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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

(Amendment No. 1 to Form 10-K)



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended January 30, 2004



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission File No. 001-08772



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HUGHES SUPPLY, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-0559446                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



One Hughes Way

Orlando, Florida 32805

(Address of principal executive offices)



(407) 841-4755

(Registrants telephone number, including area code)



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Securities registered pursuant to Section 12(b) of the Act:



|                               |  |                                          
|------------------------------ |  | -----------------------------------------
|Title of each class            |  | Name of each exchange on which registered
|Common Stock ($1.00 Par Value) |  | New York Stock Exchange                  



Securities
registered pursuant to Section 12(g) of the Act: None



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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 ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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. ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)    Yes  x    No ̈



The aggregate market value of the registrants voting stock held by non-affiliates as of the last business day of the
registrants most recently completed second fiscal quarter ($35.35 per share as of August 1, 2003): $784,386,134.



There were 30,631,377 shares of the registrants Common Stock ($1.00 par value) outstanding as of April 9, 2004.



DOCUMENTS INCORPORATED BY REFERENCE



Designated portions of the Definitive Proxy Statement for the 2004 Annual
Meeting of Shareholders held on May 20, 2004 are incorporated by reference in Part III of this Report.



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AMENDMENT NO. 1

TO THE FORM 10-K FILED BY

HUGHES SUPPLY, INC. ON JANUARY 30, 2004



This Form 10-K/A constitutes Amendment No. 1 (Amendment No. 1) to
Hughes Supply, Inc.s Annual Report on Form 10-K for the period ended January 30, 2004, which was originally filed on April 14, 2004 (Original Form 10-K) . This Amendment No. 1 is being filed solely to amend: (i) Part II, Item 8
Financial Statements and Supplementary Data by deleting the three sentences in Note 2-Business Combinations and Divestitures that reference valuations prepared by an independent third party appraisal firm; and (ii) Part IV, Item 15 Exhibits,
Financial Statement Schedules and Reports on Form 8-K to include a new consent of PricewaterhouseCoopers LLP, as well as currently dated certifications as required by Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as
amended. The remainder of the Original Form 10-K is unchanged and is not reproduced in this Amendment No. 1. This Amendment No. 1 does not reflect events occurring after the filing of the Original Form 10-K, and does not modify or update the
disclosures therein in any way other than as required to reflect the amendment described above.



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PART II



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Financial Statements



| |  |                                                                                                                                |  |        
| |  | ------------------------------------------------------------------------------------------------------------------------------ |  | -------
| |  |                                                                                                                                |  | Page(s)
| |  | Consolidated Statements of Income for Fiscal Years Ended January 30, 2004, January 31, 2003 and January 25, 2002               |  | 4      
| |  |                                                                                                                               
| |  | Consolidated Balance Sheets as of January 30, 2004 and January 31, 2003                                                        |  | 5      
| |  |                                                                                                                               
| |  | Consolidated Statements of Shareholders Equity for Fiscal Years Ended January 30, 2004, January 31, 2003 and January 25, 2002 |  | 6      
| |  |                                                                                                                               
| |  | Consolidated Statements of Cash Flows for Fiscal Years Ended January 30, 2004, January 31, 2003 and January 25, 2002           |  | 7      
| |  |                                                                                                                               
| |  | Notes to Consolidated Financial Statements                                                                                     |  | 8-31   
| |  |                                                                                                                               
| |  | Report of Independent Registered Certified Public Accounting Firm                                                              |  | 32     
| |  |                                                                                                                               
| |  | Managements Responsibility for Financial Statements                                                                           |  | 33     



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HUGHES SUPPLY, INC.

Consolidated Statements of Income

(in millions, except per share data)



|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|------------------------------------ |  | ------------------ | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------- | -
|                                     |  | Fiscal Years Ended |        
|                                     |  | January 30, 2004   |         |   | January 31, 2003 |   |         | January 25, 2002 | 
|Net Sales                            |  | $                  | 3,253.4 |   |                  | $ | 3,066.3 |                  |  | $ | 3,037.7 |  
|Cost of Sales                        |  |                    | 2,519.7 |   |                  |   | 2,356.6 |                  |  |   | 2,340.6 |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Gross Margin                         |  |                    | 733.7   |   |                  |   | 709.7   |                  |  |   | 697.1   |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Operating Expenses:                  |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Selling, general and administrative  |  |                    | 589.8   |   |                  |   | 568.0   |                  |  |   | 564.0   |  
|Depreciation and amortization        |  |                    | 21.2    |   |                  |   | 20.5    |                  |  |   | 31.1    |  
|Impairment of long-lived assets      |  |                    |        |   |                  |   |        |                  |  |   | 0.7     |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Total operating expenses             |  |                    | 611.0   |   |                  |   | 588.5   |                  |  |   | 595.8   |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Operating Income                     |  |                    | 122.7   |   |                  |   | 121.2   |                  |  |   | 101.3   |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Non-Operating Income (Expenses):     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Interest and other income            |  |                    | 6.4     |   |                  |   | 7.3     |                  |  |   | 9.3     |  
|Interest expense                     |  |                    | (34.6   | ) |                  |   | (30.3   | )                |  |   | (35.9   | )
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|                                     |  |                    | (28.2   | ) |                  |   | (23.0   | )                |  |   | (26.6   | )
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Income Before Income Taxes           |  |                    | 94.5    |   |                  |   | 98.2    |                  |  |   | 74.7    |  
|Income Taxes                         |  |                    | 36.8    |   |                  |   | 40.1    |                  |  |   | 30.6    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Net Income                           |  | $                  | 57.7    |   |                  | $ | 58.1    |                  |  | $ | 44.1    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Earnings Per Share:                  |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Basic                                |  | $                  | 2.52    |   |                  | $ | 2.50    |                  |  | $ | 1.90    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Diluted                              |  | $                  | 2.46    |   |                  | $ | 2.45    |                  |  | $ | 1.88    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Weighted average Shares Outstanding: |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Basic                                |  |                    | 22.9    |   |                  |   | 23.2    |                  |  |   | 23.2    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  
|Diluted                              |  |                    | 23.5    |   |                  |   | 23.7    |                  |  |   | 23.4    |  
|                                     |  |                    |         |   |                  |   |         |                  |  |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



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HUGHES SUPPLY, INC.

Consolidated Balance Sheets

(in millions, except share and per share data)



|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                   |  | January 30, 2004 |         |   | January 31, 2003 |  
|Assets                                                                                                                                                             |  |                  |         |   |                  |   |         |  
|Current Assets:                                                                                                                                                    |  |                  |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                                          |  | $                | 8.3     |   |                  | $ | 1.7     |  
|Accounts receivable, less allowance for doubtful accounts of $6.5 and $8.5                                                                                         |  |                  | 493.3   |   |                  |   | 423.1   |  
|Inventories                                                                                                                                                        |  |                  | 467.0   |   |                  |   | 438.5   |  
|Deferred income taxes                                                                                                                                              |  |                  | 19.4    |   |                  |   | 19.7    |  
|Other current assets                                                                                                                                               |  |                  | 53.0    |   |                  |   | 47.1    |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total current assets                                                                                                                                               |  |                  | 1,041.0 |   |                  |   | 930.1   |  
|                                                                                                                                                                   |  |                 
|Property and Equipment, Net                                                                                                                                        |  |                  | 161.8   |   |                  |   | 157.8   |  
|Goodwill                                                                                                                                                           |  |                  | 609.8   |   |                  |   | 320.1   |  
|Other Assets                                                                                                                                                       |  |                  | 68.7    |   |                  |   | 26.9    |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total assets                                                                                                                                                       |  | $                | 1,881.3 |   |                  | $ | 1,434.9 |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Liabilities and Shareholders Equity                                                                                                                               |  |                  |         |   |                  |   |         |  
|Current Liabilities:                                                                                                                                               |  |                  |         |   |                  |   |         |  
|Current portion of long-term debt                                                                                                                                  |  | $                | 44.6    |   |                  | $ | 63.8    |  
|Accounts payable                                                                                                                                                   |  |                  | 308.3   |   |                  |   | 230.0   |  
|Accrued compensation and benefits                                                                                                                                  |  |                  | 39.3    |   |                  |   | 43.3    |  
|Other current liabilities                                                                                                                                          |  |                  | 45.2    |   |                  |   | 34.2    |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                          |  |                  | 437.4   |   |                  |   | 371.3   |  
|                                                                                                                                                                   |  |                 
|Long-Term Debt                                                                                                                                                     |  |                  | 368.7   |   |                  |   | 378.1   |  
|Deferred Income Taxes                                                                                                                                              |  |                  | 55.4    |   |                  |   | 34.0    |  
|Other Noncurrent Liabilities                                                                                                                                       |  |                  | 7.8     |   |                  |   | 6.7     |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total liabilities                                                                                                                                                  |  |                  | 869.3   |   |                  |   | 790.1   |  
|                                                                                                                                                                   |  |                 
|Commitments and Contingencies (Note 10)                                                                                                                            |  |                  |         |   |                  |   |         |  
|                                                                                                                                                                   |  |                 
|Shareholders Equity:                                                                                                                                              |  |                  |         |   |                  |   |         |  
|Preferred stock, no par value; 10,000,000 shares authorized; none issued; preferences, limitations and relative rights to be established by
the Board of Directors |  |                  |        |   |                  |   |        |  
|Common stock, par value $1 per share; 100,000,000 shares authorized; 30,795,577 and 23,935,764 shares issued                                                       |  |                  | 30.8    |   |                  |   | 23.9    |  
|Capital in excess of par value                                                                                                                                     |  |                  | 533.3   |   |                  |   | 222.4   |  
|Retained earnings                                                                                                                                                  |  |                  | 465.1   |   |                  |   | 416.7   |  
|Treasury stock, 216,952 and 245,700 shares, at cost                                                                                                                |  |                  | (5.5    | ) |                  |   | (6.8    | )
|Unearned compensation related to outstanding restricted stock                                                                                                      |  |                  | (11.7   | ) |                  |   | (11.4   | )
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total shareholders equity                                                                                                                                         |  |                  | 1,012.0 |   |                  |   | 644.8   |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                                                                                         |  | $                | 1,881.3 |   |                  | $ | 1,434.9 |  
|                                                                                                                                                                   |  |                  |         |   |                  |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



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HUGHES SUPPLY, INC.

Consolidated Statements of Shareholders Equity

(in millions, except share and per share data)



|                                                                |  |              |   |  |                                |      |   |                   |   |        |                |  |         |                       |   |  |          |   |  |   |       |   |  |   |       |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------ | - |  | ------------------------------ | ---- | - | ----------------- | - | ------ | -------------- |  | ------- | --------------------- | - |  | -------- | - |  | - | ----- | - |  | - | ----- | - |  | - | ------- | -
|                                                                |  | Common Stock |   |  | Capital in Excess of Par Value |      |   | Retained Earnings |   |        | Treasury Stock |  |         | Unearned Compensation |   |  |          |  
|                                                                |  | Shares       |   |  | Dollars                        |      |   |                   |   | Shares |                |  | Dollars |                       |   |  | Total    |  
|Balance at January 26, 2001                                     |  | 24,211,485   |   |  | $                              | 24.2 |   |                   | $ | 228.1  |                |  | $       | 337.1                 |   |  | (576,783 | ) |  | $ | (13.3 | ) |  | $ | (6.1  | ) |  | $ | 570.0   |  
|Net income                                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         | 44.1                  |   |  |         |   |  |   |      |   |  |   |      |   |  |   | 44.1    |  
|Cash dividends$0.340 per share                                 |  |             |   |  |                                |     |   |                   |   |       |                |  |         | (8.0                  | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (8.0    | )
|Purchase of treasury stock                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  | (394,700 | ) |  |   | (7.5  | ) |  |   |      |   |  |   | (7.5    | )
|Shares issued under stock option plans and related tax benefits |  |             |   |  |                                |     |   |                   |   | 0.3    |                |  |         | (1.7                  | ) |  | 265,378  |   |  |   | 5.6   |   |  |   |      |   |  |   | 4.2     |  
|Purchase and retirement of common shares                        |  | (91,322      | ) |  |                                | (0.1 | ) |                   |   | (0.8   | )              |  |         | (1.1                  | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (2.0    | )
|Retirement of treasury stock                                    |  | (342,854     | ) |  |                                | (0.3 | ) |                   |   | (3.2   | )              |  |         | (4.0                  | ) |  | 342,854  |   |  |   | 7.5   |   |  |   |      |   |  |   |        |  
|Issuance of restricted stock, net of cancellations              |  | (2,709       | ) |  |                                |     |   |                   |   | 0.5    |                |  |         | 1.3                   |   |  | 339,000  |   |  |   | 7.2   |   |  |   | (9.5  | ) |  |   | (0.5    | )
|Amortization of restricted stock                                |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  |         |   |  |   |      |   |  |   | 1.5   |   |  |   | 1.5     |  
|Cancellation of stock rights issued to bestroute.com            |  |             |   |  |                                |     |   |                   |   | (7.3   | )              |  |         |                      |   |  |         |   |  |   |      |   |  |   |      |   |  |   | (7.3    | )
|                                                                |  |              |   |  |                                |      |   |                   |   |        |                |  |         |                       |   |  |          |   |  |   |       |   |  |   |       |   |  |   |         |  
|Balance at January 25, 2002                                     |  | 23,774,600   |   |  | $                              | 23.8 |   |                   | $ | 217.6  |                |  | $       | 367.7                 |   |  | (24,251  | ) |  | $ | (0.5  | ) |  | $ | (14.1 | ) |  | $ | 594.5   |  
|Net income                                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         | 58.1                  |   |  |         |   |  |   |      |   |  |   |      |   |  |   | 58.1    |  
|Cash dividends$0.355 per share                                 |  |             |   |  |                                |     |   |                   |   |       |                |  |         | (8.5                  | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (8.5    | )
|Purchase of treasury stock                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  | (257,000 | ) |  |   | (7.1  | ) |  |   |      |   |  |   | (7.1    | )
|Shares issued under stock option plans and related tax benefits |  | 216,836      |   |  |                                | 0.1  |   |                   |   | 5.8    |                |  |         | (0.1                  | ) |  | 15,551   |   |  |   | 0.3   |   |  |   |      |   |  |   | 6.1     |  
|Purchase and retirement of common shares                        |  | (25,784      | ) |  |                                |     |   |                   |   | (0.5   | )              |  |         | (0.6                  | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (1.1    | )
|Issuance of restricted stock, net of cancellations              |  | (29,888      | ) |  |                                |     |   |                   |   | (0.5   | )              |  |         | 0.1                   |   |  | 20,000   |   |  |   | 0.5   |   |  |   | (0.1  | ) |  |   |        |  
|Amortization of restricted stock                                |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  |         |   |  |   |      |   |  |   | 2.8   |   |  |   | 2.8     |  
|                                                                |  |              |   |  |                                |      |   |                   |   |        |                |  |         |                       |   |  |          |   |  |   |       |   |  |   |       |   |  |   |         |  
|Balance at January 31, 2003                                     |  | 23,935,764   |   |  | $                              | 23.9 |   |                   | $ | 222.4  |                |  | $       | 416.7                 |   |  | (245,700 | ) |  | $ | (6.8  | ) |  | $ | (11.4 | ) |  | $ | 644.8   |  
|Net income                                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         | 57.7                  |   |  |         |   |  |   |      |   |  |   |      |   |  |   | 57.7    |  
|Cash dividends$0.400 per share                                 |  |             |   |  |                                |     |   |                   |   |       |                |  |         | (10.1                 | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (10.1   | )
|Purchase of treasury stock                                      |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  | (258,600 | ) |  |   | (6.0  | ) |  |   |      |   |  |   | (6.0    | )
|Shares issued under stock option plans and related tax benefits |  |             |   |  |                                |     |   |                   |   | 1.2    |                |  |         | (0.4                  | ) |  | 199,348  |   |  |   | 5.1   |   |  |   |      |   |  |   | 5.9     |  
|Issuance of common stock, net                                   |  | 6,900,000    |   |  |                                | 6.9  |   |                   |   | 310.6  |                |  |         |                      |   |  |         |   |  |   |      |   |  |   |      |   |  |   | 317.5   |  
|Purchase and retirement of common shares                        |  | (10,299      | ) |  |                                |     |   |                   |   | (0.1   | )              |  |         | (0.3                  | ) |  |         |   |  |   |      |   |  |   |      |   |  |   | (0.4    | )
|Issuance of restricted stock, net of cancellations              |  | (29,888      | ) |  |                                |     |   |                   |   | (0.8   | )              |  |         | 1.5                   |   |  | 88,000   |   |  |   | 2.2   |   |  |   | (3.3  | ) |  |   | (0.4    | )
|Amortization of restricted stock                                |  |             |   |  |                                |     |   |                   |   |       |                |  |         |                      |   |  |         |   |  |   |      |   |  |   | 3.0   |   |  |   | 3.0     |  
|                                                                |  |              |   |  |                                |      |   |                   |   |        |                |  |         |                       |   |  |          |   |  |   |       |   |  |   |       |   |  |   |         |  
|Balance at January 30, 2004                                     |  | 30,795,577   |   |  | $                              | 30.8 |   |                   | $ | 533.3  |                |  | $       | 465.1                 |   |  | (216,952 | ) |  | $ | (5.5  | ) |  | $ | (11.7 | ) |  | $ | 1,012.0 |  
|                                                                |  |              |   |  |                                |      |   |                   |   |        |                |  |         |                       |   |  |          |   |  |   |       |   |  |   |       |   |  |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



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HUGHES SUPPLY, INC.

Consolidated Statements of Cash Flows

(in millions)



|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------ | ------ | - | --------------- | - | ----- | --------------- |  | - | ------ | -
|                                                                                  |  | Fiscal Years Ended |       
|                                                                                  |  | January 30,2004    |        |   | January 31,2003 |   |       | January 25,2002 | 
|Cash Flows from Operating Activities:                                             |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net income                                                                        |  | $                  | 57.7   |   |                 | $ | 58.1  |                 |  | $ | 44.1   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Depreciation and amortization                                                     |  |                    | 21.2   |   |                 |   | 20.5  |                 |  |   | 31.1   |  
|Provision for doubtful accounts                                                   |  |                    | 4.6    |   |                 |   | 9.1   |                 |  |   | 11.1   |  
|Amortization of restricted stock                                                  |  |                    | 2.7    |   |                 |   | 2.8   |                 |  |   | 1.0    |  
|Income tax benefit of stock options exercised                                     |  |                    | 1.2    |   |                 |   | 1.4   |                 |  |   | 0.3    |  
|Deferred income taxes                                                             |  |                    | 10.7   |   |                 |   | 14.9  |                 |  |   | 10.4   |  
|Other                                                                             |  |                    | 2.9    |   |                 |   | (1.2  | )               |  |   | 0.1    |  
|Changes in assets and liabilities, net of businesses acquired:                    |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Accounts receivable                                                               |  |                    | (24.3  | ) |                 |   | (24.3 | )               |  |   | 50.1   |  
|Inventories                                                                       |  |                    | 16.8   |   |                 |   | (11.6 | )               |  |   | 55.0   |  
|Other current assets                                                              |  |                    | (0.8   | ) |                 |   | 10.6  |                 |  |   | (12.3  | )
|Other assets                                                                      |  |                    | (3.6   | ) |                 |   | (0.4  | )               |  |   | (1.8   | )
|Accounts payable                                                                  |  |                    | 63.3   |   |                 |   | 25.2  |                 |  |   | (41.3  | )
|Accrued compensation and benefits                                                 |  |                    | (8.5   | ) |                 |   | 9.0   |                 |  |   | (0.9   | )
|Other current liabilities                                                         |  |                    | 0.9    |   |                 |   | (2.3  | )               |  |   | (4.3   | )
|Other noncurrent liabilities                                                      |  |                    | 1.1    |   |                 |   | 0.6   |                 |  |   | 0.4    |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net cash provided by operating activities                                         |  |                    | 145.9  |   |                 |   | 112.4 |                 |  |   | 143.0  |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Cash Flows from Investing Activities:                                             |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Capital expenditures                                                              |  |                    | (15.9  | ) |                 |   | (15.3 | )               |  |   | (16.9  | )
|Proceeds from sale of property and equipment                                      |  |                    | 4.0    |   |                 |   | 4.5   |                 |  |   | 8.7    |  
|Business acquisitions, net of cash                                                |  |                    | (279.6 | ) |                 |   | (33.4 | )               |  |   | (32.0  | )
|Proceeds from sale of investment in affiliated entity                             |  |                    |       |   |                 |   | 2.0   |                 |  |   |       |  
|Purchase of bestroute.com stock rights                                            |  |                    |       |   |                 |   |      |                 |  |   | (7.3   | )
|Proceeds from sale of pool and spa business                                       |  |                    |       |   |                 |   |      |                 |  |   | 25.0   |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net cash used in investing activities                                             |  |                    | (291.5 | ) |                 |   | (42.2 | )               |  |   | (22.5  | )
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Cash Flows from Financing Activities:                                             |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net borrowings (payments) under short-term debt arrangements                      |  |                    | 27.7   |   |                 |   | 19.6  |                 |  |   | (100.3 | )
|Proceeds from issuance of senior term loan                                        |  |                    | 250.0  |   |                 |   |      |                 |  |   |       |  
|Principal payments on other debt and debt of acquired entities                    |  |                    | (422.3 | ) |                 |   | (73.0 | )               |  |   | (23.8  | )
|Proceeds from issuance of common stock, net                                       |  |                    | 317.5  |   |                 |   |      |                 |  |   |       |  
|Change in book overdrafts                                                         |  |                    | (4.6   | ) |                 |   | (10.3 | )               |  |   | 1.8    |  
|Purchase of treasury shares                                                       |  |                    | (6.0   | ) |                 |   | (7.1  | )               |  |   | (7.5   | )
|Dividends paid                                                                    |  |                    | (9.4   | ) |                 |   | (8.1  | )               |  |   | (8.0   | )
|Other                                                                             |  |                    | (0.7   | ) |                 |   | 3.6   |                 |  |   | 1.7    |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net cash provided by (used in) financing activities                               |  |                    | 152.2  |   |                 |   | (75.3 | )               |  |   | (136.1 | )
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Net (Decrease) Increase in Cash and Cash Equivalents                              |  |                    | 6.6    |   |                 |   | (5.1  | )               |  |   | (15.6  | )
|Cash and Cash Equivalents, Beginning of Year                                      |  |                    | 1.7    |   |                 |   | 6.8   |                 |  |   | 22.4   |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  
|Cash and Cash Equivalents, End of Year                                            |  | $                  | 8.3    |   |                 | $ | 1.7   |                 |  | $ | 6.8    |  
|                                                                                  |  |                    |        |   |                 |   |       |                 |  |   |        |  



The accompanying
notes are an integral part of these consolidated financial statements.



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Note 1Description of Business and Summary of Significant Accounting Policies



Business



Founded in 1928, we are one of the nations largest diversified wholesale distributors of construction, repair and maintenance-related products
distributing over 350,000 products to more than 100,000 customers through 486 branches located in 38 states. Our customers include electrical, plumbing and mechanical contractors; public utilities; property management companies; municipalities and
industrial companies. Although we have a national presence, we operate principally in the southeastern and southwestern United States.



We are organized on a product line basis into six reportable segments: Water & Sewer; Plumbing/Heating and Air Conditioning (HVAC); Maintenance,
Repair and Operations (MRO); Utilities; Electrical and Industrial Pipe, Valves and Fittings (PVF). An All Other category includes our Building Materials, Fire Protection and Mechanical Industrial product lines.



Principles of Consolidation



Our consolidated financial statements include our accounts and the accounts
of our wholly owned subsidiaries. Significant intercompany balances and transactions have been eliminated. Results of operations of companies acquired are included from their respective dates of acquisition. Investments in 50% or less owned
affiliates over which we have the ability to exercise significant influence are accounted for using the equity method. During fiscal years 2004, 2003 and 2002, we did not have any less than 20% owned investments in affiliates accounted
for under the equity method.



Fiscal Year



Our fiscal year is a 52- or 53-week period ending on the last Friday in
January. Fiscal years 2004 and 2002 contained 52 weeks while fiscal year 2003 contained 53 weeks. The additional week in fiscal year 2003 was included in the first quarter.



Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates and the differences could be material.



Cash and Cash Equivalents



We consider all highly liquid investments with maturities of three months or
less when purchased to be cash equivalents.



Allowance for Doubtful
Accounts



We evaluate the collectibility of accounts
receivable based on numerous factors, including past transaction history with customers, their credit worthiness, and an assessment of our lien and bond rights. Initially, we estimate an allowance for doubtful accounts as a percentage of net sales
based on historical bad debt experience and on a quarterly basis, we write off uncollectible receivables. This estimate is periodically adjusted when we become aware of a specific customers inability to meet its financial obligations (e.g.
bankruptcy filing) or as a result of changes in the overall aging of accounts receivable. While we have a large customer base that is geographically dispersed, a slowdown in the markets in which we operate may result in higher than expected
uncollectible accounts, and therefore, the need to revise estimates for bad debts. To the extent historical credit experience is not indicative of future performance or other assumptions used by management do not prevail, the allowance for doubtful
accounts could differ significantly, resulting in either higher or lower future provisions for doubtful accounts. At January 30, 2004 and January 31, 2003, the allowance for doubtful accounts totaled $6.5 million and $8.5 million, respectively.



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Inventories



Inventories are carried at the lower of cost or market. The cost of substantially all inventories is determined by the moving average cost method. We
evaluate our inventory value at the end of each quarter to ensure that it is carried at the lower of cost or market. This evaluation includes an analysis of each branchs physical inventory results over the last two years, a review of potential
dead stock based on historical product sales and forecasted sales and an overall consolidated analysis of potential excess inventory. Periodically, the branchs perpetual inventory records are adjusted to reflect permanent declines in market
value. To the extent historical physical inventory results are not indicative of future results and if future events impact, either favorably or unfavorably, the saleability of our products or our relationship with certain key vendors, our inventory
reserves could differ significantly, resulting in either higher or lower future inventory provisions. At January 30, 2004 and January 31, 2003, our inventory reserves totaled $4.5 million and $ 6.0 million, respectively.



Consideration Received From Vendors



At the beginning of each calendar year, we enter into agreements with many
of our vendors providing for inventory purchase rebates (vendor rebates) upon achievement of specified volume purchasing levels. We accrue the receipt of vendor rebates as part of our cost of sales for products sold based on progress
towards earning the vendor rebates, taking into consideration cumulative purchases of inventory to date and projected purchases through the end of the year. An estimate of unearned vendor rebates is included in the carrying value of inventory at
each period end for vendor rebates received on products not yet sold. While we believe that we will continue to receive consideration from vendors in fiscal year 2005 and thereafter, there can be no assurance that vendors will continue to provide
comparable amounts of vendor rebates in the future.



Property and
Equipment



Property and equipment are recorded at cost
and depreciated using both straight-line and declining-balance methods based on the following estimated useful lives of the assets:



|                                  |  |           
|--------------------------------- |  | ----------
|Buildings and improvements        |  | 540 years
|Transportation equipment          |  | 220 years
|Furniture, fixtures and equipment |  | 112 years



Maintenance and repair
costs are charged to expense as incurred. Renewals and improvements that extend the useful lives of assets are capitalized. Gains or losses are recognized upon disposition. Interest costs related to assets under construction are capitalized during
the construction period and totaled $0.6 million, $0.4 million and $0.3 million in fiscal years 2004, 2003 and 2002. Depreciation of property and equipment totaled $16.6 million, $16.1 million and $18.1 million in fiscal years 2004, 2003 and 2002,
respectively.



Goodwill



Goodwill represents the excess of the purchase price paid over the fair
value of the net assets acquired in connection with business acquisitions. Effective January 26, 2002, we adopted Statement of Financial Accounting Standards (FAS) 142, Goodwill and Other Intangible Assets. FAS 142 requires
entities to assess the fair value of the net assets underlying all acquisition-related goodwill on a reporting unit basis effective beginning in fiscal year 2003. When the fair value is less than the related goodwill value, entities are required to
reduce the amount of goodwill. The approach to evaluating the recoverability of goodwill as outlined in FAS 142 requires the use of valuation techniques utilizing estimates and assumptions about projected future operating results and other
variables. Under the new impairment approach, we may be subject to earnings volatility if additional goodwill impairment occurs at a future date. FAS 142 also requires entities to discontinue the amortization of goodwill, including amortization of
goodwill acquired in past business combinations. Accordingly, we no longer amortized goodwill beginning in fiscal year 2003 (see note 4).



At January 30, 2004 and January 31, 2003, goodwill, net of accumulated amortization, totaled $609.8 million and $320.1 million, respectively. Accumulated
amortization of goodwill totaled $40.3 million at January 30, 2004 and January 31, 2003.



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Other Assets



We capitalize certain software development costs, which are being amortized
on a straight-line basis over the estimated useful lives of the software, ranging from 2 to 7 years. At January 30, 2004 and January 31, 2003, capitalized software development costs totaled $10.6 million and $9.4 million, respectively, net of
accumulated amortization of $14.9 million and $11.7 million, respectively. Amortization of capitalized software development costs totaled $3.2 million, $3.9 million and $3.6 million in fiscal years 2004, 2003 and 2002, respectively.



Intangible assets, which principally consist of customer contracts acquired
in business combinations, are recorded at their respective fair values in accordance with FAS 141, Business Combinations, and are generally amortized using the straight-line method. Additional disclosure related to acquired other intangible assets
as of fiscal year-end 2004 and 2003 are as follows (in millions):



|                                  |  |                    |      |                         |      |      |                    |  |                         |     |  |   |      |  
|--------------------------------- |  | ------------------ | ---- | ----------------------- | ---- | ---- | ------------------ |  | ----------------------- | --- |  | - | ---- | -
|                                  |  | Fiscal Years Ended |     
|                                  |  | 2004               |      |                         | 2003 |     
|                                  |  | GrossCarryingValue |      | AccumulatedAmortization |      |      | GrossCarryingValue |  | AccumulatedAmortization |    
|Amortized intangible assets       |  |                    |      |                         |      |      |                    |  |                         |     |  |   |      |  
|Acquired customer contracts       |  | $                  | 37.1 |                         | $    | (1.4 | )                  |  | $                       | 8.2 |  | $ | (0.2 | )
|Non-compete/employment agreements |  |                    | 3.1  |                         |      | (0.3 | )                  |  |                         | 0.4 |  |   | (0.1 | )
|                                  |  |                    |      |                         |      |      |                    |  |                         |     |  |   |      |  
|Total                             |  |                    | 40.2 |                         |      | (1.7 | )                  |  |                         | 8.6 |  |   | (0.3 | )
|                                  |  |                    |      |                        
|Unamortized intangible assets     |  |                    |      |                         |      |      |                    |  |                         |     |  |   |      |  
|Private label tradenames          |  |                    | 5.9  |                         |      |     |                    |  |                         |    |  |   |     |  
|                                  |  |                    |      |                         |      |      |                    |  |                         |     |  |   |      |  
|Total                             |  | $                  | 46.1 |                         | $    | (1.7 | )                  |  | $                       | 8.6 |  | $ | (0.3 | )



The weighted-average
amortization period is 13 years for acquired customer contracts and 5 years for non-compete agreements. The weighted-average period for acquired customer contracts and non-compete agreements on a combined basis is 12 years.



The aggregate amortization expense for fiscal years 2004, 2003 and 2002 was
$1.4 million, $0.4 million and $0.2 million, respectively. Total estimated annual amortization expense expected for the next five fiscal years, based on current levels of intangible assets is $3.5 million.



Impairment of Long-Lived Assets Other than Goodwill



Long-lived assets, including property and equipment, are reviewed for
possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. To analyze recoverability, we project undiscounted future cash flows over the remaining life of the asset. If these projected
cash flows are less than the carrying amount, an impairment loss is recognized based on the fair value of the asset less any costs of disposition (see note 6). Our judgments regarding the existence of impairment indicators are based on market and
operational performance. Future events could cause us to conclude that impairment indicators exist and that assets are impaired. Evaluating the impairment also requires us to estimate future operating results and cash flows. If different estimates
were used, the amount and timing of asset impairments could be affected.



Self-Insurance



We are self-insured for
certain losses relating to workers compensation, automobile, general and product liability claims. We also maintain stop loss coverage to limit the exposure arising from such claims. Self-insurance losses for claims filed and claims incurred
but not reported are accrued based upon our estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and our historical loss development experience. To the
extent the projected future development of the losses resulting from workers compensation, automobile, general and product liability claims incurred as of January 30, 2004 differs from the actual development of such losses in future periods,
our insurance reserves could differ significantly, resulting in either higher or lower future insurance expense. At January 30, 2004 and January 31, 2003, self-insurance reserves totaled $1.0 million and $5.6 million, respectively.



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Fair Value of Financial Instruments



The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and benefits,
and other current liabilities approximate their fair values because of the short-term nature of these instruments. The fair value of our long-term debt is estimated based on quoted market prices for the same or similar issues or on current rates
offered to us for debt of the same remaining maturities. The fair value of long-term debt was computed by discounting the remaining cash flows by a rate equal to the estimated constant treasury rate for the remaining life of the debt instrument plus
applicable credit spread over the remaining average life of the issue. The fair values of long-term debt approximated $324.3 million and $395.9 million and the related carrying values were $413.3 million and $441.9 million at January 30, 2004 and
January 31, 2003, respectively.



Revenue Recognition



We ship products to customers predominantly by our internal fleet and to
a lesser extent by third party carriers. We recognize revenues from product sales when title to the products is passed to the customer, which occurs at the point of destination for products shipped by our internal fleet and at the point of shipping
for products shipped by third party carriers. Revenues related to services are recognized in the period the services are performed and totaled $2.6 million, $2.4 million and $2.6 million in fiscal years 2004, 2003 and 2002, respectively.



Concentration of Credit Risk



The majority of our sales are credit sales which are made primarily to
customers whose ability to pay is dependent, in part, upon the economic strength of the construction industry in the areas where they operate. Concentration of credit, risk with respect to trade accounts receivable, is limited by the large number of
customers comprising our customer base. We perform ongoing credit evaluations of our customers and in certain situations obtain collateral sufficient to protect our credit position.



Advertising



Advertising costs are charged to expense as incurred and totaled $6.8 million, $5.1 million and $5.3 million in fiscal years 2004, 2003 and 2002,
respectively.



Shipping and Handling Fees and
Costs



We include shipping and
handling fees billed to customers in net sales. Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with
outbound freight are included in selling, general and administrative expenses and totaled $25.3 million, $24.1 million and $23.5 million in fiscal years 2004, 2003 and 2002, respectively.



Income Taxes



Income taxes are recorded for the tax effects of transactions reported in the consolidated financial statements and consist
of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and
liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available
to offset future taxable income. An assessment is made as to whether or not a valuation allowance is required to offset deferred tax assets.



Stock-Based Compensation



We measure compensation expense for employee and director stock options as the aggregate difference between the market and exercise prices of the options
on the date that both the number of shares the grantee is entitled to receive and the purchase price are known. Compensation expense associated with restricted stock grants is equal to the market value of the shares on the date of grant and is
recorded pro rata over the required holding period. For purposes of pro forma disclosures under FAS 123, Accounting for Stock-Based Compensation, as amended by FAS 148,Accounting for Stock-Based Compensation- Transition and
Disclosure, the estimated fair value of the stock options is amortized to compensation expense over the options vesting period.



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The following table illustrates the effect on net income and earnings per share if the fair value based
method had been applied to all outstanding and unvested awards in each period (in millions except per share data):



|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                                                                                                       |  | Fiscal Years Ended |     
|                                                                                                                                       |  | 2004               |      |   | 2003 |   |      | 2002 | 
|Net income as reported:                                                                                                                |  | $                  | 57.7 |   |      | $ | 58.1 |      |  | $ | 44.1 |  
|Deduct: Total stock-based compensation expense determined under the fair value based method for all awards, net of related tax
effects |  |                    | (3.6 | ) |      |   | (2.0 | )    |  |   | (0.6 | )
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|Pro forma net income                                                                                                                   |  | $                  | 54.1 |   |      | $ | 56.1 |      |  | $ | 43.5 |  
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|Earnings per share:                                                                                                                    |  |                    |      |   |      |   |      |      |  |   |      |  
|Basic as reported                                                                                                                     |  | $                  | 2.52 |   |      | $ | 2.50 |      |  | $ | 1.90 |  
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|Basic pro forma                                                                                                                       |  | $                  | 2.36 |   |      | $ | 2.42 |      |  | $ | 1.88 |  
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|Diluted as reported                                                                                                                   |  | $                  | 2.46 |   |      | $ | 2.45 |      |  | $ | 1.88 |  
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  
|Diluted pro forma                                                                                                                     |  | $                  | 2.30 |   |      | $ | 2.37 |      |  | $ | 1.86 |  
|                                                                                                                                       |  |                    |      |   |      |   |      |      |  |   |      |  



Comprehensive Income



We do not have any significant components of
comprehensive income.



Reclassifications



Certain prior year amounts in the consolidated financial statements have
been reclassified to conform to current year presentation. These reclassifications had no net impact on previously reported results of operations.



Recent Accounting Pronouncements



FAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, was issued in April 2003 and amends and clarifies financial
accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FAS 133, Accounting for Derivative Instruments and Hedging Activities.FAS 149 provides
greater clarification of the characteristics of a derivative instrument so that contracts with similar characteristics will be accounted for consistently. In general, FAS 149 is effective for contracts entered into or modified after June 30, 2003,
and for hedging relationships designated after June 30, 2003.As we do not currently have any derivative financial instruments, the adoption of FAS 149 did not have an impact on our consolidated financial statements.



FAS 150, Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity, was issued in May 2003 and clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in
statements of financial position. Previously, many of those financial instruments were classified as equity. FAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. As we did not have any of these financial instruments, the adoption of FAS 150 did not have an impact on our consolidated financial statements.



Financial Accounting Standard Board Interpretation (FIN) 46,
Consolidation of Variable Interest Entities,was issued in January 2003. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation and disclosure requirements
apply immediately to variable interest entities created after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period ending
after December 15, 2003. We are not the primary beneficiary of any variable interest entities as of January 30, 2004.



In December 2003, a revision to FIN 46 (FIN 46R) was issued to clarify some of the provisions of the interpretation and to exempt certain
entities from its requirements. Adoption of the provisions of FIN 46R is required for interim periods ending after March 15, 2004. We are currently evaluating the impact that the adoption of this revision will have on our consolidated financial
statements, and do not expect it to have a material impact.



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In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the
Act) was signed into law. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to the
prescription drug benefit under Medicare. Questions have arisen regarding whether an employer that provides postretirement prescription drug coverage should recognize the effects of the Act on its accumulated postretirement benefit obligation (APBO)
and net postretirement benefit costs under FAS 106, Employers Accounting for Postretirement Benefits Other Than Pensions. While we do offer benefits, including prescription drug coverage, to employees who have attained certain levels of
service after they have retired, those benefits are only available to retirees until age 65, at which time Medicare coverage becomes effective. As such, we do not believe that this specific provision of the Act will have a material effect on our
consolidated financial statements.



In December 2003, the FASB
issued FAS 132 (Revised) (FAS 132-R), Employers Disclosure about Pensions and Other Postretirement Benefits. FAS 132-R retains disclosure requirements of the original FAS 132 and requires additional disclosures relating to
assets, obligations, cash flows, and net periodic benefits cost. FAS 132-R is effective for fiscal years ending after December 15, 2003. Interim period disclosures are effective for interim periods beginning after December 15, 2003. The provisions
of FAS 132-R did not have a material effect on our consolidated financial statements.



In December 2003, the Staff of the Securities and Exchange Commission (SEC or the Staff) issued Staff Accounting Bulletin (SAB) 104, Revenue Recognition, which superseded SAB
101, Revenue Recognition in Financial Statements. SAB 104s primary purpose is to rescind accounting guidance in SAB 101 related to multiple element revenue arrangements, superseded as a result of the issuance of Emerging Issues Task
Force Issue 00-21, Accounting for Revenue Arrangements with Multiple Deliverables which was effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The provisions of SAB 104 did not have a material
impact on our financial statements.



Note 2Business Combinations and
Divestitures



Business Combinations



On December 19, 2003, we acquired Century Maintenance Supply, Inc.
(Century), a leading supplier of MRO products serving the multi-family apartment market throughout the United States. The acquisition will enable us to become a leader in the apartment MRO market and facilitate entry into adjacent
customer markets.



The purchase price consisted of $260.0
million cash paid for Centurys net assets, including the assumption of $31.4 million of accounts payable and accrued liabilities and $101.4 million of debt. The results of Centurys operations have been included in our consolidated
statements of income since December 19, 2003. The total cost of the acquisition was allocated to the assets acquired and liabilities assumed based on their respective fair values in accordance with FAS 141. Goodwill, of which approximately $7.1
million is deductible for tax purposes, and other intangible assets recorded in connection with the transaction totaled $271.1 million and $36.4 million, respectively. The goodwill and intangible assets were assigned entirely to our MRO segment. The
intangible assets are subject to amortization and consist primarily of customer lists, private label trade names and employment agreements that are amortized on a straight-line basis over a weighted-average useful life of 11.5 years. The estimated
annual amortization expense related to these contracts for the next five fiscal years is expected to be $2.8 million. Unaudited pro-forma operating results of operations, assuming the acquisition of Century had been completed as of the beginning of
fiscal year 2003, are as follows (in millions except per share data):



|                    |  |                    |         |      |   |        
|------------------- |  | ------------------ | ------- | ---- | - | -------
|                    |  | Fiscal Years Ended
|                    |  | 2004               |         | 2003
|Net sales           |  | $                  | 3,534.4 |      | $ | 3,357.0
|Operating income    |  |                    | 153.2   |      |   | 148.3  
|Net income          |  |                    | 67.2    |      |   | 66.0   
|                    |  |                    |         |      |   |        
|Earnings per share: |  |                    |         |      |   |        
|Basic               |  | $                  | 2.93    |      | $ | 2.85   
|Diluted             |  | $                  | 2.86    |      | $ | 2.79   
|                    |  |                    |         |      |   |        



These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisition been made at the beginning of the period presented or the results which may occur in the future.



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Effective August 4, 2003, we acquired substantially all of the net assets of Marden Susco, LLC
(Marden Susco), a southern California supplier of underground piping products for use in municipal water, sewer and storm drain systems. As a result of the acquisition, we have expanded the geographical presence of our Water & Sewer
business into the state of California.



The purchase price
consisted of $19.6 million cash paid for Marden Suscos net assets, including the assumption of $13.7 million of accounts payable and accrued liabilities and $6.7 million of debt. The results of Marden Suscos operations have been included
in our consolidated statements of income since August 4, 2003. The total cost of the acquisition was allocated to the assets acquired and liabilities assumed based on their respective fair values in accordance with FAS 141. Goodwill, all of which is
deductible for income tax purposes, and other intangible assets recorded in connection with the transaction totaled $18.1 million and $1.0 million, respectively. The goodwill and intangible assets were assigned entirely to our Water & Sewer
segment. The intangible assets are subject to amortization and consist primarily of employment agreements, revenue backlog, and customer lists that are amortized on a straight-line basis over a weighted-average useful life of 4.8 years. The
estimated annual amortization expense related to these contracts for the next five fiscal years is expected to be $0.1 million. Pro forma results of operations reflecting this acquisition have not been presented because the results of operations of
Marden Susco are not material to our consolidated operating results or assets.



On August 9, 2002, we acquired 100% of the capital stock of Utiliserve Holdings, Inc. and its subsidiaries (Utiliserve), a wholesale distributor of electrical transmission and distribution products and
services to the United States electric utility industry. As a result of the acquisition, we are a leading provider of electrical transmission and distribution products and services in the United States. We also expanded our development of
customer contracts as a result of Utiliserves value-added services, including vendor-managed inventory, collaborative emergency response and job-site delivery. Through its supply chain management solutions, Utiliserve is able to assume full
responsibility for its customers warehouse, workflow and inventory management needs.



The purchase price consisted of $33.4 million cash paid (net of cash acquired of $1.9 million) for Utiliserves net equity along with the assumption of $54.5 million and $33.2 million of debt and other
liabilities, respectively. The results of Utiliserves operations have been included in our consolidated statements of income since August 9, 2002. The total cost of the acquisition was allocated to the assets acquired and liabilities assumed
based on their respective fair values in accordance with FAS 141. Goodwill, of which approximately $25.7 million is deductible for income tax purposes, and other intangible assets recorded in connection with the transaction totaled $56.3 million and
$8.6 million, respectively. The goodwill was assigned entirely to our Utilities segment. The intangible assets are subject to amortization and consist mainly of customer contracts that are being amortized on a straight-line basis over a
weighted-average useful life of 14.6 years. The estimated annual amortization expense related to these contracts for the next five fiscal years is expected to be $0.6 million.



During fiscal year 2002, we acquired several other wholesale distributors of materials to the construction and industrial
markets that were accounted for as purchases. These acquisitions, individually and in the aggregate, did not have a material effect on the consolidated financial statements. Results of operations of these companies from their respective dates of
acquisition have been included in the consolidated financial statements.



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The assets acquired and liabilities assumed for acquisitions are summarized below (in millions):



|                                         |  |                    |        |   |      |   |       |      |  |   |       |  
|---------------------------------------- |  | ------------------ | ------ | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                         |  | Fiscal Years Ended |       
|                                         |  | 2004               |        |   | 2003 |   |       | 2002 | 
|Accounts receivable                      |  | $                  | 50.4   |   |      | $ | 19.9  |      |  | $ | 13.5  |  
|Inventories                              |  |                    | 45.3   |   |      |   | 30.5  |      |  |   | 9.7   |  
|Property and equipment                   |  |                    | 3.1    |   |      |   | 2.4   |      |  |   | 1.0   |  
|Goodwill                                 |  |                    | 289.2  |   |      |   | 56.3  |      |  |   | 23.7  |  
|Other assets (including intangibles)     |  |                    | 44.8   |   |      |   | 13.9  |      |  |   | 0.1   |  
|                                         |  |                    |        |   |      |   |       |      |  |   |       |  
|Assets acquired                          |  |                    | 432.8  |   |      |   | 123.0 |      |  |   | 48.0  |  
|                                         |  |                    |        |   |      |   |       |      |  |   |       |  
|Accounts payable and accrued liabilities |  |                    | (45.1  | ) |      |   | (33.2 | )    |  |   | (8.1  | )
|Long-term debt                           |  |                    | (108.1 | ) |      |   | (54.5 | )    |  |   | (8.6  | )
|                                         |  |                    |        |   |      |   |       |      |  |   |       |  
|Liabilities assumed                      |  |                    | (153.2 | ) |      |   | (87.7 | )    |  |   | (16.7 | )
|                                         |  |                    |        |   |      |   |       |      |  |   |       |  
|Cash purchase price                      |  | $                  | 279.6  |   |      | $ | 35.3  |      |  | $ | 31.3  |  
|                                         |  |                    |        |   |      |   |       |      |  |   |       |  



Divestitures



On December 30, 2002, we sold our remaining 49.0% equity investment in
Anasteel Supply Company, LLC. for $2.3 million. We received cash proceeds of $2.0 million with the remaining $0.3 million of consideration in the form of a note receivable due July 31, 2005. The note receivable bears interest at a fixed rate of
7.0%.



In fiscal year 2000, we invested $1.8 million in
bestroute.com (bestroute), an e-commerce company founded in 1999 to provide hard-to-find inventory products to wholesale distributors and end-users via the internet. During fiscal year 2001, we were required to fund an additional $6.3
million to bestroute as certain operating thresholds were met. In September 2000, we acquired the remaining 51.0% interest of bestroute in a transaction where the other members of bestroute received 723,183 stock rights of our company. Under the
terms of the agreement, the stock rights were exercisable by the holders on or after February 1, 2001 and granted the holders the right to convert their bestroute holdings into our common stock. The agreement also provided a call provision under
which we had the ability to call the stock rights in exchange for shares of our common stock. The exercise of a portion of the stock rights issued was contingent upon bestroute meeting its operating plan and demonstrating continued viability as a
business. In the fourth quarter of fiscal year 2001, bestroute was not able to meet its operating plan and incurred operating losses of $2.1 million. These losses were attributed to bestroutes inability to gain market acceptance and generate
revenues sufficient to cover its operating costs. As a result of these continued losses and viability concerns, we discontinued bestroutes operations on March 2, 2001, and entered into an agreement with the holders of the stock rights to
cancel 347,541 of the stock rights and redeem the remaining rights for $7.3 million of cash.



Note 3Property and Equipment



Property and equipment at January 30, 2004 and January 31, 2003 consist of the following (in millions):



|                                  |  |      |        |   |      |   |        |  
|--------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                  |  | 2004 |        |   | 2003 |  
|Land                              |  | $    | 37.2   |   |      | $ | 34.6   |  
|Buildings and improvements        |  |      | 138.3  |   |      |   | 117.5  |  
|Transportation equipment          |  |      | 21.1   |   |      |   | 24.1   |  
|Furniture, fixtures and equipment |  |      | 86.6   |   |      |   | 75.9   |  
|Construction in progress          |  |      | 1.3    |   |      |   | 19.9   |  
|                                  |  |      |        |   |      |   |        |  
|                                  |  |      | 284.5  |   |      |   | 272.0  |  
|Less accumulated depreciation     |  |      | (122.7 | ) |      |   | (114.2 | )
|                                  |  |      |        |   |      |   |        |  
|                                  |  | $    | 161.8  |   |      | $ | 157.8  |  
|                                  |  |      |        |   |      |   |        |  



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Note 4Goodwill



Effective January 26, 2002, we adopted both FAS 141 and FAS 142.FAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting. FAS 141 also specifies the criteria, which must be met in order for certain acquired intangible assets to be recorded separately from goodwill. Under FAS 142, goodwill is no longer amortized,
but rather tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. This new approach requires the use of valuation techniques and methodologies significantly different from
the undiscounted cash flow policy that was previously followed.



Our nine operating segments are also the reporting units defined in FAS 142. The reporting units goodwill was tested for impairment during the first quarter of fiscal year 2004 based upon the expected present value of future cash
flows approach. As a result of this valuation process, as well as the application of the remaining provisions of FAS 142, we concluded that there was no impairment of goodwill related to any of our reporting units.



A summary of the changes in the carrying amount of goodwill by reportable
segment for the period ended January 30, 2004 is as follows (in millions):



|                                    |  |              |       |               |   |      |  |           |       |            |   |               |  |           |     |       |   |      |  |   |      |  |   |      
|----------------------------------- |  | ------------ | ----- | ------------- | - | ---- |  | --------- | ----- | ---------- | - | ------------- |  | --------- | --- | ----- | - | ---- |  | - | ---- |  | - | -----
|                                    |  | Water &Sewer |       | Plumbing/HVAC |   | MRO  |  | Utilities |       | Electrical |   | IndustrialPVF |  | All Other |     | Total
|Balance at January 25, 2002         |  | $            | 86.6  |               | $ | 50.1 |  | $         | 1.7   |            | $ | 2.5           |  | $         | 9.0 |       | $ | 56.4 |  | $ | 57.5 |  | $ | 263.8
|Goodwill acquired                   |  |              |      |               |   |     |  |           |      |            |   | 56.3          |  |           |    |       |   |     |  |   |     |  |   | 56.3 
|                                    |  |              |       |               |   |      |  |           |       |            |   |               |  |           |     |       |   |      |  |   |      |  |   |      
|Balance at January 31, 2003         |  |              | 86.6  |               |   | 50.1 |  |           | 1.7   |            |   | 58.8          |  |           | 9.0 |       |   | 56.4 |  |   | 57.5 |  |   | 320.1
|Goodwill acquired                   |  |              | 18.1  |               |   |     |  |           | 271.1 |            |   |              |  |           |    |       |   |     |  |   |     |  |   | 289.2
|Finalization of purchase accounting |  |              |      |               |   |     |  |           |      |            |   | 0.5           |  |           |    |       |   |     |  |   |     |  |   | 0.5  
|                                    |  |              |       |               |   |      |  |           |       |            |   |               |  |           |     |       |   |      |  |   |      |  |   |      
|Balance at January 30, 2004         |  | $            | 104.7 |               | $ | 50.1 |  | $         | 272.8 |            | $ | 59.3          |  | $         | 9.0 |       | $ | 56.4 |  | $ | 57.5 |  | $ | 609.8
|                                    |  |              |       |               |   |      |  |           |       |            |   |               |  |           |     |       |   |      |  |   |      |  |   |      



Prior to the adoption
of FAS 142, we amortized goodwill over estimated useful lives ranging from 15 to 40 years. Had we accounted for goodwill consistent with the provisions of FAS 142 in prior periods, our net income, basic earnings per share and diluted earnings per
share would have been affected as follows (in millions except per share data):



|                                        |  |                    |      |      |   |      |  |   |     
|--------------------------------------- |  | ------------------ | ---- | ---- | - | ---- |  | - | ----
|                                        |  | Fiscal Years Ended
|                                        |  | 2004               |      | 2003 |   | 2002
|Net income, as reported                 |  | $                  | 57.7 |      | $ | 58.1 |  | $ | 44.1
|Add: goodwill amortization, net of tax  |  |                    |     |      |   |     |  |   | 5.4 
|                                        |  |                    |      |      |   |      |  |   |     
|Adjusted net income                     |  | $                  | 57.7 |      | $ | 58.1 |  | $ | 49.5
|                                        |  |                    |      |      |   |      |  |   |     
|Basic earnings per share, as reported   |  | $                  | 2.52 |      | $ | 2.50 |  | $ | 1.90
|Add: goodwill amortization, net of tax  |  |                    |     |      |   |     |  |   | 0.23
|                                        |  |                    |      |      |   |      |  |   |     
|Adjusted basic earnings per share       |  | $                  | 2.52 |      | $ | 2.50 |  | $ | 2.13
|                                        |  |                    |      |      |   |      |  |   |     
|Diluted earnings per share, as reported |  | $                  | 2.46 |      | $ | 2.45 |  | $ | 1.88
|Add: goodwill amortization, net of tax  |  |                    |     |      |   |     |  |   | 0.23
|                                        |  |                    |      |      |   |      |  |   |     
|Adjusted diluted earnings per share     |  | $                  | 2.46 |      | $ | 2.45 |  | $ | 2.11
|                                        |  |                    |      |      |   |      |  |   |     



Note 5Branch Closure and
Consolidation Activities



In the normal course of
business, we continually evaluate the operations and performance of our individual branches and identify branches for closure or consolidation. Prior to fiscal year 2002, we approved a plan to close and consolidate 43 branches, including bestroute
as discussed in note 2 above, because these branches did not strategically fit into our core businesses and/or they did not perform to our expectations. During fiscal year 2003, we announced the closure of an additional seven branches along with a
distribution center in Georgia.



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Effective January 1, 2003, we adopted FAS 146, Accounting for Costs Associated with Exit or Disposal
Activities, which addresses the recognition, measurement, and reporting of costs that are associated with exit and disposal activities. FAS 146 was effective for exit or disposal activities initiated after December 31, 2002.



We closed seven underperforming Plumbing/HVAC branches and our Texas
distribution center during January 2004. Approximately $2.2 million of selling, general and administrative expenses were recorded in connection with these closings.



In addition to our branch closure activities, we relocated our corporate offices during October 2003. As a result of this
decision, we recorded approximately $2.0 million of selling, general and administrative expenses during fiscal year 2004 to establish an accrued liability for the fair value of the remaining lease payments due under the previous locations
leases, net of estimated sublease income. The accrual is expected to be paid out substantially by April 2005.



The following is a summary of the expenses associated with our closure activities (in millions):



|                                              |  |                    |     |      |   |      |      |  |   |    
|--------------------------------------------- |  | ------------------ | --- | ---- | - | ---- | ---- |  | - | ---
|                                              |  | Fiscal Years Ended
|                                              |  | 2004               |     | 2003 |   |      | 2002
|Cost of sales                                 |  | $                  |    |      | $ | 0.4  |      |  | $ | 1.7
|                                              |  |                    |     |      |   |      |      |  |   |    
|Lease expense                                 |  | $                  | 4.0 |      | $ |     |      |  | $ | 1.6
|Severance expense                             |  |                    |    |      |   | 0.1  |      |  |   | 0.5
|Professional expense (contractual obligation) |  |                    |    |      |   |     |      |  |   | 0.7
|Other                                         |  |                    | 0.4 |      |   | (0.3 | )    |  |   | 0.9
|                                              |  |                    |     |      |   |      |      |  |   |    
|Selling, general and administrative expenses  |  | $                  | 4.4 |      | $ | (0.2 | )    |  | $ | 3.7
|                                              |  |                    |     |      |   |      |      |  |   |    
|Non-operating expenses                        |  | $                  |    |      | $ |     |      |  | $ | 0.7
|                                              |  |                    |     |      |   |      |      |  |   |    



The cost of sales
amounts represented inventory write-downs of products that will no longer be saleable following the closure of the branches. Severance expense included charges associated with payments owed to employees who have been or will be involuntarily
terminated in connection with our branch closures. We have accrued the estimated lease obligations from the planned closure dates through the end of the contractual lease terms, net of any estimated sublease income. Other costs accrued for branches
identified for closure were based on amounts due under agreements and/or based on estimates to terminate such agreements as well as certain executory expenses. Non-operating expenses primarily related to write-downs of assets for which we project
the undiscounted cash flows to be less than the carrying amount of the related investment.



During the third quarter of fiscal year 2003, we reversed accruals totaling $0.5 million related to previous branch closures, mainly as a result of favorable settlements of lease obligations for less than originally
anticipated.



The liability balance, included in other current
liabilities, related to our closure activities as of January 30, 2004 and January 31, 2003 was as follows (in millions):



|                           |  |                    |      |   |      |   |      |  
|-------------------------- |  | ------------------ | ---- | - | ---- | - | ---- | -
|                           |  | Fiscal Years Ended |     
|                           |  | 2004               |      |   | 2003 |  
|Beginning balance          |  | $                  | 1.2  |   |      | $ | 3.1  |  
|Provision (income)         |  |                    | 4.4  |   |      |   | (0.2 | )
|Cash expenditures:         |  |                    |      |   |      |   |      |  
|Lease                      |  |                    | (1.4 | ) |      |   | (1.1 | )
|Severance                  |  |                    |     |   |      |   | (0.1 | )
|Other                      |  |                    | (0.1 | ) |      |   | (0.3 | )
|Non-cash asset impairments |  |                    |     |   |      |   | (0.2 | )
|                           |  |                    |      |   |      |   |      |  
|Ending balance             |  | $                  | 4.1  |   |      | $ | 1.2  |  
|                           |  |                    |      |   |      |   |      |  



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Note 6Impairment of Long-Lived Assets



In the fourth quarter of fiscal year 2002, we recorded an impairment loss of $0.7 million related to goodwill of one entity
in our Plumbing/HVAC segment.



Note 7Total Debt



Total debt at January 30, 2004 and January 31, 2003 consists of the
following (in millions):



|                                                                                                                                        |  |                    |       |   |      |   |       |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | - | ---- | - | ----- | -
|                                                                                                                                        |  | Fiscal Years Ended |      
|                                                                                                                                        |  | 2004               |       |   | 2003 |  
|8.27% senior notes, due 2003                                                                                                            |  | $                  |      |   |      | $ | 19.0  |  
|8.27% senior notes, due 2005                                                                                                            |  |                    | 11.2  |   |      |   | 16.8  |  
|8.42% senior notes, due 2007                                                                                                            |  |                    | 82.4  |   |      |   | 103.0 |  
|7.96% senior notes, due 2011                                                                                                            |  |                    | 70.0  |   |      |   | 79.3  |  
|7.14% senior notes, due 2012                                                                                                            |  |                    | 32.4  |   |      |   | 36.2  |  
|7.19% senior notes, due 2012                                                                                                            |  |                    | 40.0  |   |      |   | 40.0  |  
|6.74% senior notes, due 2013                                                                                                            |  |                    | 45.2  |   |      |   | 50.0  |  
|Unsecured bank notes under $290.0 revolving credit agreement, payable March 26, 2007, with an interest rate of 2.0% at January 30,
2004 |  |                    | 100.0 |   |      |   | 72.4  |  
|Other notes payable with varying interest rates of 2.2% to 7.6% at January 30, 2004 with due dates from 2004 to 2010                    |  |                    | 32.1  |   |      |   | 25.2  |  
|                                                                                                                                        |  |                    |       |   |      |   |       |  
|Total debt                                                                                                                              |  |                    | 413.3 |   |      |   | 441.9 |  
|Less current portion                                                                                                                    |  |                    | (44.6 | ) |      |   | (63.8 | )
|                                                                                                                                        |  |                    |       |   |      |   |       |  
|Total long-term debt                                                                                                                    |  | $                  | 368.7 |   |      | $ | 378.1 |  
|                                                                                                                                        |  |                    |       |   |      |   |       |  



Unsecured Bank Notes and Line of
Credit Agreements



On March 26, 2003, we replaced our
existing $275.0 million revolving credit agreement, which was scheduled to mature on January 25, 2004, with a new $252.5 million revolving credit agreement (the new credit agreement), subject to borrowing limitations, which matures on
March 26, 2007. On May 22, 2003, we amended the new credit agreement to increase maximum borrowing capacity from $252.5 million to $290.0 million effective June 9, 2003. The new credit agreement is unsecured and contains financial and other
covenants, including limitations on dividends and maintenance of certain financial ratios. Interest is payable at market rates plus applicable margins and commitment fees ranging from 0.15% to 0.30% per annum are paid on the new credit agreement.



We have a commercial paper program backed by our new credit
agreement. There were no commercial paper borrowings outstanding at January 30, 2004 or January 31, 2003.



In order to initially fund the acquisition of Century, we borrowed $250.0 million at 3.39% under an interim senior unsecured term loan agreement (the
term loan). Effective December 19, 2003, the new credit agreement was amended to permit the new term loan borrowings and to make financial and other covenants essentially the same as those in the term loan agreement.



On January 28, 2004, we completed the sale of 6,900,000 shares of common
stock in a public offering that generated net proceeds of $317.5 million. The proceeds we received were primarily used to fund the acquisition of Century. At January 30, 2004 there were no outstanding borrowings under the term loan agreement.



We had two short-term lines of credit with borrowing
capacities of $10.0 million and $15.0 million, respectively, during fiscal year 2003. On July 25, 2002, both line of credit agreements were amended to extend the maturity dates to June 30, 2003 and the funds under the $15.0 million line were
allocated to an operating lease agreement. On August 30, 2002, the operating lease agreement was amended to increase borrowing capacity from $15.0 million to $18.7 million. Under the terms of the operating lease agreement, we lease certain
equipment, including vehicles, forklifts and trailers from various companies with funds provided by the $18.7 million line of credit. Monthly payments are made to the bank in accordance with the terms of each specific equipment lease. There was no
remaining availability under the operating lease agreement at January 30, 2004. The $10.0 million line of credit was uncommitted and terminated when the new credit agreement was executed.



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Other Notes Payable



On June 22, 2001, we entered into an agreement (lease facility agreement) with Atlantic Financial Group, Ltd.
(AFG), certain financial parties as lenders, and SunTrust Bank as agent (SunTrust) in which AFG and SunTrust agreed to fund up to $40.0 million for the acquisition and development of real property projects, including up to
$25.0 million for our new corporate headquarters building in Orlando, Florida (Orlando property). Concurrently, we entered into an agreement with AFG, certain financial parties as lenders, and SunTrust as agent for the construction of a
new multi-branch complex in Miami, Florida (Miami property). Pursuant to this agreement, AFG and SunTrust agreed to fund up to $15.0 million for the construction of this facility.



Orlando Property



Under the terms of the loan agreement (Orlando loan agreement) between AFG and SunTrust for the Orlando
property, AFG was required to fund the lease facility through a nominal equity investment, with the remainder funded through non-recourse borrowings from SunTrust. Concurrent with the execution of the Orlando loan agreement, we executed a master
lease agreement (Orlando lease agreement) with AFG under which we would lease the Orlando property for a five-year term, including the construction period and a lease period. The Orlando lease agreement required interest only payments
that began at the earlier of the completion of construction or eighteen months following the acquisition of the Orlando property. Payments were interest only at LIBOR rates plus applicable credit spreads.



On June 5, 2002, we terminated our Orlando loan agreement with AFG and
SunTrust. Concurrently, we executed a new real estate term credit agreement (the credit agreement) with SunTrust, and the outstanding principal balance of $1.7 million under the Orlando loan agreement was paid off and rolled into the
credit agreement. Under the terms of the credit agreement, SunTrust agreed to fund up to a maximum of $25.0 million for the acquisition and development of our new corporate headquarters building in Orlando, Florida. The credit agreement bears
interest based on LIBOR plus applicable credit spreads and matures July 31, 2005. At January 30, 2004 and January 31, 2003, the total outstanding borrowings of $24.4 million and $10.1 million, respectively, under the credit agreement are recorded in
long-term debt.



On March 16, 2004, we entered into
sale-leaseback transaction in which we sold the Orlando property to a subsidiary of Wachovia Development Corporation and leased the property back for a period of 20 years. The lease expires on March 16, 2024, with five 5-year extensions exercisable
at our option upon 12 months notice. We do not have an option to purchase the leased facility at the end of the minimum lease term and have not issued any residual value guarantee of the value of the leased facility. The lease is accounted for as an
operating lease.



Miami Property



Under the terms of the loan agreement (Miami loan agreement)
between AFG and SunTrust for the Miami property, AFG was required to fund the Miami property through an equity investment of approximately 20% with the remainder funded through non-recourse borrowings from SunTrust. Concurrent with the execution of
the Miami loan agreement, we executed a master lease agreement (the Miami lease agreement) with AFG. Under the terms of the Miami lease agreement, we leased the Miami property with rent payments beginning September 2003. Rent payments
for the first four years were to be interest only at a rate based on LIBOR plus applicable credit spreads.



As the lease was treated as a capital lease the outstanding borrowings and related assets were reflected in long-term debt and property and equipment. At
January 31, 2003, the total outstanding borrowings of $6.7 million under the Miami loan agreement were recorded in long-term debt. There were no outstanding borrowings under the Miami lease agreement at January 30, 2004 because on January 30, 2004,
a subsidiary of SunTrust Bank agreed to purchase the property from AFG and to lease the property to us under a new 20-year term lease expiring in 2024, with 5 year extensions exercisable at our option upon 12 months notice. The future minimum lease
payments under the lease are approximately $22.7 million. We do not have an option to purchase the leased facility at the end of the minimum lease term and have not issued any residual value guarantee of the value of the leased facility. The gain on
the sale of approximately $0.1 million will be amortized over the minimum term of the lease, which has been accounted for as an operating lease.



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Other



Our debt agreements contain covenants that require that we, among other things, maintain certain financial ratios and minimum net worth levels. The
covenants also restrict our activities regarding investments, liens, borrowing and leasing, and payment of dividends other than stock. Under the dividend covenant, approximately $155.4 million was available at January 30, 2004 for payment of
dividends. At January 30, 2004, we were in compliance with all financial and other covenants.



Maturities of debt for each of the five years subsequent to January 30, 2004 and in the aggregate are as follows (in millions):



|                    |  |   |      
|------------------- |  | - | -----
|Fiscal Years Ending |  |  
|2005                |  | $ | 44.6 
|2006                |  |   | 68.8 
|2007                |  |   | 45.0 
|2008                |  |   | 151.1
|2009                |  |   | 24.1 
|Thereafter          |  |   | 79.7 
|                    |  |   |      
|Total               |  | $ | 413.3
|                    |  |   |      



Note 8Income Taxes



The consolidated provision for income taxes consists of
the following (in millions):



|                   |  |                    |      |      |   |      |  |   |      |  
|------------------ |  | ------------------ | ---- | ---- | - | ---- |  | - | ---- | -
|                   |  | Fiscal Years Ended |     
|                   |  | 2004               |      | 2003 |   | 2002 | 
|Currently payable: |  |                    |      |      |   |      |  |   |      |  
|Federal            |  | $                  | 26.5 |      | $ | 23.3 |  | $ | 17.8 |  
|State              |  |                    | 2.7  |      |   | 2.1  |  |   | 2.3  |  
|                   |  |                    |      |      |   |      |  |   |      |  
|                   |  |                    | 29.2 |      |   | 25.4 |  |   | 20.1 |  
|                   |  |                    |      |      |   |      |  |   |      |  
|Deferred:          |  |                    |      |      |   |      |  |   |      |  
|Federal            |  |                    | 6.9  |      |   | 13.2 |  |   | 11.0 |  
|State              |  |                    | 0.7  |      |   | 1.5  |  |   | (0.5 | )
|                   |  |                    |      |      |   |      |  |   |      |  
|                   |  |                    | 7.6  |      |   | 14.7 |  |   | 10.5 |  
|                   |  |                    |      |      |   |      |  |   |      |  
|Income taxes       |  | $                  | 36.8 |      | $ | 40.1 |  | $ | 30.6 |  
|                   |  |                    |      |      |   |      |  |   |      |  



The following is a
reconciliation of tax computed at the statutory federal rate to the income tax expense in the consolidated statements of income (dollars in millions):



|                                                              |  |                    |      |   |      |   |        |      |      |  |      |        |  |   |      |  |      |  
|------------------------------------------------------------- |  | ------------------ | ---- | - | ---- | - | ------ | ---- | ---- |  | ---- | ------ |  | - | ---- |  | ---- | -
|                                                              |  | Fiscal Years Ended |     
|                                                              |  | 2004               |      |   | 2003 |   |        | 2002 |     
|                                                              |  | Amount             |      | % |      |   | Amount |      | %    |  |      | Amount |  | % |     
|Tax computed at statutory federal rate                        |  | $                  | 33.1 |   | 35.0 | % |        | $    | 34.4 |  | 35.0 | %      |  | $ | 26.1 |  | 35.0 | %
|Effect of:                                                    |  |                    |      |   |      |   |        |      |      |  |      |        |  |   |      |  |      |  
|State and local income tax, net of federal income tax benefit |  |                    | 2.2  |   | 2.3  | % |        |      | 2.3  |  | 2.4  | %      |  |   | 1.5  |  | 2.0  | %
|Nondeductible expenses                                        |  |                    | 0.9  |   | 1.0  | % |        |      | 1.3  |  | 1.3  | %      |  |   | 2.4  |  | 3.1  | %
|Other, net                                                    |  |                    | 0.6  |   | 0.6  | % |        |      | 2.1  |  | 2.2  | %      |  |   | 0.6  |  | 0.9  | %
|                                                              |  |                    |      |   |      |   |        |      |      |  |      |        |  |   |      |  |      |  
|Income taxes                                                  |  | $                  | 36.8 |   | 38.9 | % |        | $    | 40.1 |  | 40.9 | %      |  | $ | 30.6 |  | 41.0 | %
|                                                              |  |                    |      |   |      |   |        |      |      |  |      |        |  |   |      |  |      |  



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The components of deferred tax assets and liabilities at January 30, 2004 and January 31, 2003 are as
follows (in millions):



|                                          |  |                    |       |   |      |   |       |  
|----------------------------------------- |  | ------------------ | ----- | - | ---- | - | ----- | -
|                                          |  | Fiscal Years Ended |      
|                                          |  | 2004               |       |   | 2003 |  
|Deferred tax assets:                      |  |                    |       |   |      |   |       |  
|Allowance for doubtful accounts           |  | $                  | 3.1   |   |      | $ | 1.9   |  
|Inventories                               |  |                    | 7.4   |   |      |   | 6.2   |  
|Accrued vacation                          |  |                    | 0.3   |   |      |   | 2.5   |  
|Other accrued liabilities                 |  |                    | 7.2   |   |      |   | 4.5   |  
|State net operating losses                |  |                    | 2.5   |   |      |   | 4.7   |  
|Deferred compensation                     |  |                    | 5.3   |   |      |   | 4.7   |  
|                                          |  |                    |       |   |      |   |       |  
|Gross deferred tax assets                 |  |                    | 25.8  |   |      |   | 24.5  |  
|Valuation allowance                       |  |                    | (0.6  | ) |      |   | (0.2  | )
|                                          |  |                    |       |   |      |   |       |  
|Total deferred tax assets                 |  |                    | 25.2  |   |      |   | 24.3  |  
|                                          |  |                    |       |   |      |   |       |  
|Deferred tax liabilities:                 |  |                    |       |   |      |   |       |  
|Capitalized software development costs    |  |                    | 2.9   |   |      |   | 2.7   |  
|Goodwill and intangible assets            |  |                    | 33.2  |   |      |   | 16.6  |  
|Deferred revenue                          |  |                    | 11.6  |   |      |   | 9.7   |  
|Prepaid expenses and other current assets |  |                    | 11.3  |   |      |   | 9.4   |  
|Property and equipment                    |  |                    | 1.4   |   |      |   | 0.1   |  
|Other                                     |  |                    | 0.8   |   |      |   | 0.1   |  
|                                          |  |                    |       |   |      |   |       |  
|Total deferred tax liabilities            |  |                    | 61.2  |   |      |   | 38.6  |  
|                                          |  |                    |       |   |      |   |       |  
|Net deferred tax liabilities              |  | $                  | (36.0 | ) |      | $ | (14.3 | )
|                                          |  |                    |       |   |      |   |       |  



At January 30, 2004,
we had federal and state net operating loss carryforwards of $2.5 million, which expire between 2012 and 2024. A valuation allowance has been provided on certain of the state net operating losses at January 30, 2004 as full realization of these
assets is not considered more likely than not.



Note 9Employee Benefit
Plans



Profit Sharing Plan



We have a 401(k) profit sharing plan, which provides benefits for
substantially all of our employees who meet minimum age and length of service requirements. The maximum percentage of each eligible employees contribution to be matched by the Company was increased from 5% to 6% on February 1, 2001. Additional
annual contributions may be made at the discretion of the board of directors. Amounts charged to expense for this plan totaled $4.6 million, $4.9 million and $5.0 million in fiscal years 2004, 2003 and 2002, respectively.



Bonus Plans



We have bonus plans, based on growth, profitability formulas, and return on assets, which provide incentive compensation for
key officers and employees. Amounts charged to expense for bonuses to executive officers totaled $3.4 million, $2.8 million and $1.3 million in fiscal years 2004, 2003 and 2002, respectively.



Deferred Executive Compensation Plan



A non-qualified executive deferred compensation plan established on March 1,
2002 allows eligible employees to defer up to 90.0% of their cash compensation through the plan. We do not match employees contributions under the current plan.



Supplemental Executive Retirement Plan



We have a defined benefit retirement plan, which provides supplemental benefits for certain key executive officers,
generally for periods up to 15 years, upon retirement, disability, or death. The obligations are not funded separately from our general assets. At January 30, 2004 and January 30, 2003, the liability under the plan, as determined in accordance with
FAS 87, Employers Accounting for Pensions, was $5.7 million and $5.1 million, respectively. The liability in each year is recorded in other noncurrent liabilities. Amounts charged to expense under the plan totaled $0.9 million, $0.6
million and $0.5 million in fiscal years 2004, 2003 and 2002, respectively.



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Note 10Commitments and Contingencies



Lease Commitments



We occupy certain facilities and operate certain equipment and vehicles under leases that expire at various dates through the year 2024. In addition to
minimum rentals, there are certain executory costs such as real estate taxes, insurance, and common area maintenance on most of our facility leases. Rent expense under these leases totaled $57.3 million, $51.5 million and $51.6 million in fiscal
years 2004, 2003 and 2002, respectively. Future minimum annual rental payments under non-cancelable operating leases as of January 30, 2004 are as follows (in millions):



|                    |  |   |      
|------------------- |  | - | -----
|Fiscal Years Ending |  |  
|2005                |  | $ | 52.7 
|2006                |  |   | 41.4 
|2007                |  |   | 29.8 
|2008                |  |   | 21.4 
|2009                |  |   | 10.8 
|Thereafter          |  |   | 25.3 
|                    |  |   |      
|Total               |  | $ | 181.4
|                    |  |   |      



Certain operating
leases for vehicles and equipment expiring in fiscal year 2009 contain residual value guarantee provisions and other guarantees which would become due in the event of a default under the operating lease agreement, or at the expiration of the
operating lease agreement if the fair value of the leased properties is less than the guaranteed residual value. The maximum amount of our guarantee obligation at January 30, 2004 is approximately $3.0 million.



As indicated in Note 7 above, we entered into an agreement to lease our newly
constructed multi-branch complex in Miami, Florida from AFG beginning in September 2003. As the lease was treated as a capital lease, the outstanding borrowings and related assets were reflected in our long-term debt and property and equipment. On
January 30, 2004, a subsidiary of SunTrust Bank agreed to purchase the property from AFG and to lease the property to us under a new 20-year term lease expiring in 2024, with 5-year extensions exercisable at our option upon 12 months notice. The
future minimum lease payments under the lease are approximately $22.7 million. We do not have an option to purchase the leased facility at the end of the minimum lease term and have not issued any residual value guarantee of the value of the leased
facility. As such, the gain on the sale of approximately $0.1 million will be amortized over the minimum term of the lease, which has been accounted for as an operating lease.



Legal Matters



We are involved in various legal proceedings arising in the normal course of our business. In our opinion, none of the proceedings are material in
relation to our consolidated operations, cash flows, or financial position.



Note 11Stock Option Plans



Stock Plans



The 1997 Executive Stock Plan (the 1997 Stock
Plan) is our only currently active stock plan at January 30, 2004. The Directors Stock Option Plan established for non-employee board of directors members became inactive in May 2003. The 1997 Stock Plan authorizes the granting of both
incentive and non-incentive stock options for an aggregate of 3,250,000 shares of common stock, to key employees. Options are granted at prices not less than the market value on the date of grant, and the maximum term of an option may not exceed ten
years. Prices for incentive stock options granted to employees who own 10% or more of our stock are at least 110% of market value at date of grant. Options may be granted from time to time until December 31, 2006 with respect to the 1997 Stock Plan.
An option becomes exercisable at such times and in such installments as set forth by the compensation committee of the board of directors (the compensation committee). Under the 1997 Stock Plan, we can grant up to 1,625,000 shares of the
authorized options as restricted stock to certain key employees. These shares are subject to certain transfer restrictions, and vesting may be dependent upon continued employment, the satisfaction of performance objectives, or both.



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In May 2002, the shareholders approved an amendment to the 1997 Stock Plan allowing the compensation
committee to make grants of performance-based restricted shares to senior executives. Performance-based shares are used as an incentive to increase shareholder returns with actual awards based on various criteria, including increases in the price of
our common shares, earnings per share, shareholder value and net income. Compensation expense for the number of shares issued is recognized over the vesting period. On August 21, 2002, March 18, 2003, and September 15, 2003, target awards of 125,000
shares, 35,000 shares, and 15,000 shares, respectively, were made to senior executives. These shares are to be issued in five separate tranches if the price of our common shares achieves certain price levels. During fiscal year 2004, 88,000 shares
were issued with a market value at the date of grant of $3.8 million. The market value of the restricted stock at the date of grant was recorded as unearned compensation, a component of shareholders equity, and is being charged to expense over
the respective vesting periods. In fiscal year 2004 this expense totaled $0.2 million. In fiscal year 2003, none of the stock price achievement levels had been attained and accordingly, no restricted shares were issued to participants.



During fiscal year 2002, we granted certain senior executives 410,000
restricted shares in accordance with a stock performance award under the 1997 Stock Plan. The shares were awarded in five separate tranches as the price of our common shares achieved certain levels as determined by the compensation committee. At
January 25, 2002, all such stock price achievement levels had been met. The shares vest five years from the award date, and are subject to certain other vesting and forfeiture provisions contained in the 1997 Stock Plan. The market value of the
restricted shares was $10.7 million at the date of the grant and was recorded as unearned compensation, a component of shareholders equity. This amount is being charged to expense over the respective vesting period and totaled $2.2 million,
$2.2 million and $0.7 million in fiscal years 2004, 2003 and 2002, respectively.



During fiscal year 2003 and fiscal year 2002, we granted certain employees 20,000 shares and 11,000 shares of restricted stock, with market values at the date of grant of $0.6 million and $0.3 million, respectively.
There were no non-performance shares granted to employees during fiscal year 2004. In fiscal years 2004, 2003 and 2002, we cancelled 29,888 shares, 29,888 shares and 84,709 shares, respectively, of the restricted shares granted, with market values
at the date of grant of $0.5 million, $0.5 million and $1.5 million, respectively, according to the provisions of the grant. The market value of the restricted stock at the date of grant was recorded as unearned compensation, a component of
shareholders equity, and is being charged to expense over the respective vesting periods. In fiscal years 2004, 2003 and 2002, this expense totaled $0.7 million, $0.7 million and $0.8 million, respectively.



The 1997 Stock Plan also permits the granting of stock appreciation rights
(SARs) to holders of options. Such rights permit the option holder to surrender an exercisable option, in whole or in part, on any date that the fair market value of our common stock exceeds the option price for the stock and receive
payment in common stock or, if the board of directors approves, in cash or any combination of cash and common stock. Such payment would be equal to the excess of the fair market value of the shares under the surrendered option over the option price
for such shares. The change in value of SARs would be reflected in income based upon the market value of the stock. No SARs have been granted or issued through January 30, 2004.



Stock Options



Stock options and restricted stock activity and information about the 1997 Stock Plan and the Directors Stock Plan are follows:



|                                                           |  |                         |   |  |                               |      
|---------------------------------------------------------- |  | ----------------------- | - |  | ----------------------------- | -----
|Stock Options                                              |  | SharesSubject To Option |   |  | Weighted- AverageOption Price
|Balance at January 26, 2001 (1,098,789 shares exercisable) |  | 1,123,889               |   |  | $                             | 21.21
|Granted                                                    |  | 167,500                 |   |  |                               | 20.71
|Exercised                                                  |  | (255,425                | ) |  |                               | 14.63
|Cancelled                                                  |  | (80,600                 | ) |  |                               | 26.91
|                                                           |  |                         |   |  |                               |      
|Balance at January 25, 2002 (695,664 shares exercisable)   |  | 955,364                 |   |  |                               | 22.40
|Granted                                                    |  | 672,200                 |   |  |                               | 33.91
|Exercised                                                  |  | (232,387                | ) |  |                               | 20.97
|Cancelled                                                  |  | (30,400                 | ) |  |                               | 31.40
|                                                           |  |                         |   |  |                               |      
|Balance at January 31, 2003 (544,277 shares exercisable)   |  | 1,364,777               |   |  |                               | 28.11
|Granted                                                    |  | 661,150                 |   |  |                               | 34.68
|Exercised                                                  |  | (199,348                | ) |  |                               | 23.44
|Cancelled                                                  |  | (40,400                 | ) |  |                               | 32.07
|                                                           |  |                         |   |  |                               |      
|Balance at January 30, 2004 (704,729 shares exercisable)   |  | 1,786,179               |   |  | $                             | 30.85
|                                                           |  |                         |   |  |                               |      



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|                                        |  |                   |   |  |                             |  
|--------------------------------------- |  | ----------------- | - |  | --------------------------- | -
|Restricted stock                        |  | SharesOutstanding |   |  | SharesAvailable forIssuance |  
|Balance at January 26, 2001             |  | 342,521           |   |  | 518,979                     |  
|Granted                                 |  | 421,000           |   |  | (421,000                    | )
|Cancelled                               |  | (84,709           | ) |  | 84,709                      |  
|Vested                                  |  | (36,000           | ) |  |                            |  
|                                        |  |                   |   |  |                             |  
|Balance at January 25, 2002             |  | 642,812           |   |  | 182,688                     |  
|Additional authorized                   |  |                  |   |  | 250,000                     |  
|Shares transferred to stock option pool |  |                  |   |  | (288,900                    | )
|Shares assigned but not issued          |  |                  |   |  | (125,000                    | )
|Granted                                 |  | 20,000            |   |  | (20,000                     | )
|Cancelled                               |  | (29,888           | ) |  | 29,888                      |  
|Vested                                  |  |                  |   |  |                            |  
|                                        |  |                   |   |  |                             |  
|Balance at January 31, 2003             |  | 632,924           |   |  | 28,676                      |  
|Additional authorized                   |  |                  |   |  | 500,000                     |  
|Shares transferred to stock option pool |  |                  |   |  | (118,750                    | )
|Issuance of assigned shares             |  |                  |   |  | 38,000                      |  
|Granted                                 |  | 88,000            |   |  | (88,000                     | )
|Cancelled                               |  | (29,888           | ) |  | 29,888                      |  
|Vested                                  |  | (15,000           | ) |  |                            |  
|                                        |  |                   |   |  |                             |  
|Balance at January 30, 2004             |  | 676,036           |   |  | 389,814                     |  
|                                        |  |                   |   |  |                             |  



Outstanding options at January 30,
2004 have expiration dates ranging from August 17, 2004 to January 5, 2014.



The following table summarizes information about stock options outstanding at January 30, 2004:



|                         |  |  |  |                     |  |                                                  |  |                               |       |                   |         |                                |   |      
|------------------------ |  |  |  | ------------------- |  | ------------------------------------------------ |  | ----------------------------- | ----- | ----------------- | ------- | ------------------------------ | - | -----
|                         |  |  |  | Options Outstanding |  | Options Exercisable                             
|Range of Exercise Prices |  |  |  | NumberOutstanding   |  | Weighted-AverageRemainingContractualLife (Years) |  | Weighted-AverageExercisePrice |       | NumberExercisable |         | Weighted- AverageExercisePrice
|$12.83$18.75            |  |  |  | 298,068             |  | 5.3                                              |  | $                             | 16.85 |                   | 280,568 |                                | $ | 16.95
|21.00 28.75             |  |  |  | 117,941             |  | 6.3                                              |  |                               | 24.35 |                   | 98,441  |                                |   | 24.79
|30.90 36.05             |  |  |  | 1,236,670           |  | 8.6                                              |  |                               | 34.05 |                   | 321,720 |                                |   | 33.58
|38.01 49.65             |  |  |  | 133,500             |  | 8.2                                              |  |                               | 38.17 |                   | 4,000   |                                |   | 39.33
|                         |  |  |  |                     |  |                                                  |  |                               |       |                   |         |                                |   |      
|$12.83$49.65            |  |  |  | 1,786,179           |  | 7.8                                              |  | $                             | 30.85 |                   | 704,729 |                                | $ | 25.76
|                         |  |  |  |                     |  |                                                  |  |                               |       |                   |         |                                |   |      



Stock-Based Compensation



We account for our stock option plans using the
intrinsic value based method of accounting, under which no compensation expense has been recognized for stock option awards granted at fair market value. For purposes of pro forma disclosures under FAS 123, as amended by FAS 148, the estimated fair
value of the stock options is amortized to compensation expense over the options vesting period. Pro forma information relating to the fair value of stock-based compensation is presented in Note 1 under Stock-Based Compensation.



The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average assumptions for grants:



|                            |  |                    |   |  |      |   |  |      |  
|--------------------------- |  | ------------------ | - |  | ---- | - |  | ---- | -
|                            |  | Fiscal Years Ended |  
|                            |  | 2004               |   |  | 2003 |   |  | 2002 |  
|Risk-free interest rates    |  | 3.1                | % |  | 4.6  | % |  | 4.7  | %
|Dividend yield              |  | 1.1                | % |  | 1.1  | % |  | 1.5  | %
|Expected volatility         |  | 45.1               | % |  | 40.3 | % |  | 38.3 | %
|Expected stock option lives |  | 5                  |   |  | 8    |   |  | 8    |  



The weighted average
estimated fair value of employee stock options granted during 2004, 2003 and 2002 was $13.61, $15.94 and $9.16 per share, respectively. The pro forma calculations above do not include the effects of options granted prior to fiscal year 1996.



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The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable. Option-pricing models require the input of highly subjective assumptions including the expected stock price volatility. Because our stock options have characteristics
significantly different from those of traded options, and because changes in the subjective input assumptions could materially affect the fair value estimate, in our opinion, the existing models do not necessarily provide a reliable single measure
of the fair value of our employee stock options.



Note 12Capital Stock



On January 28, 2004, we completed the sale of 6,900,000
shares of common stock in a public offering that generated net proceeds of $317.5 million. The proceeds were primarily used to fund the acquisition of Century and to repay indebtedness under our revolving credit agreement.



Treasury Stock



On March 15, 1999, our board of directors authorized the repurchase of up to 2,500,000 shares of our outstanding common
stock to be used for general corporate purposes. Since March 15, 1999, we have repurchased 1,831,400 shares at an average price of $22.91 per share, of which 258,600 shares at an average price of $23.39 were purchased in fiscal year 2004, 257,000
shares at an average price of $27.78 per share were repurchased in fiscal year 2003 and 394,700 shares at an average price of $19.10 per share were repurchased in fiscal year 2002.



Preferred Stock



Our board of directors established Series A Junior Participating Preferred Stock (Series A Stock) consisting of 75,000 shares. Each share of
Series A Stock will be entitled to 1,000 votes on all matters submitted to a vote of shareholders. Series A Stock is not redeemable or convertible into any other security. Each share of Series A Stock shall have a minimum cumulative preferential
quarterly dividend rate equal to the greater of $1.00 per share or 1,000 times the aggregate per share amount of the dividend declared on common stock in the related quarter. In the event of liquidation, shares of Series A Stock will be entitled to
the greater of $1,000 per share plus any accrued and unpaid dividends or 1,000 times the payment to be made per share of common stock. No shares of Series A Stock are presently outstanding, and no shares are expected to be issued except in
connection with the shareholder rights plan referred to below.



We have a shareholder rights plan. Under the plan, we distributed to shareholders a dividend of one right per share of our common stock. When exercisable, each right will permit the holder to purchase one one-thousandth of a share (a
unit) of Series A Stock at a purchase price of $200 per unit from the Company. The rights generally become exercisable if a person or group acquires 15% or more of our common stock or commences a tender offer that could result in such
person or group owning 15% or more of our common stock. If certain subsequent events occur after the rights first become exercisable, the rights may become exercisable for the purchase of shares of our common stock, or of an acquiring company,
having a value equal to two times the exercise price of the right. In general, the rights may be redeemed by the Company at $0.01 per right at any time prior to the latter of (a) ten days after 20% or more of our stock is acquired by a person or
group and (b) the first date of a public announcement that a person or group has acquired 15% or more of our stock. The rights expire on June 2, 2008 unless terminated earlier in accordance with the shareholder rights plan.



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Note 13Earnings Per Share



Basic earnings per share are calculated by dividing net income by the weighted-average number of shares outstanding. Diluted
earnings per share includes the additional dilutive effect of our potential common shares, which includes certain employee and director stock options, unvested shares of restricted stock and stock rights issued in connection with the bestroute
acquisition in fiscal year 2001. The following summarizes the incremental shares from these potentially dilutive common shares, calculated using the treasury method, as included in the calculation of diluted weighted-average shares:



|                                                             |  |                    |  |            |  |           
|------------------------------------------------------------ |  | ------------------ |  | ---------- |  | ----------
|                                                             |  | Fiscal Years Ended
|                                                             |  | 2004               |  | 2003       |  | 2002      
|Basic weighted-average number of shares                      |  | 22,927,656         |  | 23,212,392 |  | 23,175,025
|Incremental shares resulting from:                           |  |                    |  |            |  |           
|Stock options                                                |  | 187,787            |  | 153,011    |  | 96,062    
|Restricted stock                                             |  | 379,722            |  | 299,208    |  | 84,986    
|Stock rights issued in connection with bestroute acquisition |  |                   |  |           |  | 67,550    
|                                                             |  |                    |  |            |  |           
|Diluted weighted-average number of shares                    |  | 23,495,165         |  | 23,664,611 |  | 23,423,623
|                                                             |  |                    |  |            |  |           



Excluded from
the above computations of diluted weighted-average number of shares were unvested shares of restricted common stock of 10,000 shares and 82,000 shares at average prices of $31.35 and $31.27 per share for fiscal years 2003 and 2002, respectively,
because their effect would have been anti-dilutive. No unvested shares of restricted common stock were considered to have an anti-dilutive effect for fiscal year 2004. Options to purchase 183,820 shares, 821,020 shares and 280,114 shares of common
stock at average exercise prices of $37.50, $33.95 and $32.34 per share for fiscal years 2004, 2003 and 2002, respectively, were excluded from the above computations of diluted weighted-average number of shares because their effect would have been
anti-dilutive.



Note 14Supplemental Cash Flows



Additional supplemental information related to the consolidated
statements of cash flows is as follows (in millions):



|                                                             |  |                    |      |      |   |      |  |   |     
|------------------------------------------------------------ |  | ------------------ | ---- | ---- | - | ---- |  | - | ----
|                                                             |  | Fiscal Years Ended
|                                                             |  | 2004               |      | 2003 |   | 2002
|Income taxes paid                                            |  | $                  | 13.1 |      | $ | 10.3 |  | $ | 36.6
|Interest paid                                                |  |                    | 31.3 |      |   | 29.9 |  |   | 35.8
|Property acquired with debt                                  |  |                    | 21.7 |      |   | 17.9 |  |   | 6.9 
|Debt paid with sale-leaseback proceeds                       |  |                    | 13.8 |      |   |     |  |   |    
|Note receivable from sale of investment in affiliated entity |  |                    |     |      |   | 0.3  |  |   |    



During fiscal years
2004, 2003 and 2002, we awarded certain key employees 88,000 restricted shares, 20,000 restricted shares and 421,000 restricted shares of our common stock, respectively, in accordance with the 1997 Executive Stock Plan.



During fiscal year 2002, we retired 342,854 shares of our common stock
previously held in treasury. Dividends declared but not paid totaled $3.1 million and $2.4 million at January 30, 2004 and January 31, 2003, respectively. See note 2 for the net assets acquired and liabilities assumed for acquisitions recorded using
the purchase method of accounting.



Note 15Related Party Transactions



We lease several buildings and properties from certain
related parties, including our chairman of the board, two other members of the board of directors, and an executive officer. The leases generally provide that all expenses related to the properties are to be paid by us. Rents paid under these leases
totaled $2.5 million, $2.1 million and $2.1 million in fiscal years 2004, 2003 and 2002, respectively.



We made donations totaling $0.3 million, $0.9 million and $0.1 million to Hughes Supply Foundation, Inc. (HSF), a not-for-profit charitable
organization, in fiscal years 2004, 2003 and 2002, respectively. The board of directors of HSF is comprised of certain executives of our company, including our chairman of the board, president and chief executive officer, and executive vice
president and chief financial officer.



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Note 16Segment Information



During the third quarter of fiscal year 2004, we revised our reporting structure to provide additional disclosure by
realigning our previously reported operating segments, Electrical/Plumbing, Industrial PVF, and Water & Sewer/Building Materials on a more disaggregated basis by product line into six operating segments and an All Other category. The revised
operating segments are: Water & Sewer, Plumbing/HVAC, MRO, Utilities, Electrical and Industrial PVF. The All Other category includes our Building Materials, Fire Protection, and Mechanical Industrial product lines. The Industrial PVF segment
remains unchanged.



The Corporate category includes corporate
level expenses not allocated to our operating segments. Inter-segment sales are excluded from net sales presented for each segment. Operating income for each segment includes certain corporate expense allocations for employee benefits, corporate
overhead expenses, data processing expenses, and property/casualty insurance. These allocations are based on consumption or at a standard rate determined by management.



In connection with the change of our reporting structure mentioned above, we changed our method of allocating corporate
overhead expenses to the segments. All prior period segment results have been reclassified to reflect these changes.



The following is a description of our operating segments:



Water & Sewer



The Water & Sewer segment provides a complete line of water, sewer and storm-drain products to serve the needs of both contractors and municipalities
in all aspects of the water and wastewater industries. Our waterline products transmit potable and non-potable water from the source to treatment plants, storage towers and pumping stations and ultimately to homes and businesses. Also included in
this product category is our concrete business, which complements our Water & Sewer business by manufacturing prefabricated concrete vaults used for sewer and storm drain applications



Plumbing/HVAC



The Plumbing/HVAC segment includes both our plumbing and HVAC products. Our plumbing products are sold primarily to contractors and homebuilders for
bathroom and kitchen installation. Our HVAC business distributes air conditioning and heating equipment to contractors for the installation and repair of central air conditioners, furnaces and refrigeration systems.



MRO



The MRO segment serves the multi-family housing market through customers such as apartment property management companies.
The products in the MRO segment include the items needed to maintain an apartment unit or complex in good working condition, such as plumbing, electrical, appliances/parts, hardware, door/window parts, HVAC equipment/parts and janitorial supplies.



Utilities



The Utilities segment distributes products that electric utilities need to
bring power from the generating plants through the transmission and distribution lines directly to the meters. In addition, the Utilities segment offers supply chain management services, including warehouse integration and outsourcing, meter testing
and repair and product assembly. These products and services allow us to provide the electric utility companies with the products they need in order to keep their systems operational.



Electrical



The electrical segment serves the commercial, residential and industrial markets with customers including electrical contractors, industrial companies,
original equipment manufacturers (OEMs) and commercial businesses. The products and services in our Electrical product line include wire management products, electrical distribution equipment, wire and cable, automation equipment, tools
and fasteners, light bulbs, light fixtures, motor controls, energy products, wiring devices, data/communications products and storeroom/job trailer management.



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Industrial PVF



The Industrial PVF segment distributes specialty stainless and high nickel alloy industrial PVF products for industrial, mechanical and specialty uses.
The segment primarily serves industrial customers such as petrochemical, food and beverage, pulp and paper, mining, marine and pharmaceutical customers, industrial and mechanical contractors, fabricators, wholesale distributors, exporters and OEMs.



All Other



The All Other category includes our Building Materials, Fire
Protection, and Mechanical Industrial businesses. In addition, the All Other category included revenues and expenses related to bestroute, an e-commerce company for which operations were discontinued during fiscal year 2002.



The Building Materials business distributes products including concrete and
masonry supplies and accessories, lumber, bridge rail, overhang brackets, erosion control products, bearing pads, tilt-up bracing rental, lifting and bracing inserts, sealants, waterproofing and fireproofing materials, commercial washroom
specialties, tools and accessories primarily to the commercial, industrial and public infrastructure markets, with customers such as general contractors and subcontractors.



The Fire Protection branches and fabrication facilities are located strategically within our large network of Water &
Sewer branches, giving our customers, contractors and builders in the commercial, residential and industrial markets, access to the materials for both aboveground and underground applications. Products and services provided include sprinkler heads
and devices, steel pipe and fittings, backflow prevention devices, valves, hydrants, air compressors and fabrication.



The Mechanical Industrial business offers a complete inventory of valves, actuators and accessories in addition to a variety of consulting services and
serves the commercial and industrial markets, with customers including fabricators, OEMs, industrial subcontractors, mechanical contractors, exporters, purchasing agents, maintenance departments, engineering departments and planners.



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The following table presents net sales and other financial information by segment for fiscal years 2004,
2003 and 2002, as reclassified for the changes discussed above (in millions):



|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|----------------------------------- |  | ------------- | ----- | ------------- | - | ----- | --- |  | --------- | ----- |  | ---------- | ----- | ------------- |  | - | --------- |  | --------- | ----- | - | ----- | - | ----- |  | - | ----- | - |  | - | -------
|                                    |  | Water & Sewer |       | Plumbing/HVAC |   |       | MRO |  | Utilities |       |  | Electrical |       | IndustrialPVF |  |   | All Other |  | Corporate |       |   | Total
|Net sales                           |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 922.4 |               | $ | 842.1 |     |  | $         | 158.7 |  | $          | 363.8 |               |  | $ | 362.8     |  | $         | 283.2 |   |       | $ | 320.4 |  | $ |      |   |  | $ | 3,253.4
|2003                                |  |               | 877.2 |               |   | 826.9 |     |  |           | 118.9 |  |            | 248.3 |               |  |   | 375.5     |  |           | 313.9 |   |       |   | 305.6 |  |   |      |   |  |   | 3,066.3
|2002                                |  |               | 833.1 |               |   | 855.3 |     |  |           | 110.5 |  |            | 144.9 |               |  |   | 430.6     |  |           | 330.4 |   |       |   | 332.9 |  |   |      |   |  |   | 3,037.7
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Depreciation and amortization       |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 3.2   |               | $ | 3.3   |     |  | $         | 1.0   |  | $          | 1.5   |               |  | $ | 1.0       |  | $         | 0.7   |   |       | $ | 1.9   |  | $ | 8.6   |   |  | $ | 21.2   
|2003                                |  |               | 3.1   |               |   | 3.7   |     |  |           | 0.4   |  |            | 0.9   |               |  |   | 1.3       |  |           | 0.8   |   |       |   | 2.4   |  |   | 7.9   |   |  |   | 20.5   
|2002                                |  |               | 6.8   |               |   | 6.4   |     |  |           | 0.7   |  |            | 0.4   |               |  |   | 2.0       |  |           | 2.8   |   |       |   | 4.9   |  |   | 7.1   |   |  |   | 31.1   
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Provision for doubtful accounts     |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 1.8   |               | $ | 0.8   |     |  | $         | 0.4   |  | $          | (0.9  | )             |  | $ | 0.8       |  | $         | 0.6   |   |       | $ | 1.1   |  | $ |      |   |  | $ | 4.6    
|2003                                |  |               | 3.6   |               |   | 2.5   |     |  |           | 0.1   |  |            |      |               |  |   | 1.3       |  |           | 0.4   |   |       |   | 1.2   |  |   |      |   |  |   | 9.1    
|2002                                |  |               | 3.1   |               |   | 6.3   |     |  |           |      |  |            |      |               |  |   | 0.7       |  |           | 0.3   |   |       |   | 0.3   |  |   | 0.4   |   |  |   | 11.1   
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Operating income (loss)             |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 45.1  |               | $ | 8.4   |     |  | $         | 10.1  |  | $          | 13.7  |               |  | $ | 8.2       |  | $         | 23.0  |   |       | $ | 14.2  |  | $ |      |   |  | $ | 122.7  
|2003                                |  |               | 40.4  |               |   | 14.0  |     |  |           | 8.8   |  |            | 10.2  |               |  |   | 8.1       |  |           | 31.7  |   |       |   | 8.0   |  |   |      |   |  |   | 121.2  
|2002                                |  |               | 38.9  |               |   | (2.8  | )   |  |           | 5.8   |  |            | 7.2   |               |  |   | 12.8      |  |           | 29.1  |   |       |   | 10.3  |  |   |      |   |  |   | 101.3  
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Interest and other income (expense) |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 2.7   |               | $ | 2.2   |     |  | $         | 0.2   |  | $          |      |               |  | $ | 0.6       |  | $         | (0.1  | ) |       | $ | 0.7   |  | $ | 0.1   |   |  | $ | 6.4    
|2003                                |  |               | 2.8   |               |   | 2.0   |     |  |           | 0.3   |  |            | 0.1   |               |  |   | 0.8       |  |           | (0.1  | ) |       |   | 1.4   |  |   |      |   |  |   | 7.3    
|2002                                |  |               | 3.2   |               |   | 3.1   |     |  |           | 0.2   |  |            | 0.1   |               |  |   | 0.7       |  |           |      |   |       |   | 1.1   |  |   | 0.9   |   |  |   | 9.3    
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Interest expense                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             |      |               | $ |      |     |  | $         |      |  | $          |      |               |  | $ |          |  | $         |      |   |       | $ | 0.1   |  | $ | 34.5  |   |  | $ | 34.6   
|2003                                |  |               |      |               |   |      |     |  |           |      |  |            |      |               |  |   |          |  |           |      |   |       |   | 0.1   |  |   | 30.2  |   |  |   | 30.3   
|2002                                |  |               |      |               |   |      |     |  |           |      |  |            |      |               |  |   |          |  |           |      |   |       |   |      |  |   | 35.9  |   |  |   | 35.9   
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Income (loss) before income taxes   |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 47.8  |               | $ | 10.7  |     |  | $         | 10.3  |  | $          | 13.7  |               |  | $ | 8.8       |  | $         | 22.9  |   |       | $ | 14.7  |  | $ | (34.4 | ) |  | $ | 94.5   
|2003                                |  |               | 43.2  |               |   | 16.0  |     |  |           | 9.1   |  |            | 10.2  |               |  |   | 8.9       |  |           | 31.6  |   |       |   | 9.4   |  |   | (30.2 | ) |  |   | 98.2   
|2002                                |  |               | 42.1  |               |   | (0.7  | )   |  |           | 6.0   |  |            | 7.4   |               |  |   | 13.5      |  |           | 29.1  |   |       |   | 11.2  |  |   | (33.9 | ) |  |   | 74.7   
|                                    |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|Capital expenditures                |  |               |       |               |   |       |     |  |           |       |  |            |       |               |  |   |           |  |           |       |   |       |   |       |  |   |       |   |  |   |        
|2004                                |  | $             | 2.5   |               | $ | 1.2   |     |  | $         | 1.8   |  | $          | 0.1   |               |  | $ | 0.1       |  | $         | 0.3   |   |       | $ | 0.3   |  | $ | 9.6   |   |  | $ | 15.9   
|2003                                |  |               | 2.3   |               |   | 0.8   |     |  |           | 0.1   |  |            | 0.3   |               |  |   | 0.1       |  |           | 0.5   |   |       |   | 0.7   |  |   | 10.5  |   |  |   | 15.3   
|2002                                |  |               | 3.2   |               |   | 1.7   |     |  |           | 0.6   |  |            | 0.2   |               |  |   | 0.3       |  |           | 0.7   |   |       |   | 2.8   |  |   | 7.4   |   |  |   | 16.9   



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The following table includes our investment in assets (accounts receivable less allowance for doubtful
accounts, inventories and goodwill) and accounts payable for each segment at January 30, 2004 and January 31, 2003 (in millions):



|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|------------------------- |  | ------------------ | ----- | ----------- | - | -------- |  | ------------- | ----- | --------------- | - | ------- |  | - | -----
|                          |  | Fiscal Year 2004  
|                          |  | AccountsReceivable |       | Inventories |   | Goodwill |  | SegmentAssets |       | AccountsPayable
|Water & Sewer             |  | $                  | 161.4 |             | $ | 92.8     |  | $             | 104.7 |                 | $ | 358.9   |  | $ | 78.8 
|Plumbing/HVAC             |  |                    | 106.8 |             |   | 114.4    |  |               | 50.1  |                 |   | 271.3   |  |   | 79.1 
|MRO                       |  |                    | 48.7  |             |   | 52.6     |  |               | 272.8 |                 |   | 374.1   |  |   | 16.4 
|Utilities                 |  |                    | 30.9  |             |   | 46.8     |  |               | 59.3  |                 |   | 137.0   |  |   | 22.2 
|Electrical                |  |                    | 51.6  |             |   | 28.4     |  |               | 9.0   |                 |   | 89.0    |  |   | 28.1 
|Industrial PVF            |  |                    | 40.5  |             |   | 103.3    |  |               | 56.4  |                 |   | 200.2   |  |   | 27.8 
|All Other                 |  |                    | 53.4  |             |   | 28.7     |  |               | 57.5  |                 |   | 139.6   |  |   | 18.8 
|Corporate                 |  |                    |      |             |   |         |  |               |      |                 |   |        |  |   | 37.1 
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|                          |  | $                  | 493.3 |             | $ | 467.0    |  | $             | 609.8 |                 |   | 1,570.1 |  | $ | 308.3
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|Cash and cash equivalents |  |                    |       |             |   |          |  |               |       |                 |   | 8.3     |  |   |      
|Deferred income taxes     |  |                    |       |             |   |          |  |               |       |                 |   | 19.4    |  |   |      
|Other current assets      |  |                    |       |             |   |          |  |               |       |                 |   | 53.0    |  |   |      
|Property and equipment    |  |                    |       |             |   |          |  |               |       |                 |   | 161.8   |  |   |      
|Other assets              |  |                    |       |             |   |          |  |               |       |                 |   | 68.7    |  |   |      
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|Total Assets              |  |                    |       |             |   |          |  |               |       |                 | $ | 1,881.3 |  |   |      
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|                          | 
|                          |  | Fiscal Year 2003  
|                          |  | AccountsReceivable |       | Inventories |   | Goodwill |  | SegmentAssets |       | AccountsPayable
|Water & Sewer             |  | $                  | 133.8 |             | $ | 81.5     |  | $             | 86.6  |                 | $ | 301.9   |  | $ | 50.5 
|Plumbing/HVAC             |  |                    | 100.9 |             |   | 116.9    |  |               | 50.1  |                 |   | 267.9   |  |   | 57.0 
|MRO                       |  |                    | 13.1  |             |   | 16.8     |  |               | 1.7   |                 |   | 31.6    |  |   | 3.6  
|Utilities                 |  |                    | 30.6  |             |   | 42.1     |  |               | 58.8  |                 |   | 131.5   |  |   | 22.9 
|Electrical                |  |                    | 57.4  |             |   | 37.5     |  |               | 9.0   |                 |   | 103.9   |  |   | 28.1 
|Industrial PVF            |  |                    | 41.2  |             |   | 117.3    |  |               | 56.4  |                 |   | 214.9   |  |   | 19.1 
|All Other                 |  |                    | 46.1  |             |   | 26.4     |  |               | 57.5  |                 |   | 130.0   |  |   | 17.5 
|Corporate                 |  |                    |      |             |   |         |  |               |      |                 |   |        |  |   | 31.3 
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|                          |  | $                  | 423.1 |             | $ | 438.5    |  | $             | 320.1 |                 | $ | 1,181.7 |  | $ | 230.0
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|Cash and cash equivalents |  |                    |       |             |   |          |  |               |       |                 |   | 1.7     |  |   |      
|Deferred income taxes     |  |                    |       |             |   |          |  |               |       |                 |   | 19.7    |  |   |      
|Other current assets      |  |                    |       |             |   |          |  |               |       |                 |   | 47.1    |  |   |      
|Property and equipment    |  |                    |       |             |   |          |  |               |       |                 |   | 157.8   |  |   |      
|Other assets              |  |                    |       |             |   |          |  |               |       |                 |   | 26.9    |  |   |      
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      
|Total Assets              |  |                    |       |             |   |          |  |               |       |                 | $ | 1,434.9 |  |   |      
|                          |  |                    |       |             |   |          |  |               |       |                 |   |         |  |   |      



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Note 17Quarterly Financial Information (Unaudited)



The following is a summary of the unaudited results of operations for each
quarter in fiscal years 2004 and 2003 (in millions except per share data):



|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|--------------------------- |  | ------------ | ----- | ------------- | - | ------------ |  | ------------- | ----- | --------- | - | ----- |  | - | -------
|                            |  | FirstQuarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter |       | Full Year
|Fiscal 2004                 |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Net sales                   |  | $            | 782.8 |               | $ | 815.1        |  | $             | 859.5 |           | $ | 796.0 |  | $ | 3,253.4
|Gross margin                |  |              | 175.4 |               |   | 184.5        |  |               | 193.5 |           |   | 180.3 |  |   | 733.7  
|Net income                  |  |              | 11.8  |               |   | 18.7         |  |               | 17.8  |           |   | 9.4   |  |   | 57.7   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Earnings per share:         |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Basic                       |  | $            | 0.52  |               | $ | 0.82         |  | $             | 0.78  |           | $ | 0.41  |  | $ | 2.52   
|Diluted                     |  |              | 0.51  |               |   | 0.80         |  |               | 0.76  |           |   | 0.39  |  |   | 2.46   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Average shares outstanding: |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Basic                       |  |              | 22.8  |               |   | 22.8         |  |               | 22.9  |           |   | 23.2  |  |   | 22.9   
|Diluted                     |  |              | 23.1  |               |   | 23.3         |  |               | 23.4  |           |   | 24.0  |  |   | 23.5   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Dividends per share         |  | $            | 0.100 |               | $ | 0.100        |  | $             | 0.100 |           | $ | 0.100 |  | $ | 0.400  
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Fiscal 2003                 |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Net sales                   |  | $            | 790.0 |               | $ | 774.7        |  | $             | 804.0 |           | $ | 697.6 |  | $ | 3,066.3
|Gross margin                |  |              | 181.1 |               |   | 180.6        |  |               | 188.4 |           |   | 159.6 |  |   | 709.7  
|Net income                  |  |              | 12.4  |               |   | 18.5         |  |               | 19.8  |           |   | 7.4   |  |   | 58.1   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Earnings per share:         |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Basic                       |  | $            | 0.54  |               | $ | 0.80         |  | $             | 0.85  |           | $ | 0.32  |  | $ | 2.50   
|Diluted                     |  |              | 0.52  |               |   | 0.78         |  |               | 0.84  |           |   | 0.31  |  |   | 2.45   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Average shares outstanding: |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Basic                       |  |              | 23.2  |               |   | 23.3         |  |               | 23.3  |           |   | 23.2  |  |   | 23.2   
|Diluted                     |  |              | 23.6  |               |   | 23.8         |  |               | 23.6  |           |   | 23.5  |  |   | 23.7   
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        
|Dividends per share         |  | $            | 0.085 |               | $ | 0.085        |  | $             | 0.085 |           | $ | 0.100 |  | $ | 0.355  
|                            |  |              |       |               |   |              |  |               |       |           |   |       |  |   |        



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Report of Independent Registered Certified Public Accounting Firm



To the Shareholders and Board of Directors of Hughes Supply, Inc.



In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders equity and cash flows
present fairly, in all material respects, the financial position of Hughes Supply, Inc. and its subsidiaries at January 30, 2004 and January 31, 2003, and the results of their operations and their cash flows for each of the three years in the period
ended January 30, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those situations require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



As discussed in Note 4 to the consolidated financial statements, effective
January 26, 2002, the Company changed its method of accounting for goodwill and certain intangible assets as a result of adopting Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.



|                              
|------------------------------
|/s/ PricewaterhouseCoopers LLP
|PricewaterhouseCoopers LLP    
|Orlando, Florida              
|April 14, 2004                



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Managements Responsibility for Financial Statements



The consolidated financial statements and related information included in this Annual Report were prepared in conformity with accounting principles generally accepted in the United States of America. Management is
responsible for the integrity of the financial statements and for the related information. Management has included in the Companys consolidated financial statements amounts that are based on estimates and judgments, which it believes are
reasonable under the circumstances. The responsibility of the Companys independent accountants is to express an opinion on the fairness of the consolidated financial statements. Their opinion is based on an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States) as further described in their report.



The Audit Committee of the board of directors is composed of four non-management directors. The Committee meets periodically with financial management,
internal auditors and the independent accountants to review internal accounting control, auditing and financial reporting matters.



PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



|(a) | The following documents are filed as part of this report (the page number references for the information listed under this Item 15(a) relate to the Companys Form 10-K for the
year ended January 30, 2004 as originally filed on April 14, 2004):
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (1) | Financial Statements
| | --- | --------------------



The consolidated financial statements of the Company and its subsidiaries are included in Item 8 on pages 35  65.



| | (2) | Financial Statement Schedules
| | --- | -----------------------------



The financial statement schedules are included on page 72. All other schedules have been omitted as they are either not applicable, not required or the
information is given in the financial statements or related notes thereto.



| | (3) | Exhibits Filed
| | --- | --------------



A substantial number of the exhibits listed below in the index to the exhibits on page 68  71 are indicated as having been previously filed as
exhibits to other reports under the Securities Exchange Act of 1934, as amended, or as exhibits to registration statements under the Securities Act of 1933, as amended. Such previously filed exhibits are incorporated by reference in this Form 10-K.
Exhibits not incorporated by reference herein are filed with this report.



|(b) | Reports on Form 8-K
|--- | -------------------



Hughes Supply filed or furnished the following current reports on Form 8-K during the quarter ended January 30, 2004:



On November 25, 2003, Hughes Supply, Inc. furnished a Current Report on Form
8-K dated November 25, 2003 that included information relating to our third quarter operating results.



On November 26, 2003, Hughes Supply, Inc. filed a Current Report on Form 8-K dated November 26, 2003 that included information relating to the
announcement of our definitive all cash merger agreement with Century Maintenance Supply, Inc.



On December 18, 2003, Hughes Supply, Inc. filed a Current Report on Form 8-K dated December 17, 2003 that included information relating to our revised
segment presentation.



On January 5, 2004, Hughes Supply, Inc.
filed a Current Report on Form 8-K dated December 19, 2003 that included information relating to our acquisition of Century Maintenance Supply, Inc.



On January 8, 2004, Hughes Supply, Inc. filed an amendment to its Current Report on Form 8-K dated December 19, 2003 that included certain financial
information relating to Century Maintenance Supply, Inc.



On
January 23, 2004, Hughes Supply, Inc. filed a Current Report on Form 8-K dated January 22, 2004 that included information relating to the pricing and offering for sale of shares of our common stock.



On February 2, 2004, Hughes Supply, Inc. furnished a Current Report on Form
8-K dated January 30, 2004 that included information relating to investor presentation materials used in meetings related to the sale of shares of our common stock.



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INDEX TO EXHIBITS

(Item 14(a)3  Exhibits Required by Item 601

of Regulation S-K and Additional
Exhibits)



|(2) | Plan of acquisition.
|--- | --------------------



| | 2.1 | Agreement and Plan of Merger dated as of November 26, 2003, among Hughes Supply, Inc., MRO Merger Corp., Century Maintenance Supply, Inc., FS Equity Partners IV, L.P., Century
Airconditioning Holdings, Inc., and Dennis C. Bearden, incorporated by reference to Exhibit 2.1 Form 8-K filed on January 5, 2004 (Commission File No. 001-08772).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2.2 | First Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 2.2 to Form 8-K filed on January 5, 2004 (Commission File No. 001-08772).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Articles of incorporation and by-laws.
|--- | --------------------------------------



| | 3.1 | Restated Articles of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended April 30, 1997 (Commission File No. 001-08772).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.2 | Amended and Restated By-Laws of Hughes Supply, Inc. (As Amended and Restated on May 20, 2003), incorporated by reference to Exhibit 3.2 to Form 10-Q for the quarter ended May 2,
2003 (Commission File No. 001-08772).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.3 | Form of Articles of Amendment of series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 99.3 to Form 8-A dated May 22, 1998 (Commission File No.
001-08772).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Instruments defining the rights of security holders, including indentures.
|--- | --------------------------------------------------------------------------



| | 4.1 | Form of Common Stock Certificate representing shares of the Registrants common stock, $1.00 par value, incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter
ended July 31, 1997 (Commission File No. 001-08772).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.2 | Rights Agreement dated as of May 20, 1998 between Hughes Supply, Inc. and American Stock Transfer & Trust Company, incorporated by reference to Exhibit 99.2 to Form 8-A dated
May 22, 1998 (Commission File No. 001-08772).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | Material contracts.
|---- | -------------------



| | 10.1 | Amended and restated lease agreements with Hughes, Inc. dated April 1, 2003, incorporated by reference to Exhibit 10.1 to Form 10Q for the quarter ended May 2, 2003 (Commission File
No. 001-08772):
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|         |  |                                      
|-------- |  | -------------------------------------
|Sub-Item |  | Property                             
|(a)      |  | 521 West Central Blvd, Orlando, FL   
|(b)      |  | 1010 Grand Avenue, Orlando, FL       
|(c)      |  | 2018 Lucerne Terrace, Orlando, FL    
|(d)      |  | 335 N. Ingraham Avenue, Lakeland, FL 
|(e)      |  | 951 Pierce Street, Clearwater, FL    
|(f)      |  | 903 Brentwood Drive Daytona, FL      
|(g)      |  | 401 Angle Road, Fort Pierce, FL      
|(h)      |  | 576 NE 23rdStreet, Gainesville, FL   
|(i)      |  | 2525 12thStreet, Sarasota, FL        
|(j)      |  | 341 South Seaboard Avenue, Venice, FL
|(k)      |  | 2439 7thStreet SW, Winter Haven, FL  



| | 10.2 | Hughes Supply, Inc. 1988 Stock Option Plan as amended March 12, 1996 incorporated by reference to Exhibit to Form 10-K for the fiscal year ended January 26, 1996 (Commission File
No. 001-08772).
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 | Real Estate Term Credit Agreement, dated as of May 31, 2002, by and among Hughes Supply Shared Services, Inc. as borrower, Hughes Supply, Inc. as parent, and SunTrust Bank as lender
incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended May 3, 2002 (Commission File No. 001-08772).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 10.3 (a) | First Amendment to Real Estate Term Credit Agreement, dated as of March 26, 2003, by and among Hughes Supply Shared Services, Inc. as borrower, Hughes Supply, Inc. as parent and
SunTrust Bank as lender, incorporated by reference to Exhibit 10(a) to Form 10Q for quarter ended August 1, 2003 (Commission File No. 001-08772).
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 | Hughes Supply, Inc. Amended and Restated Directors Stock Option Plan with amendments approved through May 21, 2002, incorporated by reference to Exhibit 10.4 to form 10-K for
the fiscal year ended January 31, 2003 (Commission File No. 001-08772).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.5 | Hughes Supply, Inc. Amended Senior Executives Long-Term Incentive Bonus Plan, adopted January 25, 1996, incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal
year ended January 26, 1996 (Commission File No. 001-08772).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.6 | Note Purchase Agreement, dated as of August 28, 1997, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by
reference to Exhibit 10.15 to Form 10-Q for the quarter ended July 31, 1997 (Commission File No. 001-08772).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.7 | Hughes Supply, Inc. 1997 Executive Stock Plan, Amended and Restated Plan (as amended on April 9, 2003), incorporated by reference to Exhibit 10.7 to Form 10-Q for the quarter ended
May 2, 2003 (Commission File No. 001-08772).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.8 | Note Purchase Agreement, dated as of May 29, 1996, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by reference
to Exhibit 10.13 to Form 10-K for the fiscal year ended January 30, 1998 (Commission File No. 001-08772).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.9 | Note Purchase Agreement, dated as of May 5, 1998, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by reference
to Exhibit 10.11 to Form 10-Q for the quarter ended April 30, 1998 (Commission File No. 001-08772).
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.10 | Revolving Credit Agreement dated as of March 26, 2003 amount Hughes Supply, Inc. as borrower, and the Lenders from time to time party hereto and SunTrust Bank as administrative
agent, incorporated by reference to Exhibit 10.10 to Form 10-K for the fiscal year ended January 31, 2003 (Commission File No. 001-08772).
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.10 (a) | Lender Joinder Agreement dated May 22, 2003 executed by BNP PARIBAS in favor of Hughes Supply, Inc., the borrower, and SunTrust Bank, as administrative agent, for the lenders from
time to time party to the revolving credit agreement dated as of March 26, 2003, among the borrowers, lenders and administrative agent, incorporated by reference to Exhibit 10.10 (a) to Form 10-Q for the quarter ended May 2, 2003 (Commission File
No. 001-08772).
| | --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.10 (b) | Lender Joinder agreement dated May 22, 2003 executed by CommerceBank N.A. in favor of Hughes Supply, Inc., the borrower, and SunTrust Bank, as administrative agent, for the lenders
from time to time party to the revolving credit agreement dated as of March 26, 2003, among the borrowers, lenders and administrative agent, incorporated by reference to Exhibit 10.10 (b) to Form 10-Q for the quarter ended May 2, 2003 (Commission
File No. 001-08772).
| | --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.11 | Loan and Aircraft Security Agreement dated as of November 12, 2002 between Juno Industries, Inc. (d/b/a Hughes Aviation), customer, and SunTrust Leasing Corporation, lender, CESSNA
560 XL M/S No. 560-5119, FAA Registration Mark N357 WC incorporated by reference to Exhibit 10.11 to form 10-K for the fiscal year ended January 31, 2003 (Commission File No. 001-08772).
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.12 | Note Purchase Agreement, dated as of December 21, 2000 and amended January 19, 2001, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase
Agreement incorporated by reference to Exhibit 10.12 to Form 10-K for the fiscal year ended January 26, 2001 (Commission File No. 001-08772).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.15 | Master Lease Agreement, dated as of June 22, 2001 between Atlantic Financial Group, Ltd, as Lessor and Hughes Supply, Inc. and Certain Subsidiaries of Hughes Supply, Inc., as
Lessees  Operating Lease incorporated by reference to Exhibit 10.15 to Form 10-Q for the quarter ended October 31, 2001 (Commission File No. 001-08772).
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 10.15 (a) | Loan Agreement, dated as of June 22, 2001 among Atlantic Financial Group, Ltd, as Lessor and Borrower, the financial institutions party hereto as Lenders and SunTrust Bank, as Agent
 Operating Lease incorporated by reference to Exhibit 10.15 (a) to Form 10-Q for the quarter ended October 31, 2001 (Commission File No. 001-08772).
| | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.15 (b) | Construction Agency Agreement, dated as of June 22, 2001 among Atlantic Financial Group, Ltd, and Hughes Supply, Inc. as Construction Agent  Operating Lease incorporated by
reference to Exhibit 10.15 to Form 10-Q for the quarter ended October 31, 2001 (Commission File No. 001-08772).
| | --------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.15 (c) | Guaranty Agreement from Hughes Supply, Inc., dated as of June 22, 2001  Operating Lease incorporated by reference to Exhibit 10.15 (c) to Form 10-Q for the quarter ended
October 31, 2001 (Commission File No. 001-08772).
| | --------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.15 (d) | Appendix A to the Operative Documents, Definitions and Interpretation  Operating Lease incorporated by reference to Exhibit 10.15 (d) to Form 10-Q for The quarter ended
October 31, 2001 (Commission File No. 001-08772).
| | --------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.15 (e) | First Amendment to Master Agreement incorporated by reference to Exhibit 10.15 (e) to form 10-K for the fiscal year ended January 31, 2003 (Commission File No. 001-08772).
| | --------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.16 (a) | Amendment to Uncommitted Guidance and Swing Line Demand Promissory Note dated July 26, 2002 by the Company and SunTrust Bank, Inc. incorporated by reference to Exhibit 10.16 (a) to
Form 10-Q for the quarter ended August 2, 2002 (Commission File No. 001-08772).
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.17 | Senior Term Loan Agreement dated as of December 19, 2003, among Hughes Supply, Inc., Lehman Commercial Paper, Inc. SunTrust Bank, and each of the several other banks and financial
institutions from time to time party thereto, Lehman Brothers, Inc. and SunTrust Robinson Humphrey, as exclusive joint advisors, joint book managers and joint lead arrangers and SunTrust Bank, as administrative agent, incorporated by reference to
Exhibit 10.1 to Form 8-K filed January 5, 2004 (Commission File No. 001-08772).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.18 | First Amendment to Revolving Credit Agreement dated as of December 19, 2003, among Hughes Supply, Inc., the several banks and other financial institutions from time to time party
thereto, and SunTrust Bank as administrative agent, incorporated by reference to Exhibit 10.2 to Form 8-K filed January 5, 2004 (Commission File No. 001-08772).
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.19 | Lease agreements with SJ Limited Partnership, incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission File No. 001-08772):
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|         |  |                                       
|-------- |  | --------------------------------------
|Sub-Item |  | Property                              
|(a)      |  | 7311 Galveston Road, #800, Houston, TX
|(b)      |  | 7311 Galveston Road, #510, Houston, TX



| | 10.20 | Lease agreement with SJ Partnership for 7311 Gavleston Road, #710, Houston, TX, incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission File
No. 001-08772).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.21 | Lease agreement with Stanwood Limited Partnership for 2751 Miller Road, Decatur, GA, incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission
File No. 001-08772).
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.22 | Lease agreement with SWS-GA Realty, Inc. and Stanwood Interests Limited Partnership for 2331 Varkel Way, Lithonia, GA, incorporated by reference to Form 10-K for the fiscal year
ended January 30, 2004 (Commission File No. 001-08772).
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.23 | Lease agreements with SWS-TX Realty, Inc., incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission File No. 001-08772):
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



|         |  |                                   
|-------- |  | ----------------------------------
|Sub-Item |  | Property                          
|(a)      |  | 8511 Monroe Boulevard, Houston, TX
|(b)      |  | 8505 Monroe Boulevard, Houston, TX



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| | 10.24 | Lease agreements with JEM-Realty, Inc. and Stanwood Interests Limited Partnership, incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission File
No. 001-08772):
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|         |  |                                                          |  | 
|-------- |  | -------------------------------------------------------- |  | 
|Sub-Item |  | Property                                                
|(a)      |  | 629 Pressley Road, Charlotte, NC                        
|(b)      |  | 11835 West Fairmont Parkway, LaPorte, TX                
|(c)      |  | Tract 26 South Houston Gardens, No. 6, Harris County, TX



|       |  |  |  |                                                                                                                                                        
|------ |  |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(21)   |  |  |  | Subsidiaries of the Registrant, incorporated by reference to Form 10-K for the fiscal year ended January 30, 2004 (Commission File No.
001-08772).     
|(23)   |  |  |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                 
|(31.1) |  |  |  | Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer.                                                                       
|(31.2) |  |  |  | Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and Chief Financial Officer.                                                        
|(32.1) |  |  |  | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by the President and Chief Executive
Officer.               
|(32.2) |  |  |  | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by the Executive Vice President and Chief
Financial Officer.









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FINANCIAL STATEMENT SCHEDULE



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended January 30, 2004, January 31, 2003 and January 25, 2002

(in millions)



|                                |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|------------------------------- |  | ---------------------------- | ---- | ------------------------- | - | ---- | ---------- |  | - | ---------------------- | ---- |  | - | ---
|Description                     |  | Balance atBeginningof Period |      | AdditionsCharged toIncome |   |      | Deductions |  |   | Balance atEnd ofPeriod
|2004                            |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|Allowance for doubtful accounts |  | $                            | 8.5  |                           | $ | 8.1  | (a)        |  | $ | (10.1                  | )(b) |  | $ | 6.5
|Inventory reserves              |  |                              | 6.0  |                           |   | 7.8  | (c)        |  |   | (9.3                   | )(d) |  |   | 4.5
|Deferred income taxes           |  |                              | 0.2  |                           |   | 0.4  |            |  |   |                       |      |  |   | 0.6
|                                |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|2003                            |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|Allowance for doubtful accounts |  | $                            | 8.4  |                           | $ | 10.8 | (a)        |  | $ | (10.7                  | )(b) |  | $ | 8.5
|Inventory reserves              |  |                              | 9.8  |                           |   | 0.9  | (c)        |  |   | (4.7                   | )(d) |  |   | 6.0
|Deferred income taxes           |  |                              | 0.1  |                           |   | 0.1  |            |  |   |                       |      |  |   | 0.2
|                                |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|2002                            |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    
|Allowance for doubtful accounts |  | $                            | 6.1  |                           | $ | 13.4 | (a)        |  | $ | (11.1                  | )(b) |  | $ | 8.4
|Inventory reserves              |  |                              | 10.4 |                           |   | 8.0  | (c)        |  |   | (8.6                   | )(d) |  |   | 9.8
|Deferred income taxes           |  |                              | 0.7  |                           |   |     |            |  |   | (0.6                   | )    |  |   | 0.1
|                                |  |                              |      |                           |   |      |            |  |   |                        |      |  |   |    

---

|(a) | Represents gross bad debt expense, excluding recoveries of bad debts, which totaled $3.5 million, $1.7 million and $2.3 million in fiscal 2004, fiscal 2003 and fiscal 2002,
respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Represents write-offs of uncollectible receivable amounts.
|--- | ----------------------------------------------------------

|(c) | Represents amounts charged for provision for inventory loss, including book to physical inventory adjustments and estimated dead stock write-offs.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Deductions represent the net difference between the original inventory provisions recorded and actual book to physical adjustments, dead stock write-offs, and reductions in
calculated reserve requirements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Report of Independent Registered Certified Public Accounting Firm on Financial Statement Schedule



To the Shareholders and Board of Directors

of Hughes Supply, Inc.



Our audits of the consolidated financial statements referred to in our report dated April 14, 2004 appearing in the 2004 Annual Report on Form 10-K
also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.



|                              
|------------------------------
|/s/ PricewaterhouseCoopers LLP
|PricewaterhouseCoopers LLP    
|Orlando, Florida              
|April 14, 2004                



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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.



|                   |  |                     |  |                                                               
|------------------ |  | ------------------- |  | --------------------------------------------------------------
|                   |  | HUGHES SUPPLY, INC.
|                   |  |                    
|September 14, 2004 |  | By:                 |  | /s/ Thomas I. Morgan                                          
|                   |  |                     |  | Thomas I. Morgan                                              
|                   |  |                     |  | President and Chief Executive Officer                         
|                   |  |                    
|September 14, 2004 |  | By:                 |  | /s/ David Bearman                                             
|                   |  |                     |  | David Bearman                                                 
|                   |  |                     |  | Executive Vice President and Chief Financial Officer          
|                   |  |                     |  | (Principal Financial Officer and Principal Accounting Officer)



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INDEX OF EXHIBITS FILED WITH THIS REPORT



|       |  |                                                                                                                                                        
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|(23)   |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                 
|       | 
|(31.1) |  | Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer.                                                                       
|       | 
|(31.2) |  | Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and Chief Financial Officer.                                                        
|       | 
|(32.1) |  | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by the President and Chief Executive Officer.               
|       | 
|(32.2) |  | Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by the Executive Vice President and Chief Financial Officer.



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