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, 2003
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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GRAYBAR ELECTRIC COMPANY, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK 13 - 0794380
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MO 63105
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(Address of principal executive offices) (Zip Code)
POST OFFICE BOX 7231, ST. LOUIS, MO 63177
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(Mailing Address) (Zip Code)
Registrant's telephone number, including area code: (314) 573 - 9200
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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
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Common Stock Outstanding at April 30, 2003: 6,019,231
----------------------
(Number of Shares)
Item 1. Financial Statements PART I
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CONSOLIDATED BALANCE SHEETS
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(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
MARCH 31, 2003 DECEMBER 31, 2002
-------------------------- -------------------------
CURRENT ASSETS
Cash $ 21,499 $ 20,826
-------------------------- -------------------------
Trade receivables 489,709 504,102
-------------------------- -------------------------
Merchandise inventory 490,664 515,691
-------------------------- -------------------------
Other current assets 17,543 17,270
-------------------------- -------------------------
Total current assets 1,019,415 1,057,889
-------------------------- -------------------------
PROPERTY
Land 24,939 25,601
-------------------------- -------------------------
Buildings and permanent fixtures 233,562 235,205
-------------------------- -------------------------
Furniture and fixtures 166,149 167,371
-------------------------- -------------------------
Computer software 64,943 50,236
-------------------------- -------------------------
Capital equipment leases 24,159 24,159
-------------------------- -------------------------
Less-Accumulated depreciation 214,191 209,189
-------------------------- -------------------------
Net property 299,561 293,383
-------------------------- -------------------------
DEFERRED FEDERAL INCOME TAXES 24,267 24,294
-------------------------- -------------------------
OTHER ASSETS 26,753 24,605
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$ 1,369,996 $ 1,400,171
========================== =========================
CURRENT LIABILITIES
Short-term borrowings $ 10,244 $ ---
-------------------------- -------------------------
Current portion of long-term debt 22,686 23,314
-------------------------- -------------------------
Trade accounts payable 481,410 498,855
-------------------------- -------------------------
Other accrued taxes 13,245 12,036
-------------------------- -------------------------
Accrued payroll and benefit costs 7,934 22,667
-------------------------- -------------------------
Dividends payable --- 6,802
-------------------------- -------------------------
Other payables and accruals 50,659 48,582
-------------------------- -------------------------
Total current liabilities 586,178 612,256
-------------------------- -------------------------
POSTRETIREMENT BENEFITS LIABILITY 77,886 77,586
-------------------------- -------------------------
PENSION LIABILITY 55,776 55,776
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LONG TERM DEBT 266,304 266,710
-------------------------- -------------------------
2
CONSOLIDATED BALANCE SHEETS
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(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
MARCH 31, 2003 DECEMBER 31, 2002
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SHAREHOLDERS' EQUITY
CAPITAL STOCK
Preferred:
---------
Par value $20 per share
Authorized 300,000 shares
SHARES
------
2003 2002
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Issued to shareholders 2,337 2,337
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In treasury, at cost (142) (87)
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Outstanding 2,195 2,250 44 45
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Common:
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Stated value $20 per share
Authorized 7,500,000 shares
SHARES
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2003 2002
---- ----
Issued to voting trustees 5,885,794 5,879,436
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Issued to shareholders 311,572 311,549
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In treasury, at cost (154,686) (27,380)
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Outstanding 6,042,680 6,163,605 120,854 123,272
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Advance payments on subscriptions
to common stock
49 50
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Retained earnings 307,771 309,434
------------------------- -------------------------
Accumulated other comprehensive
income (loss) (44,866) (44,958)
------------------------- -------------------------
TOTAL SHAREHOLDERS' EQUITY 383,852 387,843
------------------------- -------------------------
$ 1,369,996 $ 1,400,171
========================= =========================
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, 2003 MARCH 31, 2002
-------------------------- --------------------------
GROSS SALES, net of returns and allowances $ 863,963 $ 970,829
-------------------------- --------------------------
Less - Cash discounts 2,619 2,904
-------------------------- --------------------------
NET SALES 861,344 967,925
-------------------------- --------------------------
COST OF MERCHANDISE SOLD 688,531 786,002
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Gross margin 172,813 181,923
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 160,960 169,753
-------------------------- --------------------------
DEPRECIATION AND AMORTIZATION 8,041 8,529
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Income from operations 3,812 3,641
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OTHER INCOME, net 1,929 1,324
-------------------------- --------------------------
INTEREST EXPENSE 5,484 7,333
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Income (loss) before provision for income taxes 257 (2,368)
-------------------------- --------------------------
PROVISION FOR (BENEFIT FROM) INCOME TAXES
Current 86 (816)
-------------------------- --------------------------
Deferred 13 (96)
-------------------------- --------------------------
Total provision for (benefit from) income taxes 99 (912)
-------------------------- --------------------------
NET INCOME (LOSS) $ 158 $ (1,456)
========================== ==========================
NET INCOME (LOSS) PER SHARE OF COMMON STOCK (NOTE 2) $ .03 $ (.23)
========================== ==========================
DIVIDENDS
Preferred - $.25 per share $ 1 $ 1
-------------------------- --------------------------
Common - $.30 per share 1,820 1,916
-------------------------- --------------------------
$ 1,821 $ 1,917
========================== ==========================
See accompanying Notes to Consolidated Financial Statements
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Dollars Stated in Thousands)
(Except for Share and Per Share Data)
THREE MONTHS ENDED MARCH 31,
2003 2002
-------------------------- --------------------------
CASH FLOWS FROM OPERATIONS
Net Income (Loss) $ 158 $ (1,456)
-------------------------- --------------------------
Adjustments to reconcile net income (loss) to cash provided by
operations:
Depreciation and amortization 8,041 8,529
-------------------------- --------------------------
Deferred income taxes 13 (96)
-------------------------- --------------------------
Gain on sale of property (1,049) ---
-------------------------- --------------------------
Changes in assets and liabilities:
Trade receivables 14,393 33,370
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Merchandise inventory 25,027 44,761
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Other current assets (273) 2,469
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Other assets (2,148) (1,744)
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Trade accounts payable (17,445) (2,242)
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Accrued payroll and benefit costs (14,733) (17,382)
-------------------------- --------------------------
Other accrued liabilities 3,981 (6,983)
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15,807 60,682
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Net cash provided by operations 15,965 59,226
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property 2,559 766
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Capital expenditures for property (15,729) (16,721)
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Net cash used by investing activities (13,170) (15,955)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings 10,244 (45,445)
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Proceeds from long-term debt --- ---
-------------------------- --------------------------
Repayment of long-term debt (94) (1,251)
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Principal payments under capital equipment leases (1,229) (1,087)
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Sale of common stock 127 14,775
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Purchase of treasury stock (2,547) (1,572)
-------------------------- --------------------------
Dividends paid (8,623) (8,216)
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Net cash used by financing activities (2,122) (42,796)
-------------------------- --------------------------
NET INCREASE IN CASH 673 475
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CASH, BEGINNING OF YEAR 20,826 10,079
-------------------------- --------------------------
CASH, END OF FIRST QUARTER $ 21,499 $ 10,554
========================== ==========================
See accompanying Notes to Consolidated Financial Statements
5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
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FOR THE QUARTERS ENDED
----------------------
MARCH 31, 2003 AND 2002
-----------------------
(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, 2001 $114,424 $ 51 $ 0 $ 310,521 $ (17,504) $ 407,492
---------------
Net Income (Loss) (1,456) (1,456)
Currency Translation Adjustments 28 28
Unrealized Gain/(Loss) from
Interest Rate Swap (net of tax
of $247) 400 400
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Comprehensive Income (Loss) (1,028)
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Stock Issued 14,721 14,721
Stock Redeemed (1,571) (1) (1,572)
Advance Payments 54 54
Dividends Declared (1,917) (1,917)
---------- -------------- ----------------- --------------- ------------------- ---------------
March 31, 2002 $127,574 $ 50 $ 54 $ 307,148 $ (17,076) $ 417,750
========== ============== ================= =============== =================== ===============
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
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Net Income 158 158
Currency Translation Adjustments 135 135
Unrealized Gain/(Loss) from
Interest Rate Swap (net of tax
of $8) (43) (43)
---------------
Comprehensive Income 250
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Stock Issued 128 128
Stock Redeemed (2,546) (1) (2,547)
Advance Payments (1) (1)
Dividends Declared (1,821) (1,821)
---------- -------------- ----------------- --------------- ------------------- ---------------
March 31, 2003 $120,854 $ 44 $ 49 $ 307,771 $ (44,866) $ 383,852
========== ============== ================= =============== =================== ===============
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
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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 2003 presentation.
Note 2
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THREE MONTHS 2003 THREE MONTHS 2002
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Earnings (Loss) for Three Months $ 158 $ (1,456)
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Dividends on Preferred Stock 1 1
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Available for Common Stock $ 157 $ (1,457)
-------------------------- -------------------------
Average Common Shares Outstanding 6,100,509 6,203,143
-------------------------- -------------------------
Earnings (Loss) Per Share $ .03 $ (.23)
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7
Note 3
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At March 31, 2003 the Company had a $200 million accounts
receivable securitization program that expires in October 2003. 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. There were no borrowings outstanding under the
securitization program at March 31, 2003.
Note 4
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The Company has two operating lease arrangements covering the
funding of nine of its zone distribution facilities aggregating
approximately $73 million that require analysis as to the impact of
FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities". The Company is currently evaluating these arrangements
and has not yet determined the impact that the interpretation will
have on the Company.
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: 2003 2002
---- ----
Net Sales 100.0% 100.0%
Cost of Merchandise Sold (79.9) (81.2)
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Gross Margin 20.1 18.8
Selling, General and Administrative Expenses (18.7) (17.5)
Depreciation and amortization (.9) (.9)
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Income from operations .5 .4
Other Income, net .2 .1
Interest Expense (.6) (.8)
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Income Before Provision for Income Taxes .1 (.3)
Provision for Income Taxes - 1
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Net Income .1% (.2)%
====== =======
Net sales in the first three months of 2003 decreased $106,581, or
11.0%, to $861,344 compared to $967,925 in the first three months of 2002.
The lower net sales resulted from the generally depressed economic
conditions that continue to be prevalent on an industry-wide basis in the
electrical and communications market sectors in which the Company operates.
The general slowdown in new construction projects and the reduction in
capital spending by commercial and industrial customers that began in 2001
has continued throughout 2002 and the first quarter of 2003. Communications
market activity remains severely depressed as a result of excess
infrastructure and plant and network capacity in the marketplace. Electrical
market sales decreased 10.2% and communications market sales decreased 18.2%
when comparing the first three months of 2003 to the first three months of
2002.
Gross margin decreased $9,110, or 5.0%, from $181,923 in the first
three months of 2002 to $172,813 in first three months of 2003 primarily due
to the lower sales in the electrical and communications markets.
Selling, general and administrative expenses decreased $8,793, or
5.2%, when comparing the first three months of 2003 to the first three
months of 2002 primarily due to reductions in the Company's employment
levels which resulted in lower salary expenses of approximately $10,000. The
decrease in these expenses was partially offset by an increase in expenses
related to the implementation of the Enterprise Resource Planning system of
approximately $2,400. The Company expects that the decrease in employment
levels will be sustainable until such time as there is a significant growth
in sales.
Depreciation and amortization decreased from $8,529 in the first
quarter of 2002 to $8,041 in the first quarter of 2003 due to disposals of
property.
Other income, net includes gains on sale of property of $1,049 and
$0 and accounts receivable interest charges to customers of $346 and $559 in
the first three months of 2003 and the first three months of 2002,
respectively.
Interest expense decreased $1,849, or 25.2%, when comparing the
first quarter of 2003 to the first quarter of 2002 primarily due to lower
interest rates on short-term borrowings and decreased levels of short-term
borrowings required to finance lower levels of inventory and receivables.
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 decrease in gross margin and the
increase in other income, together with the decreases in selling, general
and administrative expenses, depreciation and amortization and interest
expense, resulted in an increase in pretax earnings of $2,625 in the first
three months of 2003 compared to the same period in 2002.
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
At March 31, 2003, current assets exceeded current liabilities by
$433,237, down $12,396 from December 31, 2002. The reduction in accounts
receivable from December 31, 2002 to March 31, 2003 resulted primarily from
the decrease in sales experienced by the Company. The average number of days
of sales in accounts receivable has remained relatively stable during the
first quarter of 2003. Merchandise inventory decreased when comparing March
31, 2003 to December 31, 2002 due largely to continuing reductions in
specific inventory carried to support customer contract agreements and lower
inventory levels required to support the decreased 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 $90,000. The Company is funding the project through a
combination of equipment leases and working capital. Project costs through
March 31, 2003 are approximately $77,000, of which $64,943 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 March 31, 2003, the Company had available to it unused lines of
credit amounting to $422,107. These lines are available to meet short-term
cash requirements of the Company. Short-term borrowings outstanding during
2003 through March 31 ranged from a minimum of $10,244 to a maximum of
$125,582.
The Company has funded its capital requirements from operations,
stock issuances to its employees and long term debt. During the first three
months of 2003, cash provided by operations amounted to $15,965 compared to
$59,226 cash provided by operations in the first three months of 2002. Cash
provided from the sale of common stock and proceeds received on stock
subscriptions amounted to $127 in the first three months of 2003. Additional
cash of approximately $400 will be provided in the remainder of 2003 as a
result of payments to be made for stock subscribed to by employees under the
2001 Common Stock Purchase Plan.
Capital expenditures for property for the three-month periods ended
March 31, 2003 and 2002 were $15,729 and $16,721, respectively. Purchases of
treasury stock for the three-month periods ended March 31, 2003 and 2002
were $2,547 and $1,572, respectively. Dividends paid for the three-month
periods ended March 31, 2003 and 2002 were $8,623 and $8,216, 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 the Company's Annual Report
on Form 10-K for the year ended December 31, 2002.
Item 4. DISCLOSURE CONTROLS AND PROCEDURES
----------------------------------
Within the ninety-day period preceding the date of this report, 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. 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 to ensure that information required to be
disclosed in the reports filed or submitted by the Company under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms. On April 1, 2003, the Company implemented the first phase of its
conversion to a new ERP platform. In connection therewith, certain of the
Company's disclosure controls and procedures have been modified at certain
locations to reflect the new system environment. Prior to implementation,
the Company reviewed the effectiveness of the design of the new disclosure
controls and procedures.
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.
99.1 - 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.
99.2 - 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.
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 14, 2003 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 COMPTROLLER
13
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert A. Reynolds, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Graybar
Electric Company, Inc. (the "Registrant");
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the Registrant
and we have:
(a) designed such disclosure controls and procedures 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
quarterly report is being prepared;
(b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors (or persons
performing the equivalent function);
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ ROBERT A. REYNOLDS, JR.
----------------------------------------------
Robert A. Reynolds, Jr.
President and Principal Executive Officer
14
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Juanita H. Hinshaw, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Graybar
Electric Company, Inc. (the "Registrant");
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the Registrant
and we have:
(a) designed such disclosure controls and procedures 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
quarterly report is being prepared;
(b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's board of directors (or persons
performing the equivalent function);
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ JUANITA H. HINSHAW
-----------------------------------------
Juanita H. Hinshaw
Senior Vice President and
Principal Financial Officer
15
EXHIBIT INDEX
-------------
99.1 - 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.
99.2 - 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.
16