Item 1. Business ------- --------
Graybar Electric Company, Inc. (the "Company") is engaged
internationally in the wholesale distribution of electrical and
communications equipment and supplies primarily to contractors,
industrial plants, independent telephone companies, power
utilities, and commercial users. All products sold by the Company
are purchased from others.
The Company was incorporated under the laws of the State of
New York on December 11, 1925 to take over the wholesale supply
department of Western Electric Company, Incorporated. The
location and telephone number of the principal executive offices
of the Company are 34 North Meramec Avenue, St. Louis, Missouri
(314) 727-3900, and the mailing address of the principal executive
offices is P.O. Box 7231, St. Louis, Missouri 63177.
Suppliers ---------
The Company acts as a distributor of the products of more
than 1,000 manufacturers. The relationship of the Company with a
number of its principal suppliers goes back many years. It is
customarily a nonexclusive national or regional distributorship
terminable upon 30 to 90 days notice by either party.
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During 1993, the Company purchased a significant portion of
its products from its two largest suppliers. The termination by
either of these companies, within a short period of time, of a
significant number of their agreements with the Company might have
an immediate material adverse effect on the business of the
Company, but the Company believes that within a reasonable period
of time it could find alternate sources of supply adequate to
alleviate such adverse effect.
Products Distributed --------------------
The Company distributes more than 100,000 different products
and, therefore, is able to supply its customers with a wide
variety of electrical and communications products. The products
distributed by the Company are supply materials consisting
primarily of products such as wire, conduit, wiring devices,
tools, motor controls, transformers, lamps, lighting fixtures,
hardware, power transmission equipment, telephone station
apparatus, key systems and other telephone equipment, and are sold
to customers such as contractors (both industrial and
residential), industrial plants, independent telephone companies,
private and public power utilities, and commercial users.
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On December 31, 1993 and 1992, the Company had orders on
hand which totalled approximately $174,928,000 and $175,792,000,
respectively. The Company believes that the small decrease from
1992 to 1993 is a result of significantly higher sales during the
month of December, 1993 than the Company has historically
experienced. The Company expects that approximately 85% of the
orders on hand at December 31, 1993 will be filled within the
twelve-month period ending December 31, 1994. Historically,
orders on hand for the Company's products have been firm, but
customers from time to time request cancellation and the Company
has historically allowed such cancellations.
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Marketing ---------
The Company sells its products through a network of distri-
buting houses located in 17 geographical districts throughout the
United States. In each district the Company maintains a main
distributing house and a number of branch distributing houses,
each of which carries an inventory of supply materials and
operates as a wholesale distributor for the territory in which it
is located. The main distributing house in each district carries
a substantially larger inventory than the branch houses so that
the branch houses can call upon the main distributing house for
additional items of inventory. In addition, the Company maintains
four (4) zone warehouses with special inventories so all locations
can call upon them for additional items. The Company also has
subsidiary operations with distribution facilities located in
Mankato, Minnesota, Parsippany and Hackettstown, New Jersey,
Puerto Rico, Mexico, Panama, Guam, Singapore, Canada and the
United Arab Emirates.
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The distribution facilities operated by the Company are shown in the following table:
Where the specialized nature or size of a particular
shipment warrants, the Company has products shipped directly from
its suppliers to the place of use, while in other cases orders are
filled from the Company's inventory. On a dollar volume basis,
over one-half of the orders are filled from the Company's
inventory and the remainder are shipped directly from the supplier
to the place of use. The Company generally finances its inventory
from internally generated funds and from long and short-term
borrowings.
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The Company distributes its products to more than 150,000
customers, which fall into five general classes. The following
list shows the estimated percentage of the Company's total sales
for each of the three years ended December 31, attributable to
each of these classes:
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At December 31, 1993, the Company employed approximately
1,880 persons in sales capacities. Approximately 880 of these
sales personnel were supply sales representatives who work in the
field making sales to customers at the work site. The remainder
of the sales personnel were sales and marketing managers, and
telemarketing, advertising, quotation, counter and clerical
personnel.
Competition -----------
The Company believes that it is the largest distributor of
electrical products not affiliated with a manufacturing company,
and one of the three largest distributors of such products in the
United States. The field is highly competitive, and the Company
estimates that the three largest distributors of electrical
products account for only a small portion of the total market,
with the balance of the market being accounted for by independent
distributors and manufacturers operating on a local, state-wide or
regional basis.
The Company believes that its competitive position is
primarily a result of its ability to supply its customers through
conveniently located distribution facilities with a broad range of
electrical and telecommunications supply materials within a short
period of time. Price is also important, particularly where the
Company is asked to submit bids to contractors in connection with
large construction jobs.
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Employees ---------
At December 31, 1993, the Company employed approximately
5,100 persons on a full-time basis. Approximately 130 of these
persons were covered by union contracts. The Company has not had
a material work stoppage and considers its relations with its
employees to be good.
Item 2.


Item 2. Properties ------- ----------
As of December 31, 1993 the Company operated offices and
distribution facilities in 222 locations. Of these, 131 were
owned by the Company, and the balance were leased. The leases are
for varying terms, the majority having a duration of less than
five years.
The Company's distribution facilities consist primarily of
warehouse space. A small portion of the space in each facility is
used for offices. Distribution facilities vary in size from
approximately 3,000 square feet to 152,000 square feet, the
average being 30,000 square feet.
As of December 31, 1993, approximately $48.6 million in debt
of the Company was secured by mortgages on thirty-four buildings.
Twenty of these facilities are subject to a first mortgage
securing a 12 1/4% note, of which approximately $14.5 million in
principal amount remains outstanding. Seven of these facilities
are subject to a first mortgage securing a 9 23/100% note, of
which $30.0 million in principal amount remains outstanding.
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Distribution houses in Norcross, Georgia; Salt Lake City, Utah;
Pinellas County and Polk County, Florida; Tucson, Arizona;
Beaumont, Texas and Glendale Heights, Illinois are subject to
mortgages securing Industrial Revenue Bonds at variable interest
rates with payments totaling $4.1 million due periodically to
2004.
Item 3.
Item 3. Legal Proceedings ------- -----------------
The Company has been named, together with numerous other
companies, as a co-defendant in actions by approximately 1,700
plaintiffs which have been filed in various federal and state
courts in Arkansas, California, Louisiana, Maryland, Mississippi,
New Hampshire, New Jersey, New York, Ohio, Pennsylvania,
Washington, and West Virginia. The plaintiffs allege personal
injuries due to exposure to asbestos products and seek substantial
damages. The majority of the complaints do not identify any
products containing asbestos allegedly sold by the Company.
However, since all products sold by the Company have been and are
purchased from suppliers, if a plaintiff were to successfully
establish an asbestos-related injury claim with respect to a
product sold by the Company, the Company believes it would
normally have a claim against its supplier. Furthermore, the
Company believes it has product liability insurance coverage
available to cover these claims. Accordingly, based on
information now known to the Company, in the opinion of management
the ultimate disposition of the asbestos-related claims against
the Company will not have a materially adverse effect on the
Company's financial position.
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Item 4.
Item 4. Submission of Matters to a Vote of Security ------- Holders -------------------------------------------
No matter was submitted to a vote of shareholders
during the fourth quarter of the fiscal year covered by this
Annual Report on Form 10-K.
PART II -------
Item 5.
Item 5. Market for the Registrant's Common Stock ------- and Related Shareholder Matters ----------------------------------------
The Company is wholly owned by its active and retired
employees, and there is no public trading market for its Common
Stock, par value $1 per share with a stated value of $20 per
share. No shareholder may sell, transfer or otherwise dispose of
shares of Common Stock without first offering the Company the
option to purchase such shares at the price at which they were
issued. The Company also has the option to purchase the Common
Stock of any shareholder who dies or ceases to be an employee of
the Company for any cause other than retirement on a Company
pension. In the past all shares issued by the Company have been
issued at $20 per share, and the Company has always exercised its
repurchase option, and expects to continue to do so.
The information as to number of holders of Common Stock and
frequency and amount of dividends, required to be included
pursuant to this Item 5, is included under the captions "Capital
Stock Data" and "Dividend Data" on page 1 of the Company's Annual
Report to Shareholders for the year ended December 31, 1993, (the
"1993 Annual Report") furnished to the Securities and Exchange
Commission (the "Commission") pursuant to Rule 14c-3 under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and such information is incorporated herein by reference.
Currently there are no restrictions in the Company's Restated
Certificate of Incorporation or its debt instruments that limit
the Company's ability to pay dividends on its Common Stock or that
the Company reasonably believes would be likely to limit
materially the future payment of such dividends.
Item 6.
Item 6. Selected Financial Data ------- -----------------------
The selected financial data for the Company as of
December 31, 1993 and for the five years then ended, which is
required to be included pursuant to this Item 6, is included under
the caption "Selected Consolidated Financial Data" on page 11 of
the 1993 Annual Report and is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of ------- Financial Condition and Results of Operations ---------------------------------------------
Management's discussion and analysis required to be
included pursuant to this Item 7 is included under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 12 and 13 of the 1993 Annual
Report and is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data ------- -------------------------------------------
The financial statements required by this Item 8 are
listed in Item 14(a)(1) of this Annual Report on Form 10-K under
the caption "Index to Financial Statements."
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Such financial statements specifically referenced from the 1993
Annual Report in such list are incorporated herein by reference.
There is no supplementary financial information required by this
item which is applicable to the Company.
Item 9.
Item 9. Disagreements on Accounting and Financial ------ Disclosure -----------------------------------------
None.
PART III --------
Item 10.


Item 10. Directors and Executive Officers of the ------- Registrant ---------------------------------------
The information with respect to the directors and
executive officers of the Company required to be included pursuant
to this Item 10 will be included under the caption "Directors and
Executive Officers -- Nominees for Election as Directors" in the
Company's Information Statement relating to the 1994 Annual
Meeting (the "Information Statement"), to be filed with the
Commission pursuant to Rule 14c-5 under the Exchange Act, and is
incorporated herein by reference.
Item 11.
Item 11. Executive Compensation -------- ----------------------
The information with respect to executive compensation
required to be included pursuant to this Item 11 will be included
under the captions "Executive Compensation" and "Pension Plan" in
the Information Statement and is incorporated herein by reference.
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Item 12.
Item 12. Security Ownership of Certain ------- Beneficial Owners and Management --------------------------------
The information with respect to the security ownership
of beneficial owners of more than 5% of the Common Stock, the
directors of the Company and all directors and officers of the
Company, which is required to be included pursuant to this Item
12, will be included in the introductory language and under the
caption "Directors and Executive Officers -- Nominees for Election
as Directors" in the Information Statement and is incorporated
herein by reference.
Item 13.
Item 13. Certain Relationships ------- and Related Transactions ------------------------
The information with respect to any reportable
transactions, business relationships and indebtedness between the
Company and the beneficial owners of more than 5% of the Common
Stock, the directors or nominees for director of the Company, the
executive officers of the Company or the members of the immediate
families of such individuals, required to be included pursuant to
this Item 13, will be included under the caption "Directors and
Executive Officers" in the Information Statement and is
incorporated herein by reference.
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PART IV -------
Item 14.
Item 14. Exhibits, Financial Statement Schedules, -------- and Reports on Form 8-K ----------------------------------------
(a) Documents filed as part of this report: --------------------------------------
The following financial statements and Report of
Independent Accountants are included on the indicated
pages in the 1993 Annual Report and are incorporated by
reference in this Annual Report on Form 10-K:
1. Index to Financial Statements -----------------------------
(i) Consolidated Statements of Income and Retained Earnings for each of the three years ended December 31, 1993 (page 14).
(ii) Consolidated Balance Sheets, as of December 31, 1993 and December 31, 1992 (page 15).
(iii) Consolidated Statements of Cash Flows for each of the three years ended December 31, 1993 (page 16).
(iv) Notes to Consolidated Financial Statements (pages 17 to 20).
(v) Report of Independent Accountants relating to above mentioned financial statements and notes for each of the three years ended December 31, 1993 (page 21).
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2. Index to Financial Schedules ----------------------------
The following schedules for each of the three years
ended December 31, 1993, to the Financial Statements and Report of
Independent Accountants thereon is included on the indicated pages in
this Annual Report on Form 10-K:
(i) Schedule V. Property, Plant and Equipment (page 21). (ii) Schedule VI. Accumulated Depreciation of Property, Plant and Equipment (page 22). (iii) Schedule VIII. Reserves (page 23). (iv) Report of Independent Accountants on Financial Statement Schedules (page 20).
All schedules other than those indicated above are
omitted because of the absence of the conditions under which they
are required or because the required information is set forth in
the financial statements and the accompanying notes thereto.
3. Exhibits --------
The following exhibits required to be filed as part of
this Annual Report on Form 10-K have been included:
(3) Articles of incorporation and by-laws
(i) Restated Certificate of Incorporation dated March 9, 1984 filed as exhibit 3(i) to the Company's Annual Report on Form 10-K for the year ended December 31, 1984 (Commission File No. 0-255) and incorporated herein by reference.
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(ii) By-laws as amended through August 1, 1991 filed as exhibit 6(a)(19) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991 (Commission File No. 0-255) and incorporated herein by reference.
(4)and(9) Instruments defining the rights of security holders, including indentures and voting trust agreements.
Voting Trust Agreement dated as of April 15, 1987, attached as Annex A to the Prospectus, dated January 20, 1987, constituting a part of the Registration Statement on Form S-13 (Registration No. 2-57861) and incorporated herein by reference.
The Company hereby agrees to furnish to the Commission upon request a copy of each instrument omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K.
(10) Material contracts.
(i) Management Incentive Plan, filed as Exhibit 4(a)(1) to the Annual Report on Form 10-K for the year ended December 31, 1972 (Commission File No. 0-255), as amended by the Amendment effective January 1, 1974, filed as Exhibit 13-c to the Registration Statement on Form S-1 (Registration No. 2-51832), the Amendment effective January 1, 1977, filed as Exhibit 13(d) to the Registration Statement on Form S-1 (Registration No. 2-59744), and the Amendment effective January 1, 1980, filed as Exhibit 5(f) to the Registration Statement on Form S-7 (Registration No. 2-68938) and incorporated herein by reference.
(13) Annual Report to Shareholders for 1993 (except for those portions which are expressly incorporated by reference in this Annual Report on Form 10-K, this exhibit is furnished for the information of the Commission and is not deemed to be filed as part of this Annual Report on Form 10-K).
(21) List of subsidiaries of the Company.
(b) Reports on Form 8-K: -------------------
No reports on Form 8-K were filed during the last quarter of the Company's fiscal year ended December 31, 1993.
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SIGNATURES ----------
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 28th day of March, 1994.
GRAYBAR ELECTRIC COMPANY, INC.
By /s/ E. A. McGRATH ---------------------------- (E. A. McGrath, President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Company, in the capacities indicated, on March 28, 1994.
/s/E. A. McGRATH Director and President --------------------- (E. A. McGrath) (Principal Executive Officer and Principal Financial Officer)
/s/J. R. SEATON Director, Vice President -------------------- (J. R. Seaton) and Comptroller (Principal Accounting Officer)
/s/J. R. HADE Director --------------------- (J. R. Hade)
/s/C. L. HALL Director --------------------- (C. L. Hall)
/s/R. H. HANEY Director --------------------- (R. H. Haney)
/s/G. W. HARPER Director -------------------- (G. W. Harper)
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/s/F. L. HIPP Director --------------------- (F. L. Hipp)
/s/R. L. MYGRANT Director --------------------- (R. L. Mygrant)
/s/I. ORLOFF Director --------------------- (I. Orloff)
/s/R. A. REYNOLDS Director --------------------- (R. A. Reynolds)
/s/A. A. THOMPSON Director --------------------- (A. A. Thompson)
/s/G. S. TULLOCH, JR. Director --------------------- (G. S. Tulloch, Jr.)
/s/J. F. VAN PELT Director --------------------- (J. F. Van Pelt)
/s/J. W. WOLF Director --------------------- (J. W. Wolf)
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Price Waterhouse
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Graybar Electric Company, Inc.
Our audits of the consolidated financial statements referred to in our report dated February 18, 1994 appearing on page 21 of the 1993 Annual Report to Shareholders of Graybar Electric Company, Inc., (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedules listed in Item 14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/Price Waterhouse ............................... PRICE WATERHOUSE
St. Louis, Missouri February 18, 1994
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INDEX TO EXHIBITS
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