-----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, FTuTHIzC8B1vqNaGfI2dhJXvzWpKbj9i4PYlB+a/odhum5S7bZAgEL1rj9sVsLOo jTN5t0fN6aeg8eQqTB7Flg== 0001068800-05-000336.txt : 20050512 0001068800-05-000336.hdr.sgml : 20050512 20050512115052 ACCESSION NUMBER: 0001068800-05-000336 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050512 DATE AS OF CHANGE: 20050512 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: 05823091 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 gray10q.txt GRAYBAR ELECTRIC COMPANY, INC. FORM 10-Q CONFORMED --------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Commission File Number 0-255 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 ---------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- ------------ GRAYBAR ELECTRIC COMPANY, INC. -------------------------------------- (Exact name of registrant as specified in its charter) NEW YORK 13 - 0794380 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) POST OFFICE BOX 7231, ST. LOUIS, MO 63177 - -------------------------------------------------------------------------------- (Mailing Address) (Zip Code) Registrant's telephone number, including area code: (314) 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 April 30, 2005: 5,558,070 ---------------------- (Number of Shares) Item 1. Financial Statements PART I ------ CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
MARCH 31, 2005 DECEMBER 31, 2004 -------------------------- ------------------------- CURRENT ASSETS Cash and cash equivalents $ 47,380 $ 9,961 -------------------------- ------------------------- Trade receivables 593,105 624,728 -------------------------- ------------------------- Merchandise inventory 484,308 473,212 -------------------------- ------------------------- Other current assets 24,794 26,379 -------------------------- ------------------------- Total current assets 1,149,587 1,134,280 -------------------------- ------------------------- PROPERTY Land 38,962 29,944 -------------------------- ------------------------- Buildings and permanent fixtures 305,667 242,579 -------------------------- ------------------------- Furniture and fixtures 172,640 167,852 -------------------------- ------------------------- Software 76,906 76,906 -------------------------- ------------------------- Capital leases 13,143 22,936 -------------------------- ------------------------- Less-Accumulated depreciation 264,303 248,711 -------------------------- ------------------------- Net property 343,015 291,506 -------------------------- ------------------------- OTHER ASSETS 26,153 25,586 -------------------------- ------------------------- $ 1,518,755 $ 1,451,372 ========================== ========================= CURRENT LIABILITIES Short-term borrowings $ 25,983 $ 67,757 -------------------------- ------------------------- Current portion of long-term debt 37,819 49,019 -------------------------- ------------------------- Trade accounts payable 571,294 490,183 -------------------------- ------------------------- Other accrued taxes 13,069 10,147 -------------------------- ------------------------- Accrued payroll and benefit costs 26,374 48,506 -------------------------- ------------------------- Dividends payable --- 6,117 -------------------------- ------------------------- Other payables and accruals 59,863 65,962 -------------------------- ------------------------- Total current liabilities 734,402 737,691 -------------------------- ------------------------- POSTRETIREMENT BENEFITS LIABILITY 77,859 77,470 -------------------------- ------------------------- PENSION LIABILITY 37,488 37,488 -------------------------- ------------------------- LONG-TERM DEBT 276,462 205,603 -------------------------- ------------------------- OTHER NON-CURRENT LIABILITIES 2,571 756 -------------------------- ------------------------- 2 CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data) MARCH 31, 2005 DECEMBER 31, 2004 ------------------------- ------------------------- SHAREHOLDERS' EQUITY CAPITAL STOCK Preferred: ---------- Par value $.01 per share Authorized 10,000,000 shares SHARES ------ 2005 2004 ---- ---- Issued to shareholders --- --- ------------- ------------- In treasury, at cost --- --- ------------- ------------- Outstanding --- --- --- --- ------------- ------------- ------------------------- ------------------------- Common: ------- Stated value $20 per share Authorized 15,000,000 shares SHARES ------ 2005 2004 ---- ---- Issued to voting trustees 5,421,055 5,298,699 ------------- ------------- Issued to shareholders 278,203 276,641 ------------- ------------- In treasury, at cost (120,595) (26,978) ------------- ------------- Outstanding 5,578,663 5,548,362 111,573 110,967 ------------- ------------- ------------------------- ------------------------- Advance payments on subscriptions to common stock 173 --- ------------------------- ------------------------- Retained earnings 305,131 308,780 ------------------------- ------------------------- Accumulated other comprehensive income (loss) (26,904) (27,383) ------------------------- ------------------------- TOTAL SHAREHOLDERS' EQUITY 389,973 392,364 ------------------------- ------------------------- $ 1,518,755 $ 1,451,372 ========================= ========================= 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 MARCH 31, 2005 MARCH 31, 2004 -------------------------- -------------------------- GROSS SALES, net of returns and allowances $ 967,336 $ 942,115 -------------------------- -------------------------- Less - Cash discounts 3,397 2,806 -------------------------- -------------------------- NET SALES 963,939 939,309 -------------------------- -------------------------- COST OF MERCHANDISE SOLD 772,950 748,535 -------------------------- -------------------------- Gross margin 190,989 190,774 -------------------------- -------------------------- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 170,607 169,882 -------------------------- -------------------------- DEPRECIATION AND AMORTIZATION 8,627 9,870 -------------------------- -------------------------- Income from operations 11,755 11,022 -------------------------- -------------------------- OTHER INCOME, net 1,340 761 -------------------------- -------------------------- INTEREST EXPENSE 6,815 6,377 -------------------------- -------------------------- Income before provision for income taxes 6,280 5,406 -------------------------- -------------------------- PROVISION FOR INCOME TAXES Current 905 914 -------------------------- -------------------------- Deferred 1,714 1,248 -------------------------- -------------------------- Total provision for income taxes 2,619 2,162 -------------------------- -------------------------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $ 3,661 $ 3,244 -------------------------- -------------------------- Cumulative effect of change in accounting principle, net of $3,587 tax benefit $ (5,634) $ --- -------------------------- -------------------------- NET INCOME (LOSS) $ (1,973) $ 3,244 ========================== ========================== INCOME PER SHARE OF COMMON STOCK BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NOTE 2) $ .66 $ .56 -------------------------- -------------------------- NET INCOME (LOSS) PER SHARE OF COMMON STOCK (NOTE 2) $ (.35) $ .56 ========================== ========================== DIVIDENDS Preferred - $.25 per share $ --- $ 1 -------------------------- -------------------------- Common - $.30 per share 1,676 1,741 -------------------------- -------------------------- $ 1,676 $ 1,742 ========================== ========================== See accompanying Notes to Consolidated Financial Statements
4 CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
THREE MONTHS ENDED MARCH 31, 2005 2004 -------------------------- -------------------------- CASH FLOWS FROM OPERATIONS Income before cumulative effect of change in accounting principle $ 3,661 $ 3,244 -------------------------- -------------------------- Adjustments to reconcile income before cumulative effect of change in accounting principle to cash provided by operations: Depreciation and amortization 8,627 9,870 -------------------------- -------------------------- Deferred income taxes 1,714 1,248 -------------------------- -------------------------- Changes in assets and liabilities: Trade receivables 31,623 (5,481) -------------------------- -------------------------- Merchandise inventory (11,096) 2,664 -------------------------- -------------------------- Other current assets 1,585 1,927 -------------------------- -------------------------- Other assets 1,334 887 -------------------------- -------------------------- Trade accounts payable 81,111 (3,900) -------------------------- -------------------------- Accrued payroll and benefit costs (22,132) (10,638) -------------------------- -------------------------- Other accrued liabilities (3,093) 874 -------------------------- -------------------------- 89,673 (2,549) -------------------------- -------------------------- Net cash provided by operations 93,334 695 -------------------------- -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of property 237 31 -------------------------- -------------------------- Capital expenditures for property (5,910) (8,250) -------------------------- -------------------------- Net cash used by investing activities (5,673) (8,219) -------------------------- -------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in short-term borrowings (41,774) 15,373 -------------------------- -------------------------- Repayment of long-term debt (183) (203) -------------------------- -------------------------- Principal payments under capital leases (1,272) (668) -------------------------- -------------------------- Sale of common stock 2,651 117 -------------------------- -------------------------- Purchase of treasury stock (1,872) (1,764) -------------------------- -------------------------- Dividends paid (7,792) (8,211) -------------------------- -------------------------- Net cash provided (used) by financing activities (50,242) 4,644 -------------------------- -------------------------- NET INCREASE (DECREASE) IN CASH 37,419 (2,880) -------------------------- -------------------------- CASH, BEGINNING OF YEAR 9,961 19,161 -------------------------- -------------------------- CASH, END OF FIRST QUARTER $ 47,380 $ 16,281 ========================== ========================== See accompanying Notes to Consolidated Financial Statements
5 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ---------------------------------------------------------- FOR THE QUARTERS ENDED ---------------------- MARCH 31, 2005 AND 2004 ----------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data)
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 3,244 3,244 Currency Translation Adjustments 413 413 Unrealized Gain/(Loss) from Interest Rate Swap (net of tax of $398) (628) (628) -------------- Comprehensive Income 3,029 -------------- Stock Issued 116 116 Stock Redeemed (1,762) (2) (1,764) Advance Payments 1 1 Dividends Declared (1,742) (1,742) -------------- -------------- ---------------- -------------- ------------------ -------------- March 31, 2004 $115,781 $ 41 $ 46 $ 307,532 $ (36,177) $ 387,223 ============== ============== ================ ============== ================== ============== COMMON ACCUMULATED STOCK OTHER COMMON PREFERRED SUBSCRIBED, RETAINED COMPREHENSIVE STOCK STOCK UNISSUED EARNINGS INCOME (LOSS) TOTAL -------------- -------------- ---------------- -------------- ------------------ -------------- December 31, 2004 $110,967 $ 0 $ 0 $ 308,780 $ (27,383) $ 392,364 -------------- Net Income (Loss) (1,973) (1,973) Currency Translation Adjustments (186) (186) Unrealized Gain/(Loss) from Interest Rate Swap (net of tax of $332) 665 665 -------------- Comprehensive Income (1,494) -------------- Stock Issued 2,478 2,478 Stock Redeemed (1,872) (1,872) Advance Payments 173 173 Dividends Declared (1,676) (1,676) -------------- -------------- ---------------- -------------- ------------------ -------------- March 31, 2005 $111,573 $ 0 $ 173 $ 305,131 $ (26,904) $ 389,973 ============== ============== ================ ============== ================== ============== See accompanying Notes to Consolidated Financial Statements
6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION --------------------------- (Dollars Stated in Thousands) (Except for Share and Per Share Data) Note 1 - ------ The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of the Company, the quarterly report includes all adjustments, consisting of normal recurring accruals, necessary for the fair presentation of the financial statements presented. Such interim financial information is subject to year-end adjustments and independent audit. Results for interim periods are not necessarily indicative of results to be expected for the full year. Note 2 - ------
THREE MONTHS 2005 THREE MONTHS 2004 ------------------------ ------------------------- Earnings for Three Months Before Cumulative Effect of Change in Accounting Principle $ 3,661 $ 3,244 ------------------------ ------------------------- Cumulative Effect of Change in Accounting Principle $ (5,634) $ --- ------------------------ ------------------------- Earnings (Loss) for Three Months $ (1,973) $ 3,244 ------------------------ ------------------------- Dividends on Preferred Stock --- 1 ------------------------ ------------------------- Available for Common Stock $ (1,973) $ 3,243 ------------------------ ------------------------- Average Common Shares Outstanding 5,574,752 5,831,002 ------------------------ ------------------------- Earnings Per Share Before Cumulative Effect of Change in Accounting Principle $ .66 $ .56 ------------------------ ------------------------- Earnings (Loss) Per Share $ (.35) $ .56 ------------------------ -------------------------
Note 3 - ------ At March 31, 2005 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 $10,000 and $50,000 at March 31, 2005 and December 31, 2004, respectively. 7 Note 4 - ------ The Company has two lease arrangements with an independent lessor which have provided $73,477 of financing for nine 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 an additional five-year term 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 leasing structures used in these two lease arrangements qualify as silos of a variable interest entity under FASB Interpretation No. 46 (FIN No. 46). As of January 1, 2005, the Company has adopted the provisions of FIN No. 46 and accordingly, as the primary beneficiary, has consolidated these silos in its financial statements. The impact of consolidation has increased the Company's property by $64,257, the net book value of the leased property as if the interpretations of FIN No. 46 had been in place from the inception of these leases. Additionally, the Company has increased long-term debt by $70,906, and recorded a minority interest in the silos of $2,571 at the date of adoption. The Company has recorded a cumulative effect of change in accounting principle of $(5,634), net of income tax effect of $3,587, to affect the consolidation. The Company has treated the adoption of FIN No. 46 as a non-cash item in its consolidated statements of cash flows. As of March 31, 2005, the consolidated silos included in the Company's financial statements have a net property balance of $63,723, long-term debt of $70,906, and a minority interest of $2,571. Under the terms of the lease arrangements, the Company's maximum exposure to loss as a result of its involvement with the two lease arrangements at March 31, 2005, is $62,455, the amount guaranteed by the Company as the residual fair value of the property. Had the provisions of FIN No. 46 been applied retrospectively, rather than as the cumulative effect of a change in accounting principle, net income and net income per share on a pro forma basis would be as follows:
Actual Pro forma ------------------------------------ ------------------------------------- March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004 -------------- -------------- -------------- -------------- Net income $(1,973) $ 3,244 $ 3,661 $ 2,923 Net income per share of common stock $ (.35) $ .56 $ .66 $ .50
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 106-2. The accumulated postretirement benefit obligation and the net periodic postretirement benefit cost do not currently reflect the accounting impact of the Act since the Company is currently unable to determine whether the benefits provided by its plan are actuarially equivalent to Medicare Part D under the Act. Note 6 - ------ During the three months ended March 31, 2005, the Company made contributions totaling $7,500 to its defined benefit pension plan. Additional contributions totaling $22,500 are expected to be paid during the remainder of 2005. 8 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:
Quarter Ended March 31: 2005 2004 ---- ---- Net Sales 100.0% 100.0% Cost of Merchandise Sold (80.2) (79.7) ----------- ------------- Gross Margin 19.8 20.3 Selling, General and Administrative Expenses (17.7) (18.1) Depreciation and amortization (.9) (1.0) ----------- ------------- Income from operations 1.2 1.2 Other Income, net .1 .1 Interest Expense (.7) (.7) ----------- ------------- Income Before Provision for Income Taxes .6 .6 Provision for Income Taxes (.2) (.3) ----------- ------------- Income Before Cumulative Effect of Change in Accounting Principle .4 .3 Cumulative Effect of Change in Accounting Principle (.6) -- ----------- ------------- Net Income (.2)% .3% =========== =============
Net sales in the first three months of 2005 increased $24,630, or 2.6%, to $963,939 compared to $939,309 in the first three months of 2004. The higher net sales resulted from the combined effect of the increase in electrical market sales experienced by the Company along with a decrease in sales to customers in the communications market. The increase in electrical market sales resulted from the generally improved economic conditions that are prevalent on an industry-wide basis in the electrical market sectors in which the Company operates. Activity in the communications market served by the Company continued to be impacted by the lingering effects of the excess of plant and network capacity. Electrical market sales increased 5.5% and communications market sales decreased 5.7% when comparing the first three months of 2005 to the first three months of 2004. Gross margin increased $215, or .1%, in the first three months of 2005 compared to the first three months of 2004 primarily due to the overall increase in net sales. Gross margin as a percentage of net sales decreased when comparing the first three months of 2005 to the first three months of 2004 due largely to lower margins on copper and steel-based products sold by the Company that were subject to pricing inflation in 2004. Selling, general and administrative expenses increased $725, or ..4%, when comparing the first three months of 2005 to the first three months of 2004 due largely to increases in transportation and other general operating expenses of approximately $3,100. The increase in general operating expenses was largely offset by a reduction in employee compensation and benefit costs of approximately $2,400. Depreciation and amortization decreased from $9,870 in the first quarter of 2004 to $8,627 in the first quarter of 2005 primarily due to lower depreciation expense on capital leases. Other income, net includes accounts receivable interest charges to customers of $893 and $934 in the first three months of 2005 and the first three months of 2004, respectively. Interest expense increased $438, or 6.9%, when comparing the first three months of 2005 to the first three months of 2004 primarily due to increased levels of short-term borrowings required to finance higher levels of accounts receivable and higher interest rates on short-term borrowings. 9 MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (Dollars Stated in Thousands) RESULTS OF OPERATIONS (Continued) - ---------------------- The combined effect of the increases in gross margin and other income, together with the decrease in depreciation and amortization and increases in selling, general and administrative expenses and interest expense, resulted in an increase in pretax earnings of $874 in the first three months of 2005 compared to the same period in 2004. As of January 1, 2005, the Company has adopted the provisions of FASB Interpretation No. 46 (FIN No. 46), which apply to the leasing structures used in two lease arrangements between the Company and an independent lessor. The leasing structures used in these two lease arrangements qualify as variable interest entities under FIN 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. The Company has recorded a cumulative effect of change in accounting principle of $(5,634), net of income tax benefit of $3,587, in its consolidated financial statements in the first quarter of 2005 as a result of adoption of FIN No. 46. FINANCIAL CONDITION AND LIQUIDITY - --------------------------------- At March 31, 2005, current assets exceeded current liabilities by $415,185, up $18,596 from December 31, 2004. The reduction in accounts receivable from December 31, 2004 to March 31, 2005 resulted primarily from the decrease in sales in the first quarter 2005 compared to the fourth quarter 2004. The average number of days of sales in accounts receivable increased during the first quarter 2005. Merchandise inventory levels were higher at March 31, 2005 when compared to December 31, 2004 inventory levels. At March 31, 2005, the Company had available to it unused lines of credit amounting to $294,818. These lines are available to meet short-term cash requirements of the Company. Short-term borrowings outstanding during 2005 through March 31 ranged from a minimum of $25,983 to a maximum of $192,002. The Company has funded its capital requirements from operations, stock issuances to its employees and long-term debt. During the first three months of 2005, cash provided by operations amounted to $93,334 compared to $695 cash provided by operations in the first three months of 2004. The increase in cash provided by operations was predominantly attributable to the combined change in trade receivables, merchandise inventory and trade accounts payable, which in the aggregate resulted in cash provided of $101,638 in the first three months of 2005 compared to cash used of $6,717 in the first three months of 2004. Cash provided from the sale of common stock and proceeds received on stock subscriptions amounted to $2,651 in the first three months of 2005. Capital expenditures for property for the three-month periods ended March 31, 2005 and 2004 were $5,910 and $8,250, respectively. Purchases of treasury stock for the three-month periods ended March 31, 2005 and 2004 were $1,872 and $1,764, respectively. Dividends paid for the three-month periods ended March 31, 2005 and 2004 were $7,792 and $8,211, respectively. 10 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, 2004. 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 March 31, 2005. 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 rollout and 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. 11 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits furnished in accordance with provisions of Item 601 of Regulation S-K. (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. Form 8-K was filed with the Commission on March 10, 2005 reporting a change in the Company's Directors and Principal Officers. 12 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. May 12, 2005 GRAYBAR ELECTRIC COMPANY, INC. ---------------------- (Date) /S/ R. A. REYNOLDS, JR. ------------------------------------ R. A. REYNOLDS, JR. PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER /S/ D. B. D'ALESSANDRO ------------------------------------ D. B. D'ALESSANDRO SENIOR VICE PRESIDENT AND PRINCIPAL FINANCIAL OFFICER /S/ J. H. KIPPER ------------------------------------ J. H. KIPPER VICE PRESIDENT AND CONTROLLER 13 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: May 12, 2005 /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, D. Beatty D'Alessandro, 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: May 12, 2005 /s/ D. BEATTY D' ALESSANDRO ----------------------------------------------------- D. Beatty D'Alessandro 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 March 31, 2005 (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 May 12, 2005 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, D. Beatty D'Alessandro, 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 March 31, 2005 (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/ D. Beatty D'Alessandro - -------------------------- D. Beatty D'Alessandro Senior Vice President and Principal Financial Officer May 12, 2005 -----END PRIVACY-ENHANCED MESSAGE-----