-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BwqxR5p9kOgguk2O9+Eo/PKi1VqrO9BDlkrxdAWa9jMpXeF9vJkljazmNYDUmEGg LvNN9iW5jf52zT6VhuwkEA== 0001068800-04-000495.txt : 20040812 0001068800-04-000495.hdr.sgml : 20040812 20040812094230 ACCESSION NUMBER: 0001068800-04-000495 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAYBAR ELECTRIC CO INC CENTRAL INDEX KEY: 0000205402 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 130794380 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00255 FILM NUMBER: 04968656 BUSINESS ADDRESS: STREET 1: 34 N MERAMEC AVE CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3145129200 MAIL ADDRESS: STREET 1: P O BOX 7231 CITY: ST LOUIS STATE: MO ZIP: 63177 10-Q 1 graybarq.txt GRAYBAR ELECTRIC COMPANY, INC. FORM 10-Q CONFORMED --------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 ----------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------- -------------- Commission File Number 0-255 GRAYBAR ELECTRIC COMPANY, INC. -------------------------------------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13 - 0794380 ------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105 ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) POST OFFICE BOX 7231, ST. LOUIS, MO 63177 ------------------------------------------------------------------------- (Mailing Address) (Zip Code) Registrant's telephone number, including area code: (314) 573 - 9200 ---------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2) of the Securities Exchange Act of 1934. YES NO X ------- ------- Common Stock Outstanding at July 31, 2004: 5,674,839 ------------------- (Number of Shares) Item 1. Financial Statements PART I ------ CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
JUNE 30, 2004 DECEMBER 31, 2003 ----------------------------- ------------------------- CURRENT ASSETS Cash $ 24,217 $ 19,161 ----------------------------- ------------------------- Trade receivables 609,420 556,967 ----------------------------- ------------------------- Merchandise inventory 497,435 483,333 ----------------------------- ------------------------- Other current assets 16,806 17,815 ----------------------------- ------------------------- Total current assets 1,147,878 1,077,276 ----------------------------- ------------------------- PROPERTY Land 29,922 27,092 ----------------------------- ------------------------- Buildings and permanent fixtures 241,755 237,840 ----------------------------- ------------------------- Furniture and fixtures 162,583 163,932 ----------------------------- ------------------------- Software 76,906 76,339 ----------------------------- ------------------------- Capital leases 23,987 23,987 ----------------------------- ------------------------- Less-Accumulated depreciation 237,890 223,585 ----------------------------- ------------------------- Net property 297,263 305,605 ----------------------------- ------------------------- DEFERRED FEDERAL INCOME TAXES 6,454 10,402 ----------------------------- ------------------------- OTHER ASSETS 27,361 28,847 ----------------------------- ------------------------- $ 1,478,956 $ 1,422,130 ============================= ========================= CURRENT LIABILITIES Short-term borrowings $ 75,963 $ --- ----------------------------- ------------------------- Current portion of long-term debt 32,756 22,872 ----------------------------- ------------------------- Trade accounts payable 523,092 536,179 ----------------------------- ------------------------- Other accrued taxes 14,985 13,684 ----------------------------- ------------------------- Accrued payroll and benefit costs 30,622 36,292 ----------------------------- ------------------------- Dividends payable --- 6,469 ----------------------------- ------------------------- Other payables and accruals 60,114 45,168 ----------------------------- ------------------------- Total current liabilities 737,532 660,664 ----------------------------- ------------------------- POSTRETIREMENT BENEFITS LIABILITY 78,236 77,636 ----------------------------- ------------------------- PENSION LIABILITY 40,895 40,895 ----------------------------- ------------------------- LONG TERM DEBT 229,725 254,381 ----------------------------- ------------------------- OTHER NON-CURRENT LIABILITIES 863 971 ----------------------------- ------------------------- 2 CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data) JUNE 30, 2004 DECEMBER 31, 2003 ------------------------- ------------------------- SHAREHOLDERS' EQUITY CAPITAL STOCK Preferred: ---------- Par value $20 per share Authorized 300,000 shares SHARES ------ 2004 2003 ---- ---- Issued to shareholders 2,173 2,173 ------------- ------------- In treasury, at cost (2,173) (52) ------------- ------------- Outstanding 0 2,121 0 43 ------------- ------------- ------------------------- ------------------------- Common: ------- Stated value $20 per share Authorized 15,000,000 shares SHARES ------ 2004 2003 ---- ---- Issued to voting trustees 5,620,612 5,609,313 ------------- ------------- Issued to shareholders 290,435 290,389 ------------- ------------- In treasury, at cost (205,943) (28,343) ------------- ------------- Outstanding 5,705,104 5,871,359 114,102 117,427 ------------- ------------- ------------------------- ------------------------- Advance payments on subscriptions to common stock 43 45 ------------------------- ------------------------- Retained earnings 312,807 306,030 ------------------------- ------------------------- Accumulated other comprehensive income (loss) (35,247) (35,962) ------------------------- ------------------------- TOTAL SHAREHOLDERS' EQUITY 391,705 387,583 ------------------------- ------------------------- $ 1,478,956 $ 1,422,130 ========================= ========================= See accompanying Notes to Consolidated Financial Statements
3 CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
QUARTER ENDED JUNE 30, 2004 JUNE 30, 2003 -------------------------- -------------------------- GROSS SALES, net of returns and allowances $ 1,043,845 $ 952,684 -------------------------- -------------------------- Less - Cash discounts 2,936 2,702 -------------------------- -------------------------- NET SALES 1,040,909 949,982 -------------------------- -------------------------- COST OF MERCHANDISE SOLD 836,225 769,169 -------------------------- -------------------------- Gross margin 204,684 180,813 -------------------------- -------------------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 179,195 164,677 -------------------------- -------------------------- DEPRECIATION AND AMORTIZATION 8,737 9,744 -------------------------- -------------------------- Income from operations 16,752 6,392 -------------------------- -------------------------- OTHER INCOME, net 742 2,729 -------------------------- -------------------------- INTEREST EXPENSE 5,555 6,287 -------------------------- -------------------------- Income before provision for income taxes 11,939 2,834 -------------------------- -------------------------- PROVISION FOR INCOME TAXES Current 2,722 429 -------------------------- -------------------------- Deferred 2,227 708 -------------------------- -------------------------- Total provision for income taxes 4,949 1,137 -------------------------- -------------------------- NET INCOME $ 6,990 $ 1,697 ========================== ========================== NET INCOME PER SHARE OF COMMON STOCK $ 1.22 $ .28 ========================== ========================== DIVIDENDS Preferred - $.25 per share $ --- $ --- -------------------------- -------------------------- Common - $.30 per share 1,715 1,799 -------------------------- -------------------------- $ 1,715 $ 1,799 ========================== ========================== See accompanying Notes to Consolidated Financial Statements
4 CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
SIX MONTHS ENDED JUNE 30, 2004 JUNE 30, 2003 -------------------------- -------------------------- GROSS SALES, net of returns and allowances $ 1,985,960 $ 1,816,647 -------------------------- -------------------------- Less - Cash discounts 5,742 5,321 -------------------------- -------------------------- NET SALES 1,980,218 1,811,326 -------------------------- -------------------------- COST OF MERCHANDISE SOLD 1,584,760 1,457,700 -------------------------- -------------------------- Gross margin 395,458 353,626 -------------------------- -------------------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 349,077 325,637 -------------------------- -------------------------- DEPRECIATION AND AMORTIZATION 18,607 17,785 -------------------------- -------------------------- Income from operations 27,774 10,204 -------------------------- -------------------------- OTHER INCOME, net 1,503 4,658 -------------------------- -------------------------- INTEREST EXPENSE 11,932 11,771 -------------------------- -------------------------- Income before provision for income taxes 17,345 3,091 -------------------------- -------------------------- PROVISION FOR INCOME TAXES Current 3,636 515 -------------------------- -------------------------- Deferred 3,475 721 -------------------------- -------------------------- Total provision for income taxes 7,111 1,236 -------------------------- -------------------------- NET INCOME $ 10,234 $ 1,855 ========================== ========================== NET INCOME PER SHARE OF COMMON STOCK (NOTE 2) $ 1.77 $ .31 ========================== ========================== DIVIDENDS Preferred - $.50 per share $ 1 $ 1 -------------------------- -------------------------- Common - $.60 per share 3,456 3,619 -------------------------- -------------------------- $ 3,457 $ 3,620 ========================== ========================== See accompanying Notes to Consolidated Financial Statements
5 CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Dollars Stated in Thousands)
SIX MONTHS ENDED JUNE 30, 2004 2003 -------------------------- -------------------------- CASH FLOWS FROM OPERATIONS Net Income $ 10,234 $ 1,855 -------------------------- -------------------------- Adjustments to reconcile net income to cash provided (used) by operations: Depreciation and amortization 18,607 17,785 -------------------------- -------------------------- Deferred income taxes 3,475 721 -------------------------- -------------------------- Gain on sale of property --- (3,038) -------------------------- -------------------------- Changes in assets and liabilities: Trade receivables (52,453) (45,835) -------------------------- -------------------------- Merchandise inventory (14,102) 11,405 -------------------------- -------------------------- Other current assets 1,009 (6,161) -------------------------- -------------------------- Other assets 1,486 (3,635) -------------------------- -------------------------- Trade accounts payable (13,087) 87,091 -------------------------- -------------------------- Accrued payroll and benefit costs (5,670) (2,254) -------------------------- -------------------------- Other accrued liabilities 17,927 2,948 -------------------------- -------------------------- (42,808) 59,027 -------------------------- -------------------------- Net cash provided (used) by operations (32,574) 60,882 -------------------------- -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property 57 5,065 -------------------------- -------------------------- Capital expenditures for property (10,322) (40,258) -------------------------- -------------------------- Net cash used by investing activities (10,265) (35,193) -------------------------- -------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in short-term borrowings 75,963 --- -------------------------- -------------------------- Proceeds from long-term debt --- --- -------------------------- -------------------------- Repayment of long-term debt (13,573) (9,819) -------------------------- -------------------------- Principal payments under capital equipment leases (1,199) (2,556) -------------------------- -------------------------- Sale of common stock 225 252 -------------------------- -------------------------- Purchase of treasury stock (3,595) (3,639) -------------------------- -------------------------- Dividends paid (9,926) (10,423) -------------------------- -------------------------- Net cash provided (used) by financing activities 47,895 (26,185) -------------------------- -------------------------- NET INCREASE (DECREASE) IN CASH 5,056 (496) -------------------------- -------------------------- CASH, BEGINNING OF YEAR 19,161 20,826 -------------------------- -------------------------- CASH, END OF SECOND QUARTER $ 24,217 $ 20,330 ========================== ========================== See accompanying Notes to Consolidated Financial Statements
6 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ---------------------------------------------------------- FOR THE SIX MONTHS ENDED ------------------------ JUNE 30, 2004 AND 2003 ---------------------- (Dollars Stated in Thousands)
COMMON ACCUMULATED STOCK OTHER COMMON PREFERRED SUBSCRIBED, RETAINED COMPREHENSIVE STOCK STOCK UNISSUED EARNINGS INCOME (LOSS) TOTAL ----------- -------------- ----------------- --------------- ------------------ --------------- December 31, 2002 $123,272 $ 45 $ 50 $309,434 $ (44,958) $387,843 -------------- Net Income 1,855 1,855 Currency Translation Adjustments 1,554 1,554 Unrealized Gain/(Loss) from Interest Rate Swap (net of tax of $514) (560) (560) -------------- Comprehensive Income 2,849 -------------- Stock Issued 256 256 Stock Redeemed (3,638) (1) (3,639) Advance Payments (4) (4) Dividends Declared (3,620) (3,620) ----------- -------------- ----------------- -------------- ------------------ -------------- June 30, 2003 $119,890 $ 44 $ 46 $307,669 $ (43,964) $383,685 =========== ============== ================= ============== ================== ============== COMMON ACCUMULATED STOCK OTHER COMMON PREFERRED SUBSCRIBED, RETAINED COMPREHENSIVE STOCK STOCK UNISSUED EARNINGS INCOME (LOSS) TOTAL ----------- -------------- ----------------- --------------- ------------------ --------------- December 31, 2003 $117,427 $ 43 $ 45 $306,030 $ (35,962) $387,583 -------------- Net Income 10,234 10,234 Currency Translation Adjustments (48) (48) Unrealized Gain/(Loss) from Interest Rate Swap (net of tax of $485) 763 763 -------------- Comprehensive Income 10,949 -------------- Stock Issued 227 227 Stock Redeemed (3,552) (43) (3,595) Advance Payments (2) (2) Dividends Declared (3,457) (3,457) ---------- -------------- ----------------- -------------- ------------------ -------------- June 30, 2004 $114,102 $ 0 $ 43 $312,807 $ (35,247) $391,705 ========== ============== ================= ============== ================== ============== See accompanying Notes to Consolidated Financial Statements
7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data) Note 1 - ------ The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of the Company, the quarterly report includes all adjustments, consisting of normal recurring accruals, necessary for the fair presentation of the financial statements presented. Such interim financial information is subject to year-end adjustments and independent audit. Results for interim periods are not necessarily indicative of results to be expected for the full year. Certain reclassifications of prior year presentations have been made to conform to the 2004 presentation. Note 2 - ------
SIX MONTHS 2004 SIX MONTHS 2003 -------------------------- ------------------------- Earnings for Six Months $ 10,234 $ 1,855 -------------------------- ------------------------- Dividends on Preferred Stock 1 1 -------------------------- ------------------------- Available for Common Stock $ 10,233 $ 1,854 -------------------------- ------------------------- Average Common Shares Outstanding 5,786,312 6,058,969 -------------------------- ------------------------- Earnings Per Share $ 1.77 $ .31 -------------------------- -------------------------
Note 3 - ------ At June 30, 2004 the Company had a $200 million accounts receivable securitization program that expires in October 2006. The securitization program provides for the sale of certain of the Company's trade receivables on a revolving basis to Graybar Commerce Corporation (GCC), a wholly owned, bankruptcy remote, special purpose subsidiary. GCC sells an undivided interest in the receivables to an unrelated multi-seller commercial paper conduit. The Company accounts for the securitization as an on-balance sheet financing arrangement because the Company has maintained effective control of the accounts receivable through a call option that gives GCC the unilateral right to repurchase the undivided interests. Accordingly, the accounts receivable and related debt are included in the accompanying consolidated balance sheets. GCC has granted a security interest in its trade receivables to the commercial paper conduit. Borrowings outstanding under the securitization program were $60,000 and $0 at June 30, 2004 and December 31, 2003, respectively. 8 Note 4 - ------ The Company has two operating lease arrangements with an independent lessor which have provided $63,684 of off-balance sheet financing for eight of the Company's zone distribution facilities. Each of the agreements carries a five-year term. The Company has the option, with the consent of the lenders to the lessor, to renew the leases for up to two additional five-year terms or to purchase the property for a price including the outstanding lease balance. If the Company elects not to renew the lease or purchase the property, or such lenders refuse to consent to a renewal, the Company may elect to remarket the property and arrange for its sale to a third party. The Company has recorded a $863 liability for the estimated fair value of the residual value guarantee for one of these operating lease agreements which was renewed in 2003. The leasing structures used in these two lease arrangements qualify as variable interest entities under FASB Interpretation No. 46 and the Company's interests in the variable interest entities are required to be consolidated in the Company's financial statements beginning in the first quarter of 2005. As of June 30, 2004 the Company's maximum exposure to loss as a result of its involvement with the two lease arrangements is $54,131, the amount guaranteed by the Company as the residual fair value of the property in accordance with the lease arrangements. Note 5 - ------ The Company has elected to defer accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in accordance with FASB Staff Position (FSP) No. FAS 106-1. The accumulated postretirement benefit obligation and the net periodic postretirement benefit cost do not currently reflect the accounting impact of the Act. Authoritative guidance on accounting for the federal subsidy is pending. Note 6 - ------ Comprehensive income is reported in the Consolidated Statements of Changes in Shareholders' Equity. Comprehensive income for the quarters ended June 30, 2004 and 2003 was $7,920 and $2,599, respectively. Note 7 - ------ During the six months ended June 30, 2004, the Company made contributions totaling $13,200 to its defined benefit pension plan. Additional contributions totaling $15,000 are expected to be paid during the remainder of 2004. 9 Item 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (Dollars Stated in Thousands) RESULTS OF OPERATIONS - --------------------- The following table sets forth certain information relating to the operations of the Company expressed as a percentage of net sales:
Six Months Ended June 30: 2004 2003 ---- ---- Net Sales 100.0% 100.0% Cost of Merchandise Sold (80.0) (80.5) ---------- ---------- Gross Margin 20.0 19.5 Selling, General and Administrative Expenses (17.6) (18.0) Depreciation and amortization (1.0) (.9) ---------- ---------- Income from operations 1.4 .6 Other Income, net .1 .3 Interest Expense (.6) (.7) ---------- ---------- Income Before Provision for Income Taxes .9 .2 Provision for Income Taxes (.4) (.1) ---------- ---------- Net Income .5% .1% ========== ==========
Net sales in the first six months of 2004 increased $168,892, or 9.3%, to $1,980,218 compared to $1,811,326 in the first six months of 2003. The higher net sales resulted from the generally improved economic conditions that are prevalent on an industry-wide basis in the electrical and communications market sectors in which the Company operates. The Company's business in the electrical market improved significantly during the first six months of 2004 as a result of the general increase in new construction projects along with increased spending by commercial and industrial customers. Communications market sales showed modest improvement during the first half of 2004. Activity in the communications market served by the Company continued to be impacted by the lingering effects of the excess of infrastructure and plant and network capacity in the communications marketplace. Electrical market sales increased 13.0% and communications market sales increased 1.1% when comparing the first six months of 2004 to the first six months of 2003. Gross margin increased $41,832, or 11.8%, from $353,626 in the first six months of 2003 to $395,458 in the first six months of 2004 primarily due to the increased sales in the electrical and communications markets. Selling, general and administrative expenses increased $23,440, or 7.2%, when comparing the first six months of 2004 to the first six months of 2003 due largely to increases in employee compensation costs of approximately $16,600 and an increase in pension plan expense of approximately $1,900. Depreciation and amortization increased from $17,785 in the first six months of 2003 to $18,607 in the first six months of 2004 primarily due to additional amortization expenses as a result of the implementation of the Enterprise Resource Planning system during 2003 and 2004. Other income, net includes gains on sale of property of $0 and $3,038 and accounts receivable interest charges to customers of $1,238 and $644 in the first six months of 2004 and the first six months of 2003, respectively. Interest expense increased $161, or 1.4%, when comparing the first six months of 2004 to the first six months of 2003 primarily due to increased levels of short-term borrowings required to finance higher levels of accounts receivable. 10 MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (Dollars Stated in Thousands) RESULTS OF OPERATIONS (Continued) - --------------------- 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, depreciation and amortization and interest expense, resulted in an increase in pretax earnings of $14,254 in the first six months of 2004 compared to the same period in 2003. FINANCIAL CONDITION AND LIQUIDITY - --------------------------------- At June 30, 2004, current assets exceeded current liabilities by $410,346, down $6,266 from December 31, 2003. The increase in accounts receivable from December 31, 2003 to June 30, 2004 resulted primarily from the increase in sales experienced by the Company. Merchandise inventory increased when comparing June 30, 2004 to December 31, 2003 due largely to higher inventory levels required to support the overall increase in sales volume. The Company is converting its existing computer systems to an Enterprise Resource Planning (ERP) system. Implementation of the new system began in April 2003. The total project costs are expected to be approximately $100,000. The Company is funding the project through a combination of equipment leases and working capital. Project costs through June 30, 2004 are approximately $98,000, of which $76,906 has been capitalized. The Company expects that conversion to the new ERP system will provide future benefits to its results of operations. The Company does not have any other plans or commitments that would require significant amounts of additional working capital. At June 30, 2004, the Company had available to it unused lines of credit amounting to $207,530. These lines are available to meet short-term cash requirements of the Company. Short-term borrowings outstanding during 2004 through June 30 ranged from a minimum of $0 to a maximum of $192,223. The Company has funded its capital requirements from operations, stock issuances to its employees and long-term debt. During the first six months of 2004, cash used by operations amounted to $32,574 compared to $60,882 cash provided by operations in the first six months of 2003. Cash provided from the sale of common stock and proceeds received on stock subscriptions amounted to $225 in the first six months of 2004. 11 FINANCIAL CONDITION AND LIQUIDITY (Continued) - --------------------------------------------- Capital expenditures for property for the six-month periods ended June 30, 2004 and 2003 were $10,322 and $40,258, respectively. Purchases of treasury stock for the six-month periods ended June 30, 2004 and 2003 were $3,595 and $3,639, respectively. Dividends paid for the six-month periods ended June 30, 2004 and 2003 were $9,926 and $10,423, respectively. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ----------------------------- There have been no material changes in the policies, procedures, controls or risk profile from that provided in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", of the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Item 4. CONTROLS AND PROCEDURES ----------------------- An evaluation was performed under the supervision and with the participation of the Company's management of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2004. Based on that evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective. On April 1, 2003, the Company began implementation of its conversion to a new ERP platform and continued implementation to various locations throughout 2004. In connection therewith, certain of the Company's disclosure controls and procedures have been modified at certain locations to reflect the new system environment. 12 PART II: OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The annual meeting of shareholders occurred on June 10, 2004. All of the nominees named in the Information Statement filed with the Commission and mailed to shareholders in accordance with the provisions of Regulation 14-C were elected. The names of the nominees elected follow; all received 5,493,774 votes, no negative votes were cast. 1. R. A. Cole 2. D. B. D'Alessandro 3. D. E. DeSousa 4. T. F. Dowd 5. L. R. Giglio 6. T. S. Gurganous 7. J. H. Hinshaw 8. G. D. Hodges 9. J. C. Loff 10. K. M. Mazzarella 11. R. D. Offenbacher 12. R. A. Reynolds, Jr. 13. K. B. Sparks Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits furnished in accordance with provisions of Item 601 of Regulation S-K. (31) Rule 13a-14(a)/15d-14(a) Certifications 31.1 - Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Principal Executive Officer. 31.2 - Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Principal Financial Officer. (32) Section 1350 Certifications 32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Principal Executive Officer. 32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Principal Financial Officer (b) Reports on Form 8-K. No reports on Form 8-K have been filed during the quarter for which this report is filed. 13 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. August 12, 2004 GRAYBAR ELECTRIC COMPANY, INC. --------------------- (Date) /S/ R. A. REYNOLDS, JR. ---------------------------------------- R. A. REYNOLDS, JR. PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER /S/ J. H. HINSHAW ---------------------------------------- J. H. HINSHAW SENIOR VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER /S/ J. H. KIPPER ---------------------------------------- J. H. KIPPER VICE PRESIDENT AND CONTROLLER 14 EX-31.1 2 ex31p1.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Exhibit 31.1 CERTIFICATION ------------- I, Robert A. Reynolds, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Graybar Electric Company, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2004 /s/ ROBERT A. REYNOLDS, JR. -------------------------------------------- Robert A. Reynolds, Jr. President and Principal Executive Officer EX-31.2 3 ex31p2.txt CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Exhibit 31.2 CERTIFICATION ------------- I, Juanita H. Hinshaw, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Graybar Electric Company, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2004 /s/ JUANITA H. HINSHAW -------------------------------------------- Juanita H. Hinshaw Senior Vice President and Principal Financial Officer EX-32.1 4 ex32p1.txt CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert A. Reynolds, Jr., President and Principal Executive Officer of Graybar Electric Company, Inc. ("the Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Robert A. Reynolds, Jr. - --------------------------- Robert A. Reynolds, Jr. President and Principal Executive Officer August 12, 2004 EX-32.2 5 ex32p2.txt CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Juanita H. Hinshaw, Senior Vice President and Principal Financial Officer of Graybar Electric Company, Inc. ("the Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: (1) The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Juanita H. Hinshaw - ---------------------- Juanita H. Hinshaw Senior Vice President and Principal Financial Officer August 12, 2004 -----END PRIVACY-ENHANCED MESSAGE-----