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CONFORMED
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
-------------------- ------------------
COMMISSION FILE NUMBER 0-255
GRAYBAR ELECTRIC COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-0794380
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
34 NORTH MERAMEC AVENUE, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 573-9200
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock - Par Value $20
Common Stock - Par Value $1 Per Share with a Stated Value of $20
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Paragraph 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. (X)
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)
The aggregate stated value of the Common Stock beneficially owned with
respect to rights of disposition by persons who are not affiliates (as defined
in Rule 405 under the Securities Act of 1933) of the registrant on June 30,
2002, was approximately $124,585,180. Pursuant to a Voting Trust Agreement,
dated as of April 1, 1997, approximately 95% of the outstanding shares of Common
Stock are held of record by five Voting Trustees who are each directors and
officers of the registrant and who collectively exercise the voting rights with
respect to such shares. The registrant is 100% owned by its active and retired
employees, and there is no public trading market for the registrant's Common
Stock. See Item 5 of this Annual Report on Form 10-K.
The number of shares of Common Stock oustanding at March 27, 2003 was
6,050,936.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the documents listed below have been incorporated by
reference into the indicated Part of this Annual Report on Form 10-K:
(1) Annual Report to Shareholders for the fiscal year ended December 31,
2002 - Part II, Items 5-8.
(2) Information Statement relating to the 2003 Annual Meeting of
Shareholders - Part III, Items 10-13.
PART I
------
Item 1. Business
- ------- --------
Graybar Electric Company, Inc. (the "Company") is engaged
internationally in the distribution of electrical, telecommunications and
networking products and the provision of related supply chain management and
logistics services, primarily to contractors, industrial plants, telephone
companies, power utilities, and commercial users. All products sold by the
Company are purchased by the Company from others.
The Company was incorporated under the laws of the State of New York
on December 11, 1925 to take over the wholesale supply department of Western
Electric Company, Incorporated. The location and telephone number of the
principal executive offices of the Company are 34 North Meramec Avenue, St.
Louis, Missouri 63105, (314) 573-9200.
Suppliers
- ---------
The Company acts as a distributor of approximately 1.4 million
products (stockkeeping units) of more than 4,200 manufacturers. The relationship
of the Company with a number of its principal suppliers goes back many years. It
is customarily a nonexclusive national or regional distributorship, terminable
upon 30 to 90 days notice by either party.
During 2002, the Company purchased approximately 48% of the
products it distributes from its top 25 suppliers. However, the Company
generally deals with more than one supplier for any product category and
there are alternative sources of comparable products available for all
product categories.
Products Distributed
- --------------------
The Company stocks more than 158,000 of the products it distributes
and, therefore, is able to supply its customers locally with a wide variety of
electrical, telecommunications and networking products. The products distributed
by the Company consist primarily of wire, cable, conduit, wiring devices, tools,
motor controls, transformers, lamps, lighting fixtures and hardware, power
transmission equipment, telephone station apparatus, key systems, PBXs, data
products for local area networks or wide area networks, fiber optic products,
and CATV products. These products are sold to customers such as contractors
(both industrial and residential), industrial plants, telephone companies,
private and public utilities, and commercial users.
2
On December 31, 2002 and 2001, the Company had orders on hand which
totaled approximately $305,541,000 and $356,670,000, respectively. The decrease
reflects the marked decline in business experienced by the Company in each of
the last two years reflecting the generally depressed economic conditions that
continue to be prevalent on an industry-wide basis in the electrical and
communications markets in which the Company operates. The market for electrical
products continues to be affected by reduced capital spending by manufacturing
and commercial customers for both new construction projects and maintenance,
repair and operations. In the communications industry, the excess infrastructure
and plant and network capacity following the aggressive growth in the late 1990s
through 2000 resulted in a dramatic decrease in spending in 2002. The Company
expects that approximately 85% of the orders on hand at December 31, 2002 will
be filled within the twelve-month period ending December 31, 2003. Generally,
orders placed by customers and accepted by the Company have resulted in sales.
However, customers from time to time request cancellation, and the Company has
historically allowed such cancellations.
Marketing
- ---------
The Company sells its products through a network of distribution
facilities located in 15 geographical districts throughout the United States. In
each district the Company maintains a main distribution facility and a number of
branch distribution facilities, 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 distribution facility in each district carries a
substantially larger inventory than the branch facilities so that the branch
facilities can call upon the main distribution facility for additional items of
inventory. In addition, the Company maintains 14 zone warehouses with both
standard and specialized inventory products. The zone warehouses replenish the
inventories carried at the distribution facilities and also make shipments
directly to customers. The Company has subsidiary operations with distribution
facilities located in Puerto Rico, Mexico and Canada.
3
The distribution facilities operated by the Company are shown in the
following table:
Number of Branch
Location of Main Distribution
Distribution Facility Facilities in District Zone Warehouses
- --------------------- ---------------------- ---------------
Boston, MA 11 Austell, GA
Cincinnati, OH 14 Charlotte, NC
City of Industry, CA 21 Cranbury, NJ
Dallas, TX 8 Dallas, TX
Glendale Heights, IL 16 Fresno, CA
Houston, TX 7 Hamilton, OH
Minneapolis, MN 17 Joliet, IL
New York, NY 15 Puyallup, WA
Norcross, GA 21 Rogers, MN
Phoenix, AZ 9 Springfield, MO
Pittsburgh, PA 11 Stafford, TX
Richmond, VA 16 Tampa, FL
Seattle, WA 9 Taunton, MA
St. Louis, MO 10 Youngstown, OH
Tampa, FL 19
Number of
Distribution
Facilities
------------
Graybar International, Inc.
---------------------------
Puerto Rico 1
Graybar Electric Canada, Ltd.
-----------------------------
Canada 24
Graybar de Mexico, S. de R.L. de C.V.
-------------------------------------
Mexico City, Mexico 1
Where the specialized nature or size of a particular shipment
warrants, the Company has products shipped directly from its suppliers to the
place of use, while in other cases orders are filled from the Company's
inventory. On a dollar volume basis, approximately 63% 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
through collections of accounts receivable and accounts payable terms with its
suppliers. The Company's short-term borrowing facilities may be used to finance
inventory as needed. Currently, the Company does not use long-term borrowings
for inventory financing. No inventory is pledged as collateral for any
borrowings.
The Company distributes its products to more than 170,000 customers,
which fall into six general classes. The following list shows the estimated
percentage of the Company's total sales for each of the last three years,
attributable to each of these classes:
4
PERCENTAGE OF SALES
CLASS OF CUSTOMERS -------------------
------------------
2002 2001 2000
----------------- ----------------- -----------------
Electrical Contractors 41.5% 37.6% 34.9
Commercial & Industrial 22.4 21.1 20.4
Telecommunication Companies 24.5 31.6 32.7
Private and Public Power Utilities 4.0 3.4 3.1
International 3.2 2.9 2.8
Other 4.4 3.4 6.1
----------------- ----------------- -----------------
100.0% 100.0% 100.0%
================= ================= =================
At December 31, 2002, the Company employed approximately 3,000
persons in sales capacities. Approximately 1,300 of these sales personnel were
sales representatives who work in the field making sales to customers at the
work site. The remainder of the sales personnel were sales and marketing
managers, and telemarketing, advertising, quotation, counter and clerical
personnel.
Competition
- -----------
The Company believes that it is one of the three largest distributors
of electrical and comm/data products in the United States. The field is highly
competitive, and the Company estimates that the three largest distributors
account for only a small portion of the total market, with the balance of the
market being accounted for by several thousand independent distributors and
manufacturers operating on a local, state-wide or regional basis.
While price is an important consideration, the Company believes that
it is the service that it is able to offer -- the ability to quickly supply its
customers with a broad range of electrical, telecommunications and networking
products through conveniently located distribution facilities -- that
distinguishes it from most of its competitors, whether they are also
distributors or are manufacturers selling direct. The Company's pricing
structure for the products it sells reflects the costs associated with the
services that it provides and its prices are generally competitive. However, if
a customer is not looking for one supplier for a wide range of products and does
not require prompt delivery or other services, a competitor that has not
incurred those costs may be in a position to offer a better price.
5
Foreign Sales
- -------------
Sales by the Company to customers in foreign countries accounted for
approximately three percent of consolidated revenues in each of the last three
years. Export activities are handled from Company facilities in Texas and
California. In addition, subsidiaries of the Company have operations in Canada
and Mexico. Long-lived assets located outside the United States represented less
than one percent of the Company's consolidated assets at the end of each of the
last three years. The Company does not have significant foreign currency
exposure and does not believe there are any other significant risks attendant to
its limited foreign operations.
Employees
- ---------
At December 31, 2002, the Company employed approximately 8,300
persons on a full-time basis. Approximately 200 of these persons were covered by
union contracts. The Company has not had a material work stoppage and considers
its relations with its employees to be good.
Item 2. Properties
- ------- ----------
As of December 31, 2002, the Company has 14 zone warehouses, ranging
in size from approximately 140,000 to 300,000 square feet. See Note 7 of Notes
to Consolidated Financial Statements for a discussion of the off-balance sheet
operating lease agreements with an independent lessor that have been used to
fund the acquisition and, in some cases, construction, of nine of the zone
warehouses. The rest of these warehouses are also leased, with the remaining
lease terms ranging from approximately 6 to 9 years.
At December 31, 2002, the Company operated in 15 geographical
districts in the United States, each of which maintains a main distribution
facility that consists primarily of warehouse space (ranging from
approximately 50,000 to 140,000 square feet). A small portion of the space
in each of the main distribution facilities is used for offices. All of
these were owned by the Company. Each district has a number of branch
distribution facilities consisting of warehouse and office space. The number
of branches in a district varies from 7 to 21 and totals 204. The branch
facilities range in size from approximately 4,000 square feet to 100,000
square feet, with the average being approximately 25,000 square feet. The
Company owns 110 of the branch facilities and leases 94. The leases of the
branch facilities are for varying terms, with the majority having a
remaining term of less than five years.
6
As of December 31, 2002, the Company has a 22,000 square foot
leased facility in Puerto Rico and an 18,000 square foot leased facility in
Mexico. In Canada, the Company has 24 distribution facilities, of which 9
are owned and 15 are leased, ranging in size from approximately 5,000 to
100,000 square feet.
The Company's headquarters are located in St. Louis, Missouri in a
93,000 square foot building owned by the Company. The Company also leases a
200,000 square foot operations and administration center in St. Louis, Missouri.
The Company has an option to purchase this facility at the expiration of the
lease in 2021.
As of December 31, 2002, approximately $12.0 million in debt of the
Company was secured by mortgages on 13 buildings. Six of these facilities are
subject to a first mortgage securing a 9.23% note, of which $8.2 million in
principal amount remains outstanding. Six of these facilities are subject to
first mortgages securing variable rate notes, of which $.9 million in principal
remains outstanding. A facility in Kitchener, Ontario, Canada is subject to a
first mortgage securing a 7.95% note, of which $2.9 million in principal remains
outstanding.
Item 3. Legal Proceedings
- ------- -----------------
There are presently no pending legal proceedings that are expected to
have a material impact on the Company or its subsidiaries.
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.
Executive Officers of the Registrant
- ------------------------------------
Certain information with respect to the executive officers of the
Company is set forth in Item 10 of this Annual Report on Form 10-K.
7
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- ------- -----------------------------------------------------------------
Matters
-------
The Company is 100% 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. Since 1928, substantially all of the
issued and outstanding shares of Common Stock have been held of record by voting
trustees under successive voting trust agreements. Under applicable state law, a
voting trust may not have a term greater than ten years. At December 31, 2002,
approximately 95% of the Common Stock was held in a Voting Trust that expires by
its terms on March 31, 2007. The participation of shareholders in a voting trust
is voluntary at the time the voting trust is created but is irrevocable during
its term. Shareholders who elect not to participate in a newly formed voting
trust hold their Common Stock as the shareholders of record.
No shareholder may sell, transfer or otherwise dispose of shares of
Common Stock (or the Voting Trust Certificates issued with respect thereto)
without first offering the Company the option to purchase such shares (or Voting
Trust Certificates) at the price at which the shares were issued. The Company
also has the option to purchase the Common Stock (or Voting Trust Certificates)
of any holder 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,
2002, (the "2002 Annual Report") furnished to the Securities and Exchange
Commission (the "Commission") pursuant to Rule 14c-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and such information is
incorporated herein by reference.
8
Item 6. Selected Financial Data
- ------- -----------------------
The selected financial data for the Company as of December 31, 2002
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 16 of the 2002 Annual Report and is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition
- ------- -----------------------------------------------------------
and Results of Operations
-------------------------
Management's discussion and analysis required to be included pursuant
to this Item 7 is included under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 17 through
19 of the 2002 Annual Report and is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
- -------- ----------------------------------------------------------
The Company's interest expense is sensitive to changes in the general
level of interest rates. Changes in interest rates have different impacts on the
fixed-rate and variable-rate portions of the Company's debt portfolio. A change
in interest rates on the fixed-rate portion of the debt portfolio impacts the
net financial instrument position but has no impact on interest incurred or cash
flows. A change in interest rates on the variable-rate portion of the debt
portfolio impacts the interest incurred and cash flows but does not impact the
net financial instrument position. To mitigate the cash flow impact of interest
rate fluctuations, the Company generally maintains a significant portion of its
debt as fixed rate in nature by borrowing on a long-term basis.
The following table provides information about financial instruments
that are sensitive to changes in interest rates. The table presents principal
cash flows and related weighted-average interest rates by expected maturity
dates.
Fair
Market
There- Value
2003 2004 2005 2006 2007 after Total 12/31/02
---- ---- ---- ---- ---- ----- ----- --------
Long-term debt principal
payments by expected maturity
dates, including current
portion -
Fixed-rate debt(A) 23,314 22,807 38,364 31,754 31,705 142,080 290,024 294,580
Average interest rate 7.10% 7.19% 7.37% 7.15% 7.15% 7.08%
Short-term variable-
rate borrowings 0 0 0
Average interest rate
(A) Dollars stated in thousands
9
The fair value of long-term debt is estimated by discounting cash
flows using current borrowing rates available for debt of similar maturities.
In September 2000 the Company entered into a swap agreement to manage
interest rates on amounts due under certain operating leases. The agreement,
which expires in July 2013, is based on a notional amount of $28.7 million. The
agreement calls for an exchange of interest payments with the Company receiving
payments based on a London Interbank Offered Rate (LIBOR) floating rate, and
making payments based on a fixed rate of 6.92%. There is no exchange of the
notional amount upon which the payments are based. The fair value of the
agreement at December 31, 2002 was $(7,036,000). The negative value of this
agreement reflects the decline in interest rates generally.
Foreign Exchange Rate Risk
--------------------------
The Company conducts business in several foreign countries including
Canada and Mexico. Exposure from foreign currency exchange rate fluctuations
is not material.
Item 8. Financial Statements and Supplementary Data
- ------- -------------------------------------------
The financial statements and Report of Independent Auditors required
by this Item 8 are listed in Item 14(a)(1) of this Annual Report on Form 10-K
under the caption "Index to Financial Statements." Such financial statements
specifically referenced from the 2002 Annual Report in such list are
incorporated herein by reference.
Selected quarterly financial data for the years ended December 31,
2002 and 2001 required by Item 302(a) is included in Note 10 - "Quarterly
Financial Information (Unaudited)" to the consolidated financial statements on
page 29 of the 2002 Annual Report and is incorporated herein by reference.
There is no other supplementary financial information required by
this item which is applicable to the Company.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
None.
10
PART III
Item 10. Directors and Executive Officers of the Registrant
- -------- --------------------------------------------------
The information with respect to the directors of the Company required
to be included pursuant to this Item 10 will be included under the caption
"Directors -- Nominees for Election as Directors" in the Company's Information
Statement relating to the 2003 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.
The following directors are also executive officers of the Company:
D. E. DeSousa, T. F. Dowd, L. R. Giglio, J. H. Hinshaw, R. A. Reynolds, Jr.,
C. R. Udell and J. F. Van Pelt. Information regarding the other executive
officers appears below. All executive officers are elected annually.
Name Age Business experience last five years
- ---- --- -----------------------------------
J. H. Kipper 50 Employed by Company in 1974; Assistant Comptroller
1989 to 1999; Vice President and Comptroller 1999
to present.
J. N. Reed 46 Employed by Company in 1980; Assistant to Treasurer
1993 to 2001; Vice President and Treasurer 2000
to present.
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 -- General" and "Executive Compensation -- Pension Plan" in the
Information Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The information with respect to the security ownership of beneficial
owners of more than 5% of the Common Stock and directors and executive officers
of the Company, which is required to be included pursuant to this Item 12, will
be included under the captions "Beneficial Ownership of More Than 5% of the
Outstanding Common Stock" and "Beneficial Ownership of Management" in the
Information Statement and is incorporated herein by reference.
11
Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------
At the date of this report, there are no reportable transactions,
business relationships or indebtedness of the type required to be included
pursuant to this Item 13 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. If there is any change in that regard prior to the
filing of the Information Statement, such information will be included under the
caption "Directors" in the Information Statement and shall be incorporated
herein by reference.
Item 14. 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. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation.
12
PART IV
-------
Item 15. 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 Auditors are included on the indicated pages in
the 2002 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, 2002 (page 20).
(ii) Consolidated Balance Sheets, as of December 31, 2002
and December 31, 2001 (page 21).
(iii) Consolidated Statements of Cash Flows for each of
the three years ended December 31, 2002 (page 22).
(iv) Consolidated Statements of Changes in Shareholders'
Equity for each of the three years ended
December 31, 2002 (page 23)
(v) Notes to Consolidated Financial Statements (pages 24
to 29).
(vi) Report of Independent Auditors (page 30).
2. Index to Financial Schedule
---------------------------
The following schedule to the financial statements for each of
the three years ended December 31, 2002 is included on the indicated page in
this Annual Report on Form 10-K:
(i) Schedule II. Valuation and Qualifying Accounts
(page 19).
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, as amended,
filed as Exhibit 4(i) to the Company's Registration
Statement on Form S-1 (Registration No. 333-15761)
and incorporated herein by reference.
13
(ii) By-laws as amended through July 25, 2000 filed as
Exhibit 3(ii) to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 2000
(Commission File No. 0-255) and incorporated herein
by reference.
(4)and(9) Voting Trust Agreements
Voting Trust Agreement dated as of April 1,
1997, attached as Annex A to the Prospectus, dated
January 21, 1997, constituting a part of the
Company's Registration Statement on Form S-1
(Registration No. 333-15761) 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.*
(ii) Form of Deferral Agreement entered into between the
Company and certain employees, including R. A. Cole,
T. F. Dowd, L. R. Giglio, T. S. Gurganous, G. D.
Hodges, J. C. Loff, R. D. Offenbacher, R. A.
Reynolds, Jr., K. B. Sparks, C. R. Udell and J. F.
Van Pelt.*
(iii) Form of Supplemental Benefit Plan covering certain
employees, including R. A. Cole, D. E. DeSousa,
T. F. Dowd, L. R. Giglio, T. S. Gurganous, J. H.
Hinshaw, G. D. Hodges, J. C. Loff, R. D.
Offenbacher, R. A. Reynolds, Jr., K. B. Sparks,
C. R. Udell and J. F. Van Pelt.*
(13) Annual Report to Shareholders for 2002 (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.
(23) Independent Auditors' Consent of Ernst and Young
LLP.
(99) Additional Exhibits.
(i) 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.
(ii) 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.
* Compensation arrangement.
(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, 2002.
14
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has duly caused this Annual Report on Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized, as of the
27th day of March, 2003.
GRAYBAR ELECTRIC COMPANY, INC.
By /S/ R. A. REYNOLDS, JR.
-------------------------------------
(R. A. Reynolds, Jr., Chairman of the
Board and President)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the Company, in the capacities indicated, on March 27, 2003.
/S/ R. A. REYNOLDS, JR. Director, Chairman of
- ---------------------------- the Board and President
(R. A. Reynolds, Jr.) (Principal Executive Officer)
/S/ J. H. HINSHAW Director
- ---------------------------- (Principal Financial Officer)
(J. H. Hinshaw)
/S/ R. A. COLE Director
- ----------------------------
(R. A. Cole)
/S/ D. E. DeSOUSA Director
- ----------------------------
(D. E. DeSousa)
/S/ T. F. DOWD Director
- ----------------------------
(T. F. Dowd)
/S/ L. R. GIGLIO Director
- ----------------------------
(L. R. Giglio)
/S/ T. S. GURGANOUS Director
- ----------------------------
(T. S. Gurganous)
/S/ G. D. HODGES Director
- ----------------------------
(G. D. Hodges)
/S/ J. C. LOFF Director
- ----------------------------
(J. C. Loff)
15
/S/ R. D. OFFENBACHER Director
- ----------------------------
(R. D. Offenbacher)
/S/ K. B. SPARKS Director
- ----------------------------
(K. B. Sparks)
/S/ C. R. UDELL Director
- ----------------------------
(C. R. Udell)
/S/ J. F. VAN PELT Director
- ----------------------------
(J. F. Van Pelt)
16
CERTIFICATIONS
--------------
I, Robert A. Reynolds, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Graybar Electric Company,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
report (the "Evaluation Date"); and
c) presented in this annual 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
functions):
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
annual 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: March 27, 2003
/s/ ROBERT A. REYNOLDS, JR.
-----------------------------------------
Robert A. Reynolds, Jr.
President and Principal Executive Officer
17
CERTIFICATIONS
--------------
I, Juanita H. Hinshaw, certify that:
1. I have reviewed this annual report on Form 10-K of Graybar Electric Company,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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 annual
report (the "Evaluation Date"); and
c) presented in this annual 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
functions):
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
annual 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: March 27, 2003
/s/ JUANITA H. HINSHAW
----------------------------
Juanita H. Hinshaw
Senior Vice President and
Principal Financial Officer
18
GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
-----------------------------------------------
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
---------------------------------------------
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance at Additions Balance
Beginning Charged to at End
of Period Income Deductions of Period
--------- ---------- ---------- ---------
Description
-----------
FOR THE YEAR ENDED DECEMBER 31, 2002:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 7,955,000 $ 5,512,000 $ 7,848,000(1) $ 5,619,000
Allowance for cash discounts 679,000 12,071,000 12,062,000(2) 688,000
----------- ----------- ----------- -----------
Total $ 8,634,000 $17,583,000 $19,910,000 $ 6,307,000
=========== =========== =========== ===========
FOR THE YEAR ENDED DECEMBER 31, 2001:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 8,634,000 $ 5,486,000 $ 6,165,000(1) $ 7,955,000
Allowance for cash discounts 777,000 13,282,000 13,380,000(2) 679,000
----------- ----------- ----------- -----------
Total $ 9,411,000 $18,768,000 $19,545,000 $ 8,634,000
=========== =========== =========== ===========
FOR THE YEAR ENDED DECEMBER 31, 2000:
Reserve deducted from assets to
which it applies-
Allowance for doubtful accounts $ 5,021,000 $ 8,888,000 $ 5,275,000(1) $ 8,634,000
Allowance for cash discounts 708,000 13,633,000 13,564,000(2) 777,000
----------- ----------- ----------- -----------
Total $ 5,729,000 $22,521,000 $18,839,000 $ 9,411,000
=========== =========== =========== ===========
(1) Amount of trade receivables written off against the reserve provided.
(2) Discounts allowed to customers.
19
INDEX TO EXHIBITS
-----------------
Exhibits
--------
(3) Articles of incorporation and by-laws.
(i) Restated Certificate of Incorporation, as amended, filed as
Exhibit 4(i) to the Company's Registration Statement on Form S-1
(Registration No. 333-15761) and incorporated herein by
reference.
(ii) By-laws as amended through July 25, 2000 filed as
Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 2000 (Commission File
No. 0-255) and incorporated herein by reference.
(4)and(9) Voting Trust Agreements
Voting Trust Agreement dated as of April 1, 1997, attached
as Annex A to the Prospectus, dated January 21, 1997,
constituting a part of the Company's Registration Statement on
Form S-1 (Registration No. 333-15761) and incorporated herein by
reference.
(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.*
(ii) Form of Deferral Agreement entered into between the
Company and certain employees, including R. A. Cole, T. F.
Dowd, L. R. Giglio, T. S. Gurganous, G. D. Hodges, J. C. Loff,
R. D. Offenbacher, R. A. Reynolds, Jr., K. B. Sparks, C. R.
Udell and J. F. Van Pelt.*
(iii) Form of Supplemental Benefit Plan covering certain
employees, including R. A. Cole, D. E. DeSousa, T. F. Dowd,
L. R. Giglio, T. S. Gurganous, J. H. Hinshaw, G. D. Hodges,
J. C. Loff, R. D. Offenbacher, R. A. Reynolds, Jr.,
K. B. Sparks, C. R. Udell and J. F. Van Pelt.*
(13) Annual Report to Shareholders for 2002 (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.
(23) Independent Auditors' Consent of Ernst and Young LLP.
(99) Additional Exhibits.
(i) 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.
(iii) 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.
* Compensation arrangement.
20
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