa District ======================================== Robert L. Mygrant Manager Robert C. Lyons District Construction and C&I Market Manager Robert P. Weiland Communications Market Manager Robert D. Wombacher Operating Manager Bruce E. Neilson Financial Manager - -------------------------------------- 26 ------------------------------------- 30 DISTRICT MANAGEMENT AS OF DECEMBER 31, 1994 - ------------------------------------------------------------------------------- ======================================== Chicago District ======================================== Richard A. Cole Manager Thomas E. Walsh C&I and Utility Market Manager Nancy C. Porter Operating Manager Martin J. Beagen Financial Manager ======================================== Minneapolis District ======================================== Robert L. Nowak Manager Terrence J. Innes C&I Market Manager Charles B. Paschke Communications Market Manager Edmund L. Trolander Operating Manager Thomas E. Kinate Financial Manager ======================================== St. Louis District ======================================== Richard D. Offenbacher Manager John P. Mills Operating Manager James V. Glass Financial Manager ======================================== Dallas District ======================================== Donald D. Erwin Manager Peter J. Roettinger C&I Market Manager Francis B. Roderick Construction Market Manager Raymond Manger Communications Market Manager Thomas T. Townsend Operating Manager George D. Zackey Financial Manager Arnold W. Nephew Integrated Supply Market Manager ======================================== San Francisco District ======================================== Frank L. Hipp, Jr. Manager Robert D. Vivian Communications Market Manager Peter F. Finn Operating Manager Gerald E. Spillman Financial Manager ======================================== Los Angeles District ======================================== Kenneth B. Sparks Manager Robert C. Odney C&I Market Manager James H. Schmidt Communications Market Manager Christopher O. Olsen Operating Manager James Bateman, Jr. Financial Manager ======================================== Seattle District ======================================== John C. Loff Manager Michael S. Lind C&I Market Manager Donald R. Stevenson Communications Market Manager T. Peter Girard, Jr. Operating Manager Randall R. Harwood Financial Manager ======================================== Phoenix District ======================================== Gary D. Hodges Manager Ralph S. Benell Communications Market Manager Jerry D. Nichols Operating Manager Ronald J. Grabar Financial Manager - -------------------------------------- 27 ------------------------------------- 31 LOCATIONS AS OF JANUARY 1, 1995 - ------------------------------------------------------------------------------- CORPORATE OFFICE 34 North Meramec Avenue St. Louis, Missouri 63105 314 727-3900 INFORMATION SYSTEMS 11828 Lackland Road St. Louis, Missouri 63146 314 569-0006 MID-ATLANTIC ZONE SERVICE CENTER 2124 Avenue C Bethlehem, Pennsylvania 18017 MIDWEST ZONE SERVICE CENTER 2424 A North Main Street East Peoria, Illinois 61611 ======================================== New York District ======================================== 21-15 Queens Plaza North Long Island City, New York 11101 718 392-2000 BRANCHES New York: Manhattan, Rochester, Albany, Syracuse, Hauppauge, Buffalo New Jersey: Newark, North Brunswick, Teterboro Telcom, Hackettstown, Parsippany ======================================== Philadelphia District ======================================== 1550 South Warfield Street Philadelphia, Pennsylvania 19146 215 336-2211 BRANCHES Maryland: Baltimore, Lanham Pennsylvania: Harrisburg, Allentown Delaware: New Castle Virginia: Chantilly ======================================== Cincinnati District ======================================== 1022 West Eighth Street Cincinnati, Ohio 45203 513 621-0600 BRANCHES West Virginia: Charleston Ohio: Columbus, Dayton, Lima Kentucky: Lexington, Louisville Tennessee: Nashville ======================================== Richmond District ======================================== 1510 Tomlynn Street Richmond, Virginia 23230 804 359-1381 BRANCHES Virginia: Norfolk, Roanoke Hampton North Carolina: Asheville, Raleigh, Winston-Salem, Charlotte, Greensboro, Wilmington South Carolina: Rock Hill Tennessee: Bristol, Johnson City ======================================== Boston District ======================================== 345 Harrison Avenue Boston, Massachusetts 02118 617 482-9320 BRANCHES Rhode Island: Cranston Massachusetts: Worcester, West Springfield, Boston Telcom (Somerville) Maine: Portland New Hampshire: Manchester Vermont: Rutland Connecticut: Hamden ======================================== Pittsburgh District ======================================== 900 Ridge Avenue Pittsburgh, Pennsylvania 15212 412 323-5200 BRANCHES Ohio: Youngstown, Cleveland, Akron, Canton, Mansfield Pennsylvania: Greensburg West Virginia: Wheeling ======================================== Atlanta District ======================================== 2050 Nancy Hanks Drive Norcross, Georgia 30071 404 441-5580 BRANCHES Georgia: Norcross, Atlanta Midtown, Marietta, Riverdale, Savannah, Cartersville Alabama: Birmingham, Huntsville, Mobile South Carolina: Columbia, Greenville, Spartanburg, Hilton Head, Beaufort Tennessee: Knoxville, Chattanooga Florida: Pensacola Mississippi: Jackson ======================================== Tampa District ======================================== 801 North Rome Avenue Tampa, Florida 33606 813 253-8881 BRANCHES Florida: Sarasota, Lakeland, Orlando, Largo, Melbourne, North Tampa, Jacksonville, South Jacksonville, Tallahassee, Daytona Beach, Perrine, Miami, West Palm Beach, Tampa Utility, Florida City, Fort Myers, Fort Pierce, Miami Telcom, Naples, Pompano Beach, Pompano Beach Telcom, Tampa Telcom Georgia: Kingsland - -------------------------------------- 28 ------------------------------------- 32 LOCATIONS AS OF JANUARY 1, 1995 - ------------------------------------------------------------------------------- ======================================== Chicago District ======================================== 900 Regency Drive Glendale Heights, Illinois 60139 708 893-3600 BRANCHES Illinois: Naperville Indiana: Fort Wayne, South Bend, Hammond, Indianapolis Michigan: Flint, Lansing, Grand Rapids, Kalamazoo, Auburn Hills, Kentwood, Livonia Ohio: Toledo ======================================== St. Louis District ======================================== 600 South Taylor Avenue St. Louis, Missouri 63110 314 531-4700 BRANCHES Iowa: Davenport, Des Moines, Cedar Rapids Illinois: East Peoria, Springfield Missouri: Jefferson City, Kansas City, Springfield Indiana: Evansville Kansas: Olathe, Wichita Nebraska: Omaha Tennessee: Memphis ======================================== Seattle Electrical District ======================================== 1919 Sixth Avenue South Seattle, Washington 98134 206 292-4848 BRANCHES Washington: Spokane, Tacoma, Everett, Bellevue Oregon: Portland, Beaverton Idaho: Boise Alaska: Anchorage California: Oakland, Fresno, Modesto, Sacramento, San Jose, Martinez, San Francisco Downtown Nevada: Reno Hawaii: Aiea ======================================== Western Comm/Data District ======================================== 1600 132nd Avenue, Northeast Bellevue, Washington 98005 206 453-1574 This new District supports communications and data sales in all branches of the Seattle Electrical District and the Phoenix Electrical District. ======================================== Minneapolis District ======================================== 2300 East 25th Street Minneapolis, Minnesota 55406 612 721-3545 BRANCHES Minnesota: St. Paul, Duluth, Brooklyn Park, Burnsville, Minneapolis Telcom (Plymouth), Rochester, Mankato Montana: Billings North Dakota: Fargo South Dakota: Sioux Falls, Brookings Wisconsin: Green Bay, Milwaukee, Marinette, Manitowoc, Madison ======================================== Dallas District ======================================== 717 South Good Latimer Expressway Dallas, Texas 75226 214 939-0844 BRANCHES Texas: San Antonio, Fort Worth, Amarillo, Austin, Abilene, Dallas Telcom, Cypress, Beaumont, Corpus Christi, Houston, Houston Telcom, North Dallas, Sherman, Lubbock, Longview, Kilgore, Carthage, Houston Distribution Center Oklahoma: Oklahoma City, Tulsa Arkansas: Little Rock, Conway Louisiana: Shreveport, Baton Rouge, Lake Charles, Harahan ======================================== Phoenix Electrical District ======================================== 3350 West Earll Drive Phoenix, Arizona 85017 602 269-2131 BRANCHES Arizona: Mesa, Tucson, Nogales Colorado: Colorado Springs, Denver, Englewood New Mexico: Albuquerque Texas: El Paso Nevada: Las Vegas, Henderson Utah: Salt Lake City California: Los Angeles, Anaheim, Costa Mesa, Long Beach, San Bernardino, San Diego, Chula Vista, Santa Barbara, Van Nuys, Bakersfield, San Marcos, Santa Maria, Los Angeles Distribution Center ======================================== International ======================================== 34 North Meramec Avenue St. Louis, Missouri 63105 314 727-3900 LOCATIONS Halifax, Nova Scotia Toronto, Canada Guaynabo, Puerto Rico Singapore Tamuning, Guam Juarez and Mexico City, Mexico GRAYBAR ELECTRIC (ONTARIO) LTD. Kitchener, Ontario Niagara Falls, Ontario Hamilton, Ontario Guelph, Ontario Windsor, Ontario MIAMI INTERNATIONAL 10500 Southwest 186th Street Perrine, Florida 38157 305 252-0400 33 Graybar Electric Company, Inc. 34 North Meramec Avenue St. Louis, Missouri 63105 EX-21 3 LIST OF SUBSIDIARIES 1 EXHIBIT 21 LIST OF SUBSIDIARIES 2 EXHIBIT 21 ---------- GRAYBAR ELECTRIC COMPANY, INC. LIST OF SUBSIDIARIES -------------------- Graybar Foreign Sales Corporation, a Barbados corporation. Graybar International, Inc., a Missouri corporation doing business in the territory of Puerto Rico. Graybar Financial Services, Inc., a Missouri corporation. Graybar International Guam, Inc., a Missouri corporation. Graybar Electric de Mexico, S.A. de C.V., a Mexican corporation. Graybar Free Zone, S.A., a Panamanian corporation. Graybar Electric Limited, a Canadian corporation. Graybar Foundation, Inc., a Missouri corporation. Graybar Services, Inc., an Illinois corporation. Cognitive Training Corporation, a Missouri corporation. Distribution Associates, Inc., a Missouri corporation. Graybar Electric (Ontario) Limited, a Canadian corporation Graybar Holdings Limited, a Canadian corporation. Graybar-P&M International PTE LTD, a Singapore corporation. EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1994 DEC-31-1994 17,144 0 301,525 3,801 211,482 542,424 262,155 108,722 719,786 406,290 90,212 91,859 0 164 57,120 719,786 2,355,622 2,355,622 1,934,925 1,934,925 377,508 304 12,003 32,676 13,974 18,702 0 0 0 18,702 4.03 4.03
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