<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

                                      OR

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

       FOR THE TRANSITION PERIOD FROM                   TO                 .
                                      -----------------    ----------------

                         COMMISSION FILE NUMBER 0-255

                        GRAYBAR ELECTRIC COMPANY, INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
<C>                                                                     <C>
                             NEW YORK                                              13-0794380
   (State or other jurisdiction of incorporation or organization)       (IRS Employer Identification No.)

           34 NORTH MERAMEC AVENUE, ST. LOUIS, MISSOURI                               63105
             (Address of principal executive offices)                               (Zip Code)
</TABLE>

       Registrant's telephone number, including area code:   (314) 573-9200

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

       Securities registered pursuant to Section 12(g) of the Act:
                  Common Stock      -   Par Value $1.00 Per Share with a
                                        Stated Value of $20.00

Indicate by check mark whether the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.

                                Yes ( ) No (X)

Indicate by check mark whether the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.

                                Yes ( ) No (X)

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 (Paragraph 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. (X)

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.

<TABLE>
         <C>                                   <C>                             <C>
         Large Accelerated Filer (  )          Accelerated Filer (  )          Non-Accelerated filer (X)
</TABLE>

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2) of the Exchange Act.

                                Yes ( ) No (X)

       The aggregate stated value of the Common Stock beneficially owned with
respect to rights of disposition by persons who are not affiliates (as defined
in Rule 405 under the Securities Act of 1933) of the registrant on June 30,
2007, was approximately $130,549,220. Pursuant to a Voting Trust Agreement,
dated as of March 16, 2007, approximately 79% of the outstanding shares of
Common Stock are held of record by five Voting Trustees who are each directors
or officers of the registrant and who collectively exercise the voting rights
with respect to such shares. The registrant is 100% owned by its active and
retired employees, and there is no public trading market for the registrant's
Common Stock. See Item 5 of this Annual Report on Form 10-K.

       The number of shares of Common Stock outstanding at March 12, 2008
was 8,052,373.

                      DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the documents listed below have been incorporated by
reference into the indicated Part of this Annual Report on Form 10-K:

       Information Statement relating to the 2008 Annual Meeting of
Shareholders - Part III, Items 10-14.



<PAGE>
<PAGE>

<TABLE>
                                     GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                                                ANNUAL REPORT ON FORM 10-K
                                       FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

                                                    TABLE OF CONTENTS

<CAPTION>
                                                                                                                    PAGE(S)

                                                          PART I
<C>             <C>                                                                                                 <C>
ITEM 1.         Business                                                                                              3-5
ITEM 1A.        Risk Factors                                                                                          5-6
ITEM 1B.        Unresolved Staff Comments                                                                               6
ITEM 2.         Properties                                                                                            6-7
ITEM 3.         Legal Proceedings                                                                                       7
ITEM 4.         Submission of Matters to a Vote of Security Holders                                                     7

                                                         PART II

ITEM 5.         Market for Registrant's Common Equity, Related Stockholder
                     Matters and Issuer Purchases of Equity Securities                                                8-9
ITEM 6.         Selected Financial Data                                                                                 9
ITEM 7.         Management's Discussion and Analysis of Financial Condition
                     and Results of Operations                                                                       9-16
ITEM 7A.        Quantitative and Qualitative Disclosures About Market Risk                                          16-17
ITEM 8.         Financial Statements and Supplementary Data                                                         17-35
ITEM 9.         Changes in and Disagreements With Accountants on
                     Accounting and Financial Disclosure                                                               35
ITEM 9A(T).     Controls and Procedures                                                                                35
ITEM 9B.        Other Information                                                                                      35
                                                         PART III

ITEM 10.        Directors, Executive Officers and Corporate Governance                                                 36
ITEM 11.        Executive Compensation                                                                                 36
ITEM 12.        Security Ownership of Certain Beneficial Owners and
                     Management and Related Stockholder Matters                                                        36
ITEM 13.        Certain Relationships and Related Transactions, and Director Independence                              36
ITEM 14.        Principal Accounting Fees and Services                                                                 36

                                                         PART IV

ITEM 15.        Exhibits, Financial Statement Schedules                                                             37-39

SIGNATURES                                                                                                          40-41
INDEX TO EXHIBITS                                                                                                      42
CERTIFICATIONS
</TABLE>

                                      2

<PAGE>
<PAGE>

                                    PART I

The following discussion should be read in conjunction with our accompanying
audited consolidated financial statements, notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations as of
and for the year ended December 31, 2007, included in this Annual Report on
Form 10-K. The results shown herein are not necessarily indicative of the
results to be expected in any future periods. This discussion contains
forward-looking statements (as such term is defined in the federal securities
laws) and is based on current expectations, which involve risks and
uncertainties. Actual results and the timing of events could differ materially
from the forward-looking statements as a result of certain factors, a number
of which are outlined in Item 1A., "Risk Factors", of this Annual Report on
Form 10-K.

All dollar amounts are stated in thousands ($000s) in the following
discussion.

ITEM 1.  BUSINESS

THE COMPANY

Graybar Electric Company, Inc. ("Graybar" or the "Company") is engaged in the
distribution of electrical, telecommunications and networking products and the
provision of related supply chain management and logistics services, primarily
to construction contractors, industrial plants, telephone companies, power
utilities, federal, state and local governments and commercial users in North
America. All products sold by the Company are purchased by the Company from
others. The Company's business activity is primarily with customers in the
United States. Graybar also has subsidiary operations with distribution
facilities in Canada, Puerto Rico and Mexico.

The Company was incorporated under the laws of the State of New York on
December 11, 1925 to take over the wholesale supply department of Western
Electric Company, Incorporated. Graybar is one hundred percent (100%) owned by
its active and retired employees and there is no public trading market for its
common stock. The location of the principal executive offices of the Company
is 34 North Meramec Avenue, St. Louis, Missouri 63105 and its telephone number
is (314) 573-9200.

The Company maintains an internet website at http://www.graybar.com. Graybar's
filings with the U.S. Securities and Exchange Commission (the "SEC" or
"Commission"), including its Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments to those reports, are
accessible free of charge on our website within the "About Us" page under "SEC
Filings" as soon as reasonably practicable after we file the reports with the
SEC. Additionally, a copy of the Company's SEC filings can be obtained at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or
by calling the SEC at 1-800-SEC-0330. Also, a copy of our electronically filed
materials can be obtained at http://www.sec.gov.

SUPPLIERS

Graybar distributes over one million products (stockkeeping units) made by
nearly 4,400 primary manufacturers through the Company's network of
distribution facilities. The relationship between the Company and its
suppliers is customarily a nonexclusive national or regional distributorship,
terminable upon 30 to 90 days notice by either party. The relationships
between the Company and a number of its principal suppliers go back many
years.

The Company purchased approximately fifty-three percent (53%) of the products
it distributes from its top 25 suppliers during 2007. However, the Company
generally deals with more than one supplier for any product category and there
are alternative sources of comparable products available for nearly all
product categories.

PRODUCTS DISTRIBUTED

The Company stocks over 115,000 of the products it distributes and, therefore,
is able to supply its customers locally with a wide variety of electrical,
telecommunications and networking products. The products distributed by the
Company consist primarily of wire, cable, conduit, wiring devices, switchgear,
tools, motor controls, transformers, lamps, lighting fixtures and hardware,
power transmission equipment, telephone station apparatus, key systems,
private branch exchanges (PBX), data products for local or wide area networks,
fiber optic products, security/access control products, and cable television
(CATV) products.

On December 31, 2007 and 2006, the Company had orders on hand that totaled
approximately $581,200 and $563,800, respectively. The Company expects that
approximately eighty-five percent (85%) of the orders it had on hand at
December 31, 2007 will be filled within the twelve-month period ending
December 31, 2008. Generally, orders placed by customers and accepted by the
Company have resulted in sales. However, customers from time to time request
cancellation and the Company has historically allowed such cancellations.

                                      3

<PAGE>
<PAGE>

MARKETING

Graybar sells its products primarily through a network of distribution
facilities located in thirteen geographical districts throughout the United
States. The Company operates a main distribution facility in each district
along with a number of branch distribution facilities, each of which carries
an inventory of products and operates as a wholesale distributor for the
territory in which it is located. In addition, the Company maintains seven
zone warehouses and three service centers containing inventories of both
standard and specialized products. Both the zone warehouses and service
centers replenish the inventories carried at the main and branch distribution
facilities and make shipments directly to customers. The Company also has
subsidiary operations with distribution facilities located in Canada, Puerto
Rico and Mexico.

The distribution facilities operated by the Company at December 31, 2007 are
shown below:

<TABLE>
<CAPTION>
      U.S. LOCATIONS

                                                             NUMBER OF BRANCH
                              LOCATION OF MAIN             DISTRIBUTION FACILITIES
      DISTRICT              DISTRIBUTION FACILITY               IN DISTRICT*           ZONE WAREHOUSES
      --------              ---------------------               -----------            ---------------
      <C>                   <C>                            <C>                         <C>
      Boston                Boston, MA                               11                Austell, GA
      California            City of Industry, CA                     20                Fresno, CA
      Dallas                Dallas, TX                               14                Joliet, IL
      Chicago               Glendale Heights, IL                     19                Richmond, VA
      Minneapolis           Minneapolis, MN                          16                Springfield, MO
      New York              Parsippany, NJ                           12                Stafford, TX
      Atlanta               Norcross, GA                             21                Youngstown, OH
      Phoenix               Phoenix, AZ                               9
      Pittsburgh            Pittsburgh, PA                           20
      Richmond              Richmond, VA                             17
      Seattle               Seattle, WA                              12
      St. Louis             St. Louis, MO                            13
      Tampa                 Riverview, FL                            20

<FN>
      *Includes Service Centers

<CAPTION>
                                                                 NUMBER OF
                                                               DISTRIBUTION
      INTERNATIONAL LOCATIONS                                   FACILITIES
                                                                ----------
      <C>                                                      <C>
      Graybar Electric Canada, Ltd.
      -----------------------------
       Halifax, Nova Scotia, Canada                                  28
      Graybar International, Inc.
      ---------------------------
       Carolina, Puerto Rico                                          1
      Graybar de Mexico, S.de R.L. de C.V.
      ------------------------------------
       Mexico City, Mexico                                            2
</TABLE>


Where the specialized nature or size of a particular shipment warrants, the
Company has products shipped directly from its suppliers to the place of use,
while in other cases orders are filled from the Company's inventory. On a
dollar volume basis, approximately fifty-eight percent (58%) and sixty percent
(60%) of the orders were filled from the Company's inventory in 2007 and 2006,
respectively, and the remainder were shipped directly from the supplier to the
place of use. The Company generally finances its inventory through collections
of trade receivables and trade accounts payable terms with its suppliers. The
Company's short-term borrowing facilities are also used to finance inventory
as needed. Currently, the Company does not use long-term borrowings for
inventory financing. No inventory is pledged as collateral for any borrowings.

The Company distributes its products to more than 160,000 customers, which
fall into three principal classes. The following list shows the estimated
percentage of the Company's total sales attributable to each of these classes
for the last three years:

<TABLE>
<CAPTION>
                                                                   PERCENTAGE OF SALES
CLASS OF CUSTOMERS                                             FOR YEARS ENDED DECEMBER 31,
------------------                            ---------------------------------------------------------------
                                                    2007                   2006                  2005
                                                    ----                   ----                  ----
<C>                                                 <C>                    <C>                   <C>
Electrical Contractors                              48.0%                  49.8%                 45.0%
Commercial & Industrial                             19.4                   18.9                  22.3
Voice and Data Communications                       20.4                   19.9                  19.4
</TABLE>

                                      4

<PAGE>
<PAGE>

At December 31, 2007, the Company employed approximately 3,200 persons in
sales capacities. Approximately 1,300 of these sales personnel were sales
representatives working to generate sales with current and prospective
customers. The remainder of the sales personnel were sales and marketing
managers and telemarketing, advertising, quotation, counter and clerical
personnel.

COMPETITION

The Company believes that it is one of the three largest wholesale
distributors of electrical and comm/data products in the United States. The
field is highly competitive, and the Company estimates that the five largest
wholesale distributors account for less than twenty-five percent (25%) of the
total market. The balance of the market is made up of several thousand
independent distributors operating on a local, regional or national basis and
manufacturers who sell their products directly to end users.

While price is an important consideration, the Company believes that it is the
service that it is able to offer -- the ability to quickly supply its
customers with a broad range of electrical, telecommunications and networking
products through conveniently located distribution facilities -- that
distinguishes it from most of its competitors, whether they are distributors
or manufacturers selling direct. The Company's pricing structure for the
products it sells reflects the costs associated with the services that it
provides and its prices are generally competitive. However, if a customer is
not looking for one supplier to provide a wide range of products and does not
require prompt delivery or other services, a competitor that does not provide
these benefits may be in a position to offer a lower price.

FOREIGN SALES

Sales by the Company to customers in foreign countries accounted for
approximately five percent (5%) of consolidated revenues in 2007, 2006, and
2005. Subsidiaries of the Company have operations in Canada, Puerto Rico and
Mexico. Limited export activities are handled from Company facilities in
Texas, Arizona and California. Long-lived assets located outside the United
States represented approximately one percent (1%) of the Company's
consolidated assets at the end of each of the last three years. The Company
does not have significant foreign currency exposure and does not believe there
are any other significant risks attendant to its foreign operations.

EMPLOYEES

At December 31, 2007, the Company employed approximately 8,600 persons on a
full-time basis. Approximately 160 of these persons were covered by union
contracts. The Company has not had a material work stoppage and considers its
relations with its employees to be good.

ITEM 1A. RISK FACTORS

Our business, financial condition and results are subject to various risks,
including, but not limited to, those discussed below. The risks outlined below
are those that we believe are currently the most significant, although
additional risks not presently known to us or that we currently deem less
significant may also impact our business, financial condition, and results.

WE PURCHASE ONE HUNDRED PERCENT (100%) OF THE PRODUCTS WE SELL TO OUR
CUSTOMERS FROM OTHER PARTIES. As a wholesale distributor, our business and
financial results are dependent on our ability to purchase products from
manufacturers not controlled by our Company that we, in turn, sell to our
customers. Nearly fifty-three percent (53%) of our purchases are made from
only 25 manufacturers. A sustained disruption in our ability to source product
from one or more of the largest of these vendors might have a material impact
on our ability to fulfill customer orders resulting in lost revenue and, in
rare cases, damages for late or non-delivery.

CONSOLIDATION IN THE ELECTRICAL AND COMM/DATA WHOLESALE DISTRIBUTION
INDUSTRIES COULD NEGATIVELY IMPACT THE FINANCIAL PERFORMANCE OF OUR COMPANY.
Our industry contains several thousand competitors, none with a significant
market share. There has been an increasing amount of consolidation in the
market over the past several years and a few consolidators have greatly
increased their scope of operations in the United States. If a large,
well-financed consolidator is able to unify a large number of our existing
competitors into a single entity, it could impact our market position and, as
a result, our financial performance.

OUR BUSINESS FLUCTUATES WITH GENERAL ECONOMIC CONDITIONS, PARTICULARLY IN THE
RESIDENTIAL, COMMERCIAL AND INDUSTRIAL BUILDING CONSTRUCTION INDUSTRIES. Our
operating locations are widely distributed geographically across the United
States and, to a lesser extent, Canada. Customers for both electrical and
comm/data products are similarly diverse - we have over 160,000 customers and
our largest customer accounts for less than two percent (2%) of our total
revenue. While our geographic and customer concentrations are relatively low,
our performance is, nonetheless, dependent on favorable conditions in both the
general economy and the construction industry. In addition, conditions in the
construction industry are greatly influenced by credit market conditions.
Since we derive a substantial portion of our business from


                                      5

<PAGE>
<PAGE>

construction contractors, revenue could be negatively impacted should interest
rates rise, debt-financing continue to be scarce, or other general economic
conditions deteriorate to levels that depress building activity.

OUR DAILY ACTIVITIES ARE HIGHLY DEPENDENT ON THE UNINTERRUPTED OPERATION OF
OUR INFORMATION SYSTEMS. We are a recognized industry leader for our use of
information technology in all areas of our business - sales, customer service,
inventory management, finance, accounting and human resources. We maintain
redundant information systems as part of our disaster recovery program and are
able to operate in many respects using a paper-based system to help mitigate a
complete interruption in our information processing capabilities. Nonetheless,
our information systems remain vulnerable to natural disasters, wide-area
telecommunications or power utility disruptions, terrorist attack, or other
major disruptions. A sustained interruption in the functioning of our
information systems, however unlikely, could lower operating income by
negatively impacting revenue, expenses, or both.

WE ARE SUBJECT TO LEGAL PROCEEDINGS AND OTHER CLAIMS. We are subject to legal
proceedings and other claims arising out of the conduct of our business,
including proceedings and claims relating to public and private sector
transactions, product liability, contract performance, and employment matters.
On the basis of information currently available to us, we do not believe that
existing proceedings and claims will have a material impact on our financial
position or results. However, litigation is unpredictable, and we could incur
judgments or enter into settlements for current or future claims that could
adversely affect our financial position or our results in a particular period.

More specifically, with respect to asbestos litigation, as of December 31,
2007, approximately 3,027 individual cases and 168 class actions are pending
that allege actual or potential asbestos-related injuries resulting from the
use of or exposure to products sold by us. Additional claims will likely be
filed against us in the future. Our insurance carriers have historically borne
all costs and liability with respect to this litigation and are continuing to
do so. Accordingly, our future liability with respect to pending and
unasserted claims is dependent on the continued solvency of our insurance
carriers. Other factors that could impact this liability are: the number of
future claims filed against us; the defense and settlement costs associated
with these claims; changes in the litigation environment, including changes in
federal or state law governing the compensation of asbestos claimants; adverse
jury verdicts in excess of historic settlement amounts; and bankruptcies of
other asbestos defendants. Because any of these factors may change, our future
exposure is unpredictable and it is possible that we may incur costs that
would have a material adverse impact on our liquidity, financial position or
results of operations in future periods.

OUR FINANCING ARRANGEMENTS AND LOAN AGREEMENTS CONTAIN FINANCIAL COVENANTS AND
CERTAIN OTHER RESTRICTIONS ON OUR ACTIVITIES AND THOSE OF OUR SUBSIDIARIES.
Our senior unsecured notes, revolving credit facility, and trade receivable
securitization program impose contractual limits on our ability, and the
ability of most of our subsidiaries, to take certain actions. In addition, we
are required to maintain acceptable financial ratios relating to debt
leverage, interest coverage, net worth, asset performance, and certain other
customary covenants. Our failure to comply with these obligations may cause an
event of default triggering an acceleration of the debt owed to our creditors
or limit our ability to obtain additional credit under these facilities. While
we expect to remain in compliance with the terms of our credit agreements, our
failure to do so could have a negative impact on our ability to borrow funds
and maintain acceptable levels of cash flow from financing activities.

THERE IS NO PUBLIC TRADING MARKET FOR OUR COMMON STOCK. The Company's capital
stock is one hundred percent (100%) owned by its employees and retirees.
Common stock may not be sold by the holder thereof, except after first
offering it to the Company. The Company has always exercised this purchase
option in the past and expects that it will continue to do so. As a result, no
public market for our common stock exists, nor is one expected to develop.
This lack of a public market for the Company's common stock may limit
Graybar's ability to raise large amounts of equity capital.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable

ITEM 2. PROPERTIES

As of December 31, 2007, the Company has seven zone warehouses ranging in size
from approximately 160,000 to 300,000 square feet. The lease arrangements used
to finance three of the zone warehouses are discussed in Note 7 of the Notes
to the Consolidated Financial Statements, located in Item 8., "Financial
Statements and Supplementary Data", of this Annual Report on Form 10-K. Of the
remaining four zone warehouses, two are owned and two are leased. The
remaining lease terms on these two leased facilities range from approximately
one to four years.

As of December 31, 2007, the Company has three service centers ranging in size
from 143,000 to 210,000 square feet. Two of the three service centers are
owned and the remaining service center facility is leased. The remaining lease
term on the leased service center is two years.

                                      6

<PAGE>
<PAGE>

At December 31, 2007, the Company operated in thirteen geographical districts
in the United States, each of which maintains a main distribution facility
(ranging from approximately 30,000 to 170,000 square feet) that consists
primarily of warehouse space. A small portion of the space in each of the main
distribution facilities is used for offices. The Company owns ten of the main
distribution facilities and leases three. Each district has a number of branch
distribution facilities consisting of warehouse and office space. The number
of branches in a district varies from nine to twenty-one and totals 201 for
all districts. The branch facilities range in size from approximately 1,000
square feet to 130,000 square feet, with the average being approximately
30,000 square feet. The Company owns 113 of the branch facilities and leases
88. The leases of the branch facilities are for varying terms, with the
majority having a remaining term of less than five years.

As of December 31, 2007, the Company has twenty-eight distribution facilities
in Canada, of which nine are owned and nineteen are leased. These range in
size from approximately 5,000 to 60,000 square feet. The Company has a 22,000
square foot leased facility in Puerto Rico and two leased facilities in Mexico
ranging in size from approximately 1,300 to 13,000 square feet.

The Company's headquarters are located in St. Louis, Missouri in a 93,000
square foot building owned by the Company. The Company also leases a 200,000
square foot operations and administration center in St. Louis, Missouri. The
Company has options to purchase this facility in 2011, 2016, and at the
expiration of the lease in 2021.

As of December 31, 2007, the Company had granted mortgages or other security
interests on ten buildings securing approximately $31,613 in debt. Seven of
the ten facilities are subject to security interests totaling $27,715 under a
lease arrangement with an independent lessor. Another two of the ten
facilities are subject to first mortgages securing fixed and variable rate
notes, of which $272 in principal remains outstanding. A facility in
Kitchener, Ontario, Canada is subject to a first mortgage securing a 5.87%
note, of which $3,626 in principal remains outstanding.

ITEM 3. LEGAL PROCEEDINGS

There are presently no pending legal proceedings that are expected to have a
material impact on the Company or its subsidiaries.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of shareholders during the fourth quarter of
the fiscal year covered by this Annual Report on Form 10-K.





                                      7

<PAGE>
<PAGE>

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company is one hundred percent (100%) owned by its active and retired
employees and there is no public trading market for its common stock. Since
1928, substantially all of the issued and outstanding shares of common stock
have been held of record by voting trustees under successive voting trust
agreements. Under applicable state law, a voting trust may not have a term
greater than ten years. The 1997 Voting Trust Agreement expired on March 31,
2007 and was succeeded by the 2007 Voting Trust Agreement that expires by its
terms on March 15, 2017. At December 31, 2007, approximately seventy-nine
percent (79%) of the common stock was held in this voting trust. The
participation of shareholders in the voting trust is voluntary at the time the
voting trust is created but is irrevocable during its term. Shareholders who
elect not to participate in the newly formed voting trust hold their common
stock as the shareholders of record.

No shareholder may sell, transfer or otherwise dispose of shares of common
stock or the voting trust interests issued with respect thereto ("common
stock", "common shares", or "shares") without first offering the Company the
option to purchase such shares at the price at which the shares were issued.
The Company also has the option to purchase at the issue price the common
stock of any holder who dies or ceases to be an employee of the Company for
any cause other than retirement on a Company pension. All outstanding shares
of the Company have been issued at $20.00 per share. The Company has always
exercised its repurchase option and expects to continue to do so.

The following table sets forth information regarding purchases of common stock
by the Company pursuant to the foregoing provisions:

<TABLE>
ISSUER PURCHASES OF EQUITY SECURITIES

<CAPTION>
                                                     TOTAL                                          TOTAL NUMBER OF SHARES
                                                    NUMBER                   AVERAGE                   PURCHASED AS PART
                                                   OF SHARES                PRICE PAID               OF PUBLICLY ANNOUNCED
PERIOD                                             PURCHASED                PER SHARES                 PLANS OR PROGRAMS
------                                             ---------                ----------                 -----------------
<C>                                                 <C>                       <C>                             <C>
October 1 to October 31, 2007                       20,287                    $20.00                          N/A
November 1 to November 30, 2007                     27,935                    $20.00                          N/A
December 1 to December 31, 2007                     34,481                    $20.00                          N/A
                                                    ------                    ------                          ---
Total                                               82,703                    $20.00                          N/A


<CAPTION>
CAPITAL STOCK AT DECEMBER 31, 2007:

                                                                             NUMBER OF
TITLE OF CLASS                                                            SECURITY HOLDERS           NUMBER OF SHARES (A)
--------------                                                            ----------------           --------------------
<C>                                                                            <C>                         <C>
Voting Trust Interests issued with respect to Common Stock                     4,363                       6,294,210
Common Stock                                                                   1,450                       1,637,425
                                                                               -----                       ---------
Total                                                                          5,813                       7,931,635

<FN>
(A) Adjusted for the declaration of a twenty percent (20%) stock dividend in 2007.

<CAPTION>
DIVIDEND DATA

(in dollars per share)                                                                       YEAR ENDED DECEMBER 31,
                                                                                -----------------------------------------------
PERIOD                                                                           2007                  2006               2005
------                                                                           ----                  ----               ----
<C>                                                                             <C>                   <C>                <C>
First Quarter                                                                   $0.30                 $0.30              $0.30
Second Quarter                                                                   0.30                  0.30               0.30
Third Quarter                                                                    0.30                  0.30               0.30
Fourth Quarter                                                                   1.10                  1.10               1.10
                                                                                 ----                  ----               ----
Total                                                                           $2.00                 $2.00              $2.00
</TABLE>

On December 13, 2007, a twenty percent (20%) stock dividend was declared to
shareholders of record on January 3, 2008. Shares representing this dividend
were issued on February 1, 2008.



                                      8

<PAGE>
<PAGE>

On December 14, 2006, a ten percent (10%) stock dividend was declared to
shareholders of record on January 3, 2007. Shares representing this dividend
were issued on February 1, 2007.

On December 8, 2005, a five percent (5%) stock dividend was declared to
shareholders of record on January 3, 2006. Shares representing this dividend
were issued on February 1, 2006.

ITEM 6. SELECTED FINANCIAL DATA

This summary should be read in conjunction with the accompanying consolidated
financial statements and the notes thereto included in Item 8., "Financial
Statements and Supplementary Data", of this Annual Report on Form 10-K.

<TABLE>
                                      FIVE YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
                                           (Stated in thousands except for per share data)

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,                       2007              2006            2005               2004            2003
--------------------------------                       ----              ----            ----               ----            ----
<C>                                           <C>               <C>              <C>               <C>             <C>
Gross sales                                   $   5,279,653     $   5,028,827    $  4,304,187      $   4,093,462   $   3,813,272
Cash discounts                                      (21,352)          (19,684)        (16,144)           (13,909)        (10,820)
                                              --------------    --------------   -------------     --------------  --------------
NET SALES                                     $   5,258,301     $   5,009,143    $  4,288,043      $   4,079,553   $   3,802,452
GROSS MARGIN (A)                                  1,032,318           961,451         811,034            797,010         762,417
INCOME BEFORE CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING PRINCIPLE              $      83,421     $      57,388    $     22,398      $      14,018   $       8,465
Cumulative effect of change in accounting
  principle, net of $3,587 tax effect (B)                --                --          (5,634)                --              --
NET INCOME                                    $      83,421     $      57,388    $     16,764      $      14,018   $       8,465
Net income applicable to common stock (C)     $      83,421     $      57,388    $     16,764      $      14,017   $       8,463
Average common shares outstanding (D)                 7,888             7,730           7,680              7,912           8,306
Income per share of common stock
  before cumulative effect of change
  in accounting principle (D)                 $       10.58     $        7.42    $       2.91      $        1.77   $        1.02
Cumulative effect of change
  in accounting principle per share (D)                  --                --           (0.73)                --              --
NET INCOME PER SHARE OF COMMON STOCK (D)      $       10.58     $        7.42    $       2.18      $        1.77   $        1.02
CASH DIVIDENDS PER COMMON SHARE               $        2.00     $        2.00    $       2.00      $        2.00   $        2.00
Total assets                                  $   1,532,028     $   1,508,246    $  1,443,387      $   1,451,372   $   1,422,130
Long-term debt                                $     115,419     $     203,869    $    233,527      $     205,603   $     254,381
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A)  Reflects the reclassification of outgoing freight from cost of merchandise
     sold to selling, general and administrative expenses for all periods
     prior to 2005. Prior to reclassifying outgoing freight, gross margin in
     2004 and 2003 was $783,781 and $734,466, respectively.

(B)  2005 results reflect the adoption of Financial Accounting Standards Board
     (FASB) Interpretation No. 46, "Consolidation of Variable Interest
     Entities - an interpretation of ARB No. 51" (FIN 46), and its subsequent
     revision FIN 46R.

(C)  Income applicable to common stock reflects net income less preferred
     stock dividends.

(D)  All periods adjusted for the declaration of a twenty percent (20%) stock
     dividend declared in December 2007, a ten percent (10%) stock dividend
     declared in December 2006, and a five percent (5%) stock dividend
     declared in December 2005. Prior to these adjustments, the average common
     shares outstanding for 2006, 2005, 2004, and 2003 were 6,442, 5,541,
     5,709, and 5,993, respectively.
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's Discussion and Analysis provides a narrative on the Company's
results of operations, financial condition, liquidity, and cash flows for the
three-year period ended December 31, 2007. This discussion should be read in
conjunction with the accompanying consolidated financial statements and the
notes to the consolidated financial statements included in Item 8., "Financial
Statements and Supplementary Data", of this Annual Report on Form 10-K.

BUSINESS OVERVIEW

The Company experienced moderate sales growth to a new historical high in
2007. This growth in revenue was achieved organically. Significant cash flows
from operations resulted from a record level of net income in 2007.

The Company benefited from positive, though slowing, general economic
conditions in North America in 2007. Growth in electrical market sales was
moderate, though negatively impacted by the continued decline in residential
construction


                                      9

<PAGE>
<PAGE>

throughout much of North America. Higher sales to the comm/data market
resulted from the Company's improved competitive performance in this market,
coupled with moderate growth in the overall comm/data market.

Strong cash flow from operations in 2007 resulted from a 45.4% increase in net
income. The Company funded its capital expenditures with operational cash
flow, while also substantially reducing long-term debt. Year-end cash balances
remained near historical highs.

Moderate growth in sales and continued profitability is expected for 2008.

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth certain information relating to the operations
of the Company stated in thousands of dollars and as a percentage of sales for
the years ended December 31, 2007, 2006, and 2005:

<TABLE>
<CAPTION>
                                              2007                           2006                            2005
                                              ----                           ----                            ----
                                     DOLLARS        PERCENT         Dollars       Percent            Dollars      Percent
                                     -------        -------         -------       -------            -------      -------
<C>                             <C>               <C>          <C>              <C>            <C>                <C>

NET SALES                       $  5,258,301          100.0%   $  5,009,143         100.0%     $   4,288,043        100.0%
 Cost of merchandise sold         (4,225,983)         (80.4)     (4,047,692)        (80.8)        (3,477,009)       (81.1)
-------------------------------------------------------------------------------------------------------------------------------
GROSS MARGIN                       1,032,318           19.6         961,451          19.2            811,034         18.9
 Selling, general and
   administrative expenses          (838,693)         (15.9)       (814,587)        (16.3)          (715,333)       (16.7)
 Depreciation and
   amortization                      (36,351)          (0.7)        (34,260)         (0.7)           (34,644)        (0.8)
 Other income, net                     4,513            0.1           9,418           0.2              3,732          0.1
-------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS               161,787            3.1         122,022           2.4             64,789          1.5
 Interest expense                    (17,080)          (0.3)        (23,019)         (0.5)           (26,470)        (0.6)
-------------------------------------------------------------------------------------------------------------------------------
 Income before provision
   for income taxes and
   cumulative effect of
   change in accounting
   principle                         144,707            2.8          99,003           1.9             38,319          0.9
-------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes           (61,286)          (1.2)        (41,615)         (0.8)           (15,921)        (0.4)
-------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE
  EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE                83,421            1.6          57,388           1.1             22,398          0.5
-------------------------------------------------------------------------------------------------------------------------------
Cumulative effect of change
   in accounting principle,
   net of tax                             --             --              --            --             (5,634)        (0.1)
-------------------------------------------------------------------------------------------------------------------------------
NET INCOME                      $     83,421            1.6%   $     57,388           1.1%     $      16,764          0.4%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


2007 COMPARED TO 2006

Net sales totaled $5,258,301 in 2007, compared to $5,009,143 last year, an
increase of $249,158, or 5.0%. Increases in net sales were recorded in both of
the primary market sectors in which the Company operates. Net sales to the
electrical market increased 3.8%, while net sales to the comm/data market rose
8.0% in 2007, compared to 2006.

Gross margin increased $70,867, or 7.4%, to $1,032,318 from $961,451, partly
due to higher net sales volumes in 2007 compared to 2006. In addition, the
Company's gross margin rate on net sales increased to 19.6% during 2007, up
from 19.2% in 2006, primarily due to the return to a more stable product cost
environment in 2007 and the Company's ongoing gross margin rate improvement
initiatives.

Selling, general and administrative expenses increased $24,106, or 3.0%, to
$838,693 in 2007 from $814,587 in 2006, mainly due to increased compensation
costs resulting from a modest increase in the number of employees, partially
offset by reduced employee benefit, bad debt, legal, and professional
expenses. Selling, general and administrative expenses as a percentage of
sales were 15.9% in 2007, compared to 16.3% in 2006.

Depreciation and amortization expenses in 2007 increased to $36,351 from
$34,260 in 2006. The increase was due to higher average balances of property,
at cost, and higher amortization expenses on capital leases.

Other income, net totaled $4,513 in 2007, compared to $9,418 in 2006. Other
income, net for 2007 included gains on the disposal of property of $1,483,
property impairment losses of $(1,727), and interest income and trade
receivable interest charges to customers of $4,757. Other income, net in 2006
included net gains on the disposal of property of $8,820 and a


                                      10

<PAGE>
<PAGE>

property impairment loss of $(2,575). Trade receivable interest charges to
customers and other interest income accounted for the remaining $3,173 of
other income, net for 2006.

Income from operations totaled $161,787 in 2007, an increase of $39,765, or
32.6%, from $122,022 in 2006. The increase was due to higher gross margin,
partially offset by higher selling, general and administrative expenses,
higher depreciation and amortization expenses, and lower other income, net.

Interest expense declined $5,939, or 25.8%, to $17,080 in 2007 from $23,019 in
2006. This reduction was mainly due to lower levels of outstanding short- and
long-term debt in 2007, compared to 2006.

The increase in gross margin, combined with increased selling, general and
administrative expenses, higher depreciation and amortization expenses, lower
other income, net, and lower interest expense, resulted in pre-tax earnings of
$144,707 for the year ended December 31, 2007, an increase of $45,704, or
46.2%, compared to the year ended December 31, 2006.

The Company's total provision for income taxes increased $19,671 to $61,286
for the year ended December 31, 2007 as a result of higher pre-tax earnings.
The Company's effective tax rate increased to 42.4% for the year ended
December 31, 2007, up from 42.0% in 2006. The 2007 and 2006 effective tax
rates were higher than the 35.0% U.S. federal statutory rate primarily due to
state and local income taxes.

Net income for 2007 increased $26,033, or 45.4%, to $83,421 in 2007 from
$57,388 in 2006.

2006 COMPARED TO 2005

Net sales totaled $5,009,143 in 2006, compared to $4,288,043 in 2005, an
increase of $721,100, or 16.8%. Significant increases in net sales were
recorded in both of the primary market sectors in which the Company operates.
Net sales to the electrical market increased 16.6%, while net sales to the
comm/data market rose 17.0% in 2006, compared to 2005.

The increase in net sales was largely attributable to the Company's improved
competitive performance and positive general economic conditions in North
America during 2006. Significant inflation in the price of copper-based
products, mainly wire and cable, also positively impacted net sales.
Electrical market net sales were particularly strong in the construction
sector. Growth in the overall comm/data market accelerated in 2006 and,
coupled with the Company's improved penetration of this market, resulted in
higher net sales to comm/data customers.

Gross margin increased $150,417, or 18.5%, due to the higher net sales volume
in 2006, compared to 2005. The Company's gross margin rate on net sales
increased to 19.2% during 2006, up from 18.9% in 2005.

Selling, general and administrative expenses increased $99,254, or 13.9%, to
$814,587 in 2006 from $715,333 in 2005. Selling, general and administrative
expenses as a percentage of sales were 16.3% in 2006, compared to 16.7% in
2005. The increase was mainly due to increased employee compensation and
benefit expenses, including incentive compensation, totaling approximately
$92,000.

Depreciation and amortization expenses in 2006 decreased slightly to $34,260
from $34,644 in 2005, mainly due to lower amortization on capital leases.

Other income, net of $9,418 in 2006 included net gains on the disposal of
property of $8,820 and property impairment losses of $(2,575). Trade
receivable interest charges to customers and other interest income accounted
for the remaining $3,173 of other income, net in 2006. Other income, net in
2005 included net gains on the disposal of property of $1,818 and trade
receivable interest charges to customers of $1,124.

Income from operations totaled $122,022 in 2006, an increase of $57,233, or
88.3%, from $64,789 in 2005. The increase was due to higher gross margin and
other income, net, and lower depreciation and amortization expenses, partially
offset by higher selling, general and administrative expenses.

Interest expense declined $3,451, or 13.0%, to $23,019 in 2006 from $26,470 in
2005. This reduction was mainly due to lower levels of outstanding short- and
long-term debt.

The combination of increased gross margin, other income, net, and selling,
general and administrative expenses, coupled with lower depreciation and
amortization expenses and lower interest expense, resulted in pre-tax
earnings of $99,003 for the year ended December 31, 2006, an increase of
$60,684, or 158.4%, compared to the year ended December 31, 2005.

The Company's total provision for income taxes increased $25,694 to $41,615
for the year ended December 31, 2006 as a result of higher pre-tax earnings.
The Company's effective tax rate increased to 42.0% for the year ended
December 31, 2006, up from 41.5% in 2005. The 2006 and 2005 effective tax
rates were higher than the 35.0% U.S. federal statutory rate primarily due to
state and local income taxes.



                                      11

<PAGE>
<PAGE>

Net income for 2006 increased $40,624, or 242.3%, to $57,388 from $16,764 in
2005. A portion of the increase was attributable to the cumulative effect of
change in accounting principle of $(5,634), net of income tax effect of
$3,587, recorded by the Company in 2005 as a consequence of the adoption of
FIN 46, and its subsequent revision, FIN 46R.

FINANCIAL CONDITION AND LIQUIDITY

The Company has historically funded its capital requirements using cash flow
provided by operations, stock issuances to its employees, and long-term debt.

<TABLE>
<CAPTION>
CASH FLOW INFORMATION
FOR THE YEARS ENDED DECEMBER 31,                                             2007                2006               2005
----------------------------------                                           ----                ----               ----
<C>                                                                    <C>                 <C>                <C>
   Net cash flow provided by operations                                $   94,430          $  160,319         $   77,049
   Capital expenditures                                                   (27,123)            (45,494)           (30,233)
   Net cash flow used by investing activities                             (15,668)            (32,897)            (4,308)
   Net cash flow used by financing activities                             (64,805)            (84,286)           (73,628)
</TABLE>

OPERATING ACTIVITIES

Cash provided by operations was $94,430 in 2007, compared to $160,319 in 2006
and $77,049 in 2005. The decrease in cash flow from operations in 2007
compared to 2006 was primarily the result of increased income before the
cumulative effect of change in accounting principle of $83,421 and an increase
in trade accounts payable of $11,627, partially offset by an increase in trade
receivables of $4,679, an increase in merchandise inventory of $11,597, and a
decrease in other current and non-current liabilities totaling $32,565. The
increase in trade receivables resulted primarily from the increase in sales
experienced by the Company. The average number of days of sales in trade
receivables at December 31, 2007 decreased moderately from the average number
of days at December 31, 2006. Merchandise inventory levels were higher at
December 31, 2007 when compared to December 31, 2006. Average inventory
turnover improved modestly when comparing December 31, 2007 to December 31,
2006. Current assets exceeded current liabilities by $394,291 at December 31,
2007, down $21,174 from $415,465 at December 31, 2006.

INVESTING ACTIVITIES

Capital expenditures for property were $27,123, $45,494, and $30,233, and
proceeds from the disposal of property were $10,912, $11,887, and $25,036, for
the years ended December 31, 2007, 2006, and 2005, respectively. The proceeds
received resulted primarily from the sale of real property. Cash received from
the Company's investment in joint venture was $543, $710, and $889, for the
years ended December 31, 2007, 2006, and 2005, respectively, and relates to
its investment in Graybar Financial Services.

FINANCING ACTIVITIES

The excess of cash provided by operations over investing activities, as well
as a $5,534 increase in short-term borrowings, enabled the Company to reduce
long-term debt (including current portion) by $60,286 and capital lease
obligations by $422. Reductions in short- and long-term debt (including
current portion) during 2006 totaled $74,128.

Cash provided by the sale of common stock amounted to $9,890, $7,401, and
$5,215, and purchases of treasury stock were $6,436, $6,123, and $5,803 for
the years ended December 31, 2007, 2006, and 2005, respectively. Dividends
paid were $12,444, $11,436, and $11,118 for the years ended December 31, 2007,
2006, and 2005, respectively.

Liquidity
---------

The Company had a revolving credit agreement with a group of banks at
an interest rate based on the London Interbank Offered Rate (LIBOR) that
consisted of an unsecured $150,000, 364-day facility that was to have expired
in July 2007. Prior to expiration, the Company executed a new, unsecured
LIBOR-based revolving credit agreement that consists of a $200,000 five-year
facility expiring in May 2012. There were no amounts outstanding under the
credit agreements at December 31, 2007 and 2006.

At December 31, 2007 and 2006, the Company had a $215,000 trade receivable
securitization program that expires in October 2009. The trade receivable
securitization program provides for the sale of certain of the Company's trade
receivables on a revolving basis to Graybar Commerce Corporation (GCC), a
wholly-owned, bankruptcy-remote, special-purpose subsidiary. GCC sells an
undivided interest in the trade receivables to an unrelated multi-seller
commercial paper conduit. The Company accounts for the securitization as an
on-balance sheet financing arrangement because the Company has maintained
effective control of the trade receivables through a call option that gives
GCC the unilateral right to repurchase the undivided interests. Accordingly,
the trade receivables and related debt are included in the accompanying
consolidated balance sheets. GCC has granted a security interest in its trade
receivables to the commercial paper conduit.


                                      12

<PAGE>
<PAGE>

There were no borrowings outstanding under the trade receivable securitization
program at December 31, 2007 and 2006.

At December 31, 2007, the Company had available to it unused lines of credit
amounting to $436,575 compared to $377,076 at December 31, 2006. These lines
are available to meet the short-term cash requirements of the Company and
certain committed lines of credit have annual fees of up to 50 basis points
(0.5%) of the committed lines of credit.

Short-term borrowings outstanding during 2007 and 2006 ranged from a minimum
of $14,027 and $13,667 to a maximum of $49,560 and $140,924, respectively. The
average daily amount of borrowings outstanding under short-term credit
agreements during 2007 and 2006 amounted to approximately $20,000 and $82,000
at weighted-average interest rates of 5.57% and 5.31%, respectively. The
weighted average interest rate for amounts outstanding at December 31, 2007
was 6.00%.

The credit agreement, the trade receivable securitization program, and certain
other note agreements have various covenants that limit the Company's ability
to make investments, pay dividends, incur debt, dispose of property, and issue
equity securities. The Company is also required to maintain certain financial
ratios as defined in the agreements. The Company was in compliance with all
covenants as of December 31, 2007 and 2006.

The Company had two lease arrangements with an independent lessor, which
provided $58,777 of financing for eight of the Company's distribution
facilities. The agreements carried five-year terms expiring July 2008 and
December 2009. The Company terminated the lease arrangement expiring in
December 2009 on September 28, 2007 by exercising its purchase option. The
independent lessor conveyed clear title to three distribution facilities to
the Company in exchange for a cash payment of $30,479, which included the
outstanding principal owed on the three properties totaling $30,057, unpaid
interest, and other closing costs.

The Company has the option, with the consent of the lessor's lenders, to renew
the remaining lease for an additional five-year term or to purchase the
property for a price including the outstanding lease balance. If the Company
elects not to renew the lease or purchase the property, or such lenders refuse
to consent to a renewal, the Company may elect to remarket the property and
arrange for its sale to a third party.

The financing structure used in this lease arrangement qualifies as a silo of
a variable interest entity and therefore is accounted for under FIN 46. As of
December 31, 2007, the consolidated silo included in the Company's financial
statements has a net property balance of $17,203, long-term debt of $27,715,
and a minority interest of $1,005. At December 31, 2006, the consolidated
silos included in the Company's financial statements had a net property
balance of $42,536, long-term debt of $56,720, and a minority interest of
$2,057.

Under the terms of the remaining lease arrangement, the Company's maximum
exposure to loss at December 31, 2007, in respect of the properties subject to
the lease arrangement, is $24,412, the amount guaranteed by the Company as the
residual fair value of the property.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The Company has the following contractual obligations as of December 31, 2007:

<TABLE>
<CAPTION>
                                                                                  2009                2011               2013
                                                                                   AND                 AND                AND
                                           TOTAL               2008               2010                2012             BEYOND
                                           -----               ----               ----                ----             ------
<C>                                  <C>                <C>                <C>                 <C>                <C>
Long-term debt obligations           $   200,990        $    70,961        $    79,085         $    43,313        $     7,631
Capital lease obligations                  2,299                563              1,126                 610                 --
Operating lease obligations               97,206             26,964             33,446              14,507             22,289
Purchase obligations                     623,827            623,827                 --                  --                 --
--------------------                 -----------        -----------        -----------         -----------        -----------
         Total                       $   924,322        $   722,315        $   113,657         $    58,430        $    29,920
</TABLE>

Long-term debt and capital lease obligations consist of both principal and
interest payments.

Purchase obligations consist primarily of open inventory purchase orders made
in the normal course of business. Many of these obligations may be cancelled
with limited or no financial penalties.

The table above does not include $53,738 of accrued, unfunded pension cost,
$91,927 of accrued, unfunded employment-related benefits cost, of which
$84,436 is related to the Company's postretirement benefit plan, and $6,945 in
contingent payments for uncertain tax positions because it is not certain when
these obligations will be settled or paid.


                                      13

<PAGE>
<PAGE>

The Company also expects to make contributions totaling approximately $33,300
to its defined benefit pension plan during 2008 that are not included in the
table.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States, which require
the Company to make estimates and assumptions (see Note 1 in notes to the
consolidated financial statements located in Item 8., "Financial Statements
and Supplementary Data", of this Annual Report on Form 10-K). The Company
believes the following accounting policies have the potential to have a more
significant impact on its financial statements either because of the
significance of the financial statement item to which they relate or because
they involve a higher degree of judgment and complexity.

Revenue Recognition
-------------------

Revenue is recognized when evidence of a customer arrangement exists, prices
are fixed and determinable, and product title, ownership and risk of loss
transfers to the customer. Revenues recognized are primarily for product
sales, but also include freight and handling charges. The Company's standard
shipping terms are FOB shipping point, under which, product title passes to
the customer at the time of shipment. The Company does, however, fulfill some
customer orders based on shipping terms of FOB destination, whereby title
passes to the customer at the time of delivery. Revenue is reported net of all
taxes assessed by governmental authorities as a result of revenue-producing
transactions, primarily sales tax.

Allowance for Doubtful Accounts
-------------------------------

The Company performs ongoing credit evaluations of its customers and a
significant portion of its trade receivables is secured by mechanic's lien or
payment bond rights. The Company maintains allowances to reflect the expected
uncollectibility of trade receivables based on past collection history, the
economic environment, and specific risks identified in the receivables
portfolio. Although actual credit losses have historically been within
management's expectations, additional allowances may be required if the
financial condition of the Company's customers were to deteriorate.

Income Taxes
------------

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes"
(SFAS 109). Under this standard, the Company determines its deferred tax
assets and liabilities based upon the difference between the financial
statement and tax bases of its assets and liabilities using enacted applicable
tax rates. The Company then assesses the likelihood that its deferred tax
assets will be recovered from future taxable income and to the extent it
believes that recovery is not likely, a valuation allowance is established.
Changes in the valuation allowance, when recorded, are included in the
provision for (benefit from) income taxes in its consolidated financial
statements.

The Company adopted the provisions of FASB Interpretation No. 48, "Accounting
for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109"
(FIN 48), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements in
accordance with SFAS 109, and prescribes a recognition threshold and
measurement process for financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. FIN 48 also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.

The Company classifies interest expense and penalties as part of its provision
for income taxes based upon applicable federal and state interest/underpayment
percentages. The Company has accrued $2,807 and $2,002 in interest and
penalties in its statement of financial position at December 31, 2007 and
2006, respectively. Interest was computed on the difference between the
provision for income taxes recognized in accordance with FIN 48 and the amount
of benefit previously taken or expected to be taken in the Company's federal,
state, and local income tax returns.

Merchandise Inventory
---------------------

The Company values its inventories at the lower of cost (determined using the
last-in, first-out (LIFO) cost method) or market. LIFO accounting is a method
of accounting that, compared with other inventory accounting methods,
generally provides better matching of current costs with current revenues. In
assessing the ultimate realization of inventories, the Company makes judgments
as to its return rights to suppliers and future demand requirements. If actual
future demand, market conditions, or supplier return provisions are less
favorable than those projected by management, additional inventory write-downs
may be required.

Pension Plan
------------

The Company's pension plan expense and obligations are determined based on the
selection of certain assumptions, the most significant of which are the
expected long-term rate of return on plan assets and the discount rate used to
discount plan liabilities. While management believes that the assumptions
selected by the Company are appropriate, differences in actual experience or
changes in assumptions may affect the Company's pension plan obligation and
future pension expense. For the years 2007 and 2006, the Company's expected
long-term rate of return on plan assets was 8.00%. The discount rate used to
discount plan liabilities was changed to 6.00% at December 31, 2007, up from
5.75% at December 31, 2006. The Company has elected to continue to use an
expected long-term rate of return on plan assets of 8.00% for 2008. The
Company expects 2008 pension expense to be approximately $22,000.



                                      14

<PAGE>
<PAGE>

Supplier Volume Incentives
--------------------------

The Company's agreements with many of its suppliers provide for the Company to
earn volume incentives based on purchases during the agreement period. These
agreements typically provide for the incentives to be paid in arrears. The
Company estimates amounts to be received from suppliers at the end of each
reporting period based on the earnout level that the Company believes is
probable of being achieved. The Company records the incentive ratably over the
year as a reduction of cost of merchandise sold as the related inventory is
sold. Changes in the estimated amount of incentives are treated as changes in
estimate and are recognized using a cumulative catch-up adjustment. Actual
amounts of incentives received have historically been within management's
estimates. In the event that the operating performance of the Company's
suppliers were to decline, however, there can be no assurance that amounts
earned would be paid or that the volume incentives would continue to be
included in future agreements.

NEW ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business
Combinations" (SFAS 141R). This statement replaces FASB Statement No. 141,
"Business Combinations", and will change the accounting treatment and
disclosure for certain specific items in a business combination. Under SFAS
141R, an acquiring entity will be required to recognize all the assets
acquired and liabilities assumed in a transaction at the acquisition-date fair
value with limited exceptions. SFAS 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2008.
Accordingly, if the Company were to engage in a business combination, it will
be recorded and disclosed following existing U.S. generally accepted
accounting principles until January 1, 2009. SFAS 141R may have an impact on
the accounting for business combinations, if any, the Company may consummate
after SFAS 141R is adopted.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements - an Amendment of ARB No. 51" (SFAS 160).
SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 is effective for fiscal years beginning on or after
December 15, 2008. The Company has not completed its evaluation of the
potential impact of the adoption of SFAS 160 on its consolidated financial
statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115" (SFAS 159), which permits an entity to measure certain
financial assets and liabilities at fair value. The statement's objective is
to improve financial reporting by allowing entities to mitigate volatility in
reported earnings caused by the measurement of related assets and liabilities
using different attributes, without having to apply complex hedge accounting
provisions. This statement became effective for fiscal years beginning after
November 15, 2007 and is to be applied prospectively. SFAS 159 is not expected
to have a material effect on the Company's financial statements for the fiscal
year ending December 31, 2008.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132R" (SFAS 158). This statement requires that
a company recognize a net liability or asset, to report the funded status of
their defined benefit pension and other postretirement plans on its balance
sheet, and measure benefit plan assets and benefit obligations as of the
Company's balance sheet date. The portion of this statement related to
recognizing a net liability or asset for the funded status became effective
for fiscal years ending after June 15, 2007 for employers, such as the
Company, that do not issue publicly-traded securities. Upon the adoption of
SFAS 158 at December 31, 2007, the Company recorded an after-tax charge to
accumulated other comprehensive loss of $73,707. The requirements related to
the measurement date of the assets and benefit obligations will be effective
for fiscal years ending after December 15, 2008. The Company currently uses
its year-end balance sheet date as its measurement date as required by SFAS
158.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
(SFAS 157). This statement does not require any new fair value measurements,
but rather, provides enhanced guidance to other pronouncements that require
or permit assets or liabilities to be measured at fair value. The changes to
current practice resulting from the application of this statement relate to
the definition of fair value, the methods used to estimate fair value, and the
requirement for expanded disclosures about estimates of fair value. This
statement becomes effective for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years. Subsequent to issuance of SFAS
157, the FASB issued Staff Position No. FAS 157-2, "Effective Date of FASB
Statement No. 157" (FSP 157-2). FSP 157-2 delays the effective date of SFAS
157 for nonfinancial assets and nonfinancial liabilities, except for items
that are recognized or disclosed at fair value in the financial statements on
a recurring basis (at least annually) for fiscal years beginning after
November 15, 2008.

In addition, the FASB issued Staff Position No. 157-1, "Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13" (FSP 157-1), on February 14, 2008. FSP 157-1
amends SFAS 157 to exclude FASB Statement No. 13, "Accounting for Leases" (SFAS
13), and other accounting pronouncements that address fair value measurements
for purposes of lease classification or measurement under SFAS 13. The Company
does not expect that its adoption of


                                      15

<PAGE>
<PAGE>

SFAS 157, FSP 157-2, the deferral related to nonfinancial assets and
nonfinancial liabilities, and FSP 157-1, the amendment regarding applicability
to leases, will have a material effect on its financial statements.

The FASB issued FIN 48, in June 2006. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with SFAS 109. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. It also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition.

The Company adopted the provisions of FIN 48 on January 1, 2007. Under FIN 48,
the Company had $6,980 of unrecognized tax benefits recorded in its statement
of financial position as of January 1, 2007. Of this amount, $406 was recorded
as a reduction to the January 1, 2007 balance of retained earnings. The
Company's unrecognized tax benefits of $6,945 as of December 31, 2007 are
uncertain tax positions that would impact the Company's effective tax rate if
recognized.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's interest expense is sensitive to changes in the general level of
interest rates. Changes in interest rates have different impacts on the
fixed-rate and variable-rate portions of the Company's debt portfolio. A
change in interest rates on the fixed-rate portion of the debt portfolio
impacts the fair value of the financial instrument but has no impact on
interest incurred or cash flows. A change in interest rates on the
variable-rate portion of the debt portfolio impacts the interest incurred and
cash flows but does not impact the fair value of the financial instrument. To
mitigate the cash flow impact of interest rate fluctuations, the Company
generally maintains a significant portion of its debt as fixed rate in nature
by borrowing on a long-term basis.

Based on $47,148 in variable rate debt outstanding at December 31, 2007, a one
percent (1%) increase in interest rates would increase the Company's interest
expense by $471 per annum.

The following table provides information about financial instruments that are
sensitive to changes in interest rates. The table presents principal cash
flows stated in thousands and related weighted-average interest rates by
expected maturity dates.

<TABLE>
<CAPTION>
                                                                                                                              FAIR
                                                                                                  2013                      MARKET
                                                                                                   AND                       VALUE
DEBT INSTRUMENTS                   2008        2009         2010        2011         2012       BEYOND         TOTAL      12/31/07
----------------                   ----        ----         ----        ----         ----       ------         -----      --------
<C>                           <C>            <C>         <C>          <C>         <C>           <C>         <C>          <C>
Long-term debt principal
payments by expected
maturity dates

  Fixed-rate debt             $  32,284      32,284       35,379      29,063       11,137        7,386      $147,533     $ 136,529
  Weighted average
    interest rate                 7.14%       7.14%        7.03%       7.12%        6.61%        6.62%

  Variable-rate debt          $  27,777          62           62          46           --           --      $ 27,947     $  27,947
  Weighted average
    interest rate                 6.39%       6.75%        6.75%       6.75%           --           --

Short-term variable-
    rate borrowings           $  19,201          --           --          --           --           --      $ 19,201     $  19,201
  Weighted average
    interest rate                 6.00%          --           --          --           --           --
</TABLE>

The fair value of long-term debt is estimated by discounting cash flows using
current borrowing rates available for debt of similar maturities.

The Company entered into a swap agreement to manage interest rates on amounts
due under a leveraged lease arrangement in September 2000. The swap agreement,
which expires in July 2013, is based on a notional amount of $28,720. The
agreement calls for an exchange of interest payments, with the Company being
paid a LIBOR floating rate and paying a fixed rate of 6.92%. There is no
exchange of the notional amount upon which the payments are based. The fair
value of the swap agreement at December 31, 2007 was approximately $(4,072).
The negative value of this agreement


                                      16

<PAGE>
<PAGE>

reflects the current low level of interest rates compared to interest rates in
effect at September 2000, when the agreement was entered into.

FOREIGN EXCHANGE RATE RISK

The Company conducts business in Canada and Mexico. Exposure to foreign
currency exchange rate fluctuations is not material.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS:

Management's Discussion and Analysis of Financial Condition and Results of
Operations as of and for the year ended December 31, 2007, included in our
Annual Report on Form 10-K for such period as filed with the U.S. Securities
and Exchange Commission, should be read in conjunction with our accompanying
audited consolidated financial statements and the notes thereto.

This document contains forward-looking statements (as such term is defined in
the federal securities laws) and is based on current expectations, which
involve risks and uncertainties. The results herein are not necessarily
indicative of the results to be expected in any future periods. Actual results
and the timing of events could differ materially from the forward-looking
statements as a result of certain factors, a number of which are outlined in
Item 1A., "Risk Factors", of this Annual Report on Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




               [THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]





                                      17

<PAGE>
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

                          [ERNST & YOUNG letterhead]



The Board of Directors and Shareholders
Graybar Electric Company, Inc.

We have audited the accompanying consolidated balance sheets of Graybar
Electric Company, Inc. (the Company) as of December 31, 2007 and 2006, and the
related consolidated statements of income, changes in shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
2007. 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 in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to
perform an audit of the Company's internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Graybar Electric
Company, Inc. at December 31, 2007 and 2006, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2007, in conformity with U.S. generally accepted accounting
principles.

As discussed in Note 2 to the consolidated financial statements, on January 1,
2007, the Company changed its method of accounting for uncertain tax
positions. As discussed in Note 5 to the consolidated financial statements, on
December 31, 2007, the Company changed its method of accounting for defined
pension benefit and other postretirement plans.


                                            /s/ Ernst & Young LLP



St. Louis, Missouri
February 22, 2008





                                      18

<PAGE>
<PAGE>

<TABLE>
                                        GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF INCOME
                                        (Stated in thousands except for per share data)

<CAPTION>
For the Years Ended December 31,                                                     2007             2006               2005
------------------------------------------------------------------------------------------------------------------------------
<C>                                                                         <C>              <C>                <C>
NET SALES                                                                   $   5,258,301    $   5,009,143      $   4,288,043
Cost of merchandise sold                                                       (4,225,983)      (4,047,692)        (3,477,009)
------------------------------------------------------------------------------------------------------------------------------
        GROSS MARGIN                                                            1,032,318          961,451            811,034
Selling, general and administrative expenses                                     (838,693)        (814,587)          (715,333)
Depreciation and amortization                                                     (36,351)         (34,260)           (34,644)
Other income, net                                                                   4,513            9,418              3,732
------------------------------------------------------------------------------------------------------------------------------
        INCOME FROM OPERATIONS                                                    161,787          122,022             64,789
Interest expense                                                                  (17,080)         (23,019)           (26,470)
------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes and cumulative effect
  of change in accounting principle                                               144,707           99,003             38,319
------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes:
   Current                                                                        (41,922)         (47,563)            (3,885)
   Deferred                                                                       (19,364)           5,948            (12,036)
------------------------------------------------------------------------------------------------------------------------------
         Total provision for income taxes                                         (61,286)         (41,615)           (15,921)
------------------------------------------------------------------------------------------------------------------------------
 INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
   PRINCIPLE                                                                       83,421           57,388             22,398
------------------------------------------------------------------------------------------------------------------------------
 Cumulative effect of change in accounting principle, net of
    $3,587 tax effect                                                                  --               --             (5,634)
------------------------------------------------------------------------------------------------------------------------------
        NET INCOME                                                          $      83,421    $      57,388      $      16,764
------------------------------------------------------------------------------------------------------------------------------
Income per share of common stock before cumulative effect
   of change in accounting principle  (A)                                   $       10.58    $        7.42      $        2.91
------------------------------------------------------------------------------------------------------------------------------
Cumulative effect of change in accounting principle per share (A)                      --               --              (0.73)
------------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE OF COMMON STOCK (A)                                    $       10.58    $        7.42      $        2.18
------------------------------------------------------------------------------------------------------------------------------

<FN>
(A)  Adjusted for the declaration of a twenty percent (20%) stock dividend in
     2007. Prior to the adjustment, the average common shares outstanding were
     6,442 and 6,400 for the years ended December 31, 2006 and 2005,
     respectively.
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.



                              19

<PAGE>
<PAGE>



<TABLE>
                                        GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                                                  CONSOLIDATED BALANCE SHEETS
                                          (Stated in thousands except for share data)

<CAPTION>
DECEMBER 31,                                                                                        2007                2006
-------------------------------------------------------------------------------------------------------------------------------
<C>                                                                                        <C>                 <C>
ASSETS
-------------------------------------------------------------------------------------------------------------------------------
     CURRENT ASSETS
       Cash and cash equivalents                                                           $      66,167       $      52,210
       Trade receivables (less allowances of $8,248 and $8,522, respectively)                    702,869             698,190
       Merchandise inventory                                                                     397,076             385,479
       Other current assets                                                                       20,135              19,302
-------------------------------------------------------------------------------------------------------------------------------
           Total Current Assets                                                                1,186,247           1,155,181
-------------------------------------------------------------------------------------------------------------------------------
     PROPERTY, AT COST
       Land                                                                                       42,633              44,135
       Buildings                                                                                 310,120             311,148
       Furniture and fixtures                                                                    162,445             158,757
       Software                                                                                   76,906              76,906
       Capital leases                                                                              2,413               2,413
--------------------------------------------------------------------------------------------------------------------------------
           Total Property, at cost                                                               594,517             593,359
           Less - accumulated depreciation and amortization                                     (286,549)           (267,013)
--------------------------------------------------------------------------------------------------------------------------------
           Net Property                                                                          307,968             326,346
     OTHER NON-CURRENT ASSETS                                                                     37,813              26,719
--------------------------------------------------------------------------------------------------------------------------------
           TOTAL ASSETS                                                                    $   1,532,028         $ 1,508,246
--------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------------------------------------------------------
     CURRENT LIABILITIES
       Short-term borrowings                                                               $      19,201       $      13,667
       Current portion of long-term debt                                                          60,061              32,319
       Trade accounts payable                                                                    515,035             503,408
       Accrued payroll and benefit costs                                                         117,283             112,549
       Other accrued taxes                                                                        12,766              13,010
       Dividends payable                                                                           7,327               6,494
       Other current liabilities                                                                  60,283              58,269
--------------------------------------------------------------------------------------------------------------------------------
           Total Current Liabilities                                                             791,956             739,716
     POSTRETIREMENT BENEFITS LIABILITY                                                            75,436              74,447
     PENSION LIABILITY                                                                            52,938              43,449
     LONG-TERM DEBT                                                                              115,419             203,869
     OTHER NON-CURRENT LIABILITIES                                                                16,662               4,042
--------------------------------------------------------------------------------------------------------------------------------
           TOTAL LIABILITIES                                                                   1,052,411           1,065,523
--------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                   SHARES AT DECEMBER 31,
                                                               -----------------------------
     CAPITAL STOCK                                                    2007              2006
                                                                      ----              ----
<C>                                                             <C>               <C>             <C>                 <C>
       Common, stated value $20.00 per share
       Authorized                                               15,000,000        15,000,000
                                                                ----------        ----------
       Issued to voting trustees                                 6,313,724         6,158,008
       Issued to shareholders                                    1,652,392           291,703
       In treasury, at cost                                        (34,481)          (10,722)
-----------------------------------------------------------------------------------------------------------------------------------
           Outstanding Common Stock                              7,931,635         6,438,989            158,633             128,780
-----------------------------------------------------------------------------------------------------------------------------------
       Common shares subscribed                                    557,704           506,662             11,154              10,133
       Less subscriptions receivable                              (557,704)         (506,662)           (11,154)            (10,133)
-----------------------------------------------------------------------------------------------------------------------------------
     RETAINED EARNINGS                                                                                  386,217             342,878
     ACCUMULATED OTHER COMPREHENSIVE LOSS                                                               (65,233)            (28,935)
-----------------------------------------------------------------------------------------------------------------------------------
           TOTAL SHAREHOLDERS' EQUITY                                                                   479,617             442,723
-----------------------------------------------------------------------------------------------------------------------------------
           TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                             $   1,532,028          $1,508,246
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.



                                     20

<PAGE>
<PAGE>

<TABLE>
                                        GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (Stated in thousands)

-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                                                            2007            2006             2005
-----------------------------------------------------------------------------------------------------------------------------------
<C>                                                                                     <C>             <C>              <C>
CASH FLOWS FROM OPERATIONS
    Income before cumulative effect of change in accounting principle                    $83,421         $57,388          $22,398
-----------------------------------------------------------------------------------------------------------------------------------
    Adjustments to reconcile income before cumulative effect of change in
     accounting principle to cash provided by operations:
       Depreciation and amortization                                                      36,351          34,260           34,644
       Deferred income taxes                                                              19,364          (5,948)          12,036
       Net gains on disposal of property                                                  (1,483)         (8,820)          (1,818)
       Losses on impairment of property                                                    1,727           2,575               --
       Changes in assets and liabilities:
         Trade receivables                                                                (4,679)        (64,210)          (9,252)
         Merchandise inventory                                                           (11,597)         42,648           45,085
         Other current assets                                                               (833)         (3,715)          10,792
         Other non-current assets                                                        (11,637)          9,341           (8,484)
         Trade accounts payable                                                           11,627          42,860          (29,635)
         Accrued payroll and benefit costs                                                 4,734          45,838            2,036
         Other current liabilities                                                       (12,817)         12,513           (7,494)
         Other non-current liabilities                                                   (19,748)         (4,411)           6,741
-----------------------------------------------------------------------------------------------------------------------------------
       Total adjustments to income before cumulative effect of change
         in accounting principle                                                          11,009         102,931           54,651
-----------------------------------------------------------------------------------------------------------------------------------
    Net cash flow provided by operations                                                  94,430         160,319           77,049
-----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
       Proceeds from disposal of property                                                 10,912          11,887           25,036
       Capital expenditures for property                                                 (27,123)        (45,494)         (30,233)
       Investment in joint venture                                                           543             710              889
-----------------------------------------------------------------------------------------------------------------------------------
    Net cash flow used by investing activities                                           (15,668)        (32,897)          (4,308)
-----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
       Net increase (decrease) in short-term borrowings                                    5,534         (42,243)         (11,847)
       Repayment of long-term debt                                                       (60,927)        (31,885)         (48,803)
       Principal payments under capital leases                                              (422)             --           (1,272)
       Sale of common stock                                                                9,890           7,401            5,215
       Purchases of treasury stock                                                        (6,436)         (6,123)          (5,803)
       Dividends paid                                                                    (12,444)        (11,436)         (11,118)
-----------------------------------------------------------------------------------------------------------------------------------
    Net cash flow used by financing activities                                           (64,805)        (84,286)         (73,628)
-----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                                           13,957          43,136             (887)
-----------------------------------------------------------------------------------------------------------------------------------
CASH, BEGINNING OF YEAR                                                                   52,210           9,074            9,961
-----------------------------------------------------------------------------------------------------------------------------------
CASH, END OF YEAR                                                                        $66,167         $52,210           $9,074

SUPPLEMENTAL CASH FLOW INFORMATION:
       CASH PAID FOR INTEREST                                                            $17,583         $23,644          $26,669
       CASH PAID FOR INCOME TAXES                                                        $57,472         $40,114          $13,767
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.




                                     21

<PAGE>
<PAGE>



<TABLE>
                                    GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                 (Stated in thousands)

<CAPTION>
                                                   COMMON         RETAINED       ACCUMULATED OTHER
                                                    STOCK         EARNINGS      COMPREHENSIVE LOSS               TOTAL
                                                    -----         --------           -------------               -----
<C>                                            <C>              <C>                    <C>                <C>
BALANCE, DECEMBER 31, 2004                     $  110,967       $  308,780             $  (27,383)        $    392,364
                                               ==========       ===========            ===========        =============
Net income                                                          16,764                                      16,764
Currency translation adjustments                                                            1,191                1,191
Unrealized gain from interest
   rate swap (net of tax of $587)                                                             935                  935
Minimum pension liability (net of
   tax of $11,518)                                                                        (18,091)             (18,091)
                                                                                                          -------------
Comprehensive income                                                                                               799
                                                                                                          -------------
Stock issued                                        5,215                                                        5,215
Stock repurchased                                  (5,803)                                                      (5,803)
Dividends declared                                  5,469          (16,609)                                    (11,140)
                                               -----------      -----------            -----------        -------------
BALANCE, DECEMBER 31, 2005                     $  115,848       $  308,935             $  (43,348)        $    381,435
                                               ===========      ===========            ===========        =============
Net income                                                          57,388                                      57,388
Currency translation adjustments                                                             (317)                (317)
Unrealized gain from interest
   rate swap (net of tax of $338)                                                             533                  533
Minimum pension liability (net of
   tax of $9,348)                                                                          14,197               14,197
                                                                                                          -------------
Comprehensive income                                                                                            71,801
                                                                                                          -------------
Stock issued                                        7,401                                                        7,401
Stock repurchased                                  (6,123)                                                      (6,123)
Dividends declared                                 11,654          (23,445)                                    (11,791)
                                               -----------      -----------            -----------        -------------
BALANCE, DECEMBER 31, 2006                     $  128,780       $  342,878             $  (28,935)        $    442,723
                                               ===========      ===========            ===========        =============
Cumulative impact of change in
   accounting for uncertainties in
   income taxes  (Note 2)                                             (406)                                       (406)
                                               -----------      -----------            -----------        -------------
January 1, 2007, as adjusted                      128,780          342,472                (28,935)             442,317
                                               -----------      -----------            -----------        -------------
Net income                                                          83,421                                      83,421
Currency translation adjustments                                                            6,699                6,699
Unrealized loss from interest
   rate swap (net of tax of $355)                                                            (557)                (557)
Minimum pension liability (net of
   tax of $19,599)                                                                         31,267               31,267
                                                                                        ----------        -------------
Comprehensive income                                                                                           120,830
                                                                                                          -------------
Adoption of SFAS 158 (net of tax of
   $46,927) (Note 5)                                                                      (73,707)             (73,707)
Stock issued                                        9,890                                                        9,890
Stock repurchased                                  (6,436)                                                      (6,436)
Dividends declared                                 26,399          (39,676)                                    (13,277)
                                               -----------      -----------             -----------        ------------
BALANCE, DECEMBER 31, 2007                     $  158,633       $  386,217              $ (65,233)         $   479,617
                                               ===========      ===========             ===========        ============
</TABLE>


The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.



                                     22

<PAGE>
<PAGE>

                GRAYBAR ELECTRIC COMPANY, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005

                  (Stated in thousands except per share data)


1/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Graybar Electric Company, Inc. ("Graybar" or the "Company") is a New York
Corporation, incorporated in 1925. The Company is engaged in the distribution
of electrical, telecommunications and networking products and the provision of
related supply chain management and logistics services, primarily to
construction contractors, industrial plants, telephone companies, power
utilities, federal, state and local governments, and commercial users in North
America. All products sold by the Company are purchased by the Company from
others. The Company's business activity is primarily with customers in the
United States. The Company also has subsidiary operations with distribution
facilities in Canada, Puerto Rico and Mexico.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Graybar Electric
Company, Inc. and its subsidiary companies. All material intercompany balances
and transactions have been eliminated. Certain reclassifications of prior year
amounts have been made to conform to the 2007 presentation.

REVENUE RECOGNITION

Revenue is recognized when evidence of a customer arrangement exists, prices
are fixed and determinable, and product title, ownership and risk of loss
transfers to the customer. Revenues recognized are primarily for product
sales, but also include freight and handling charges. The Company's standard
shipping terms are FOB shipping point, under which, product title passes to
the customer at the time of shipment. The Company does, however, fulfill some
customer orders based on shipping terms of FOB destination, whereby title
passes to the customer at the time of delivery. Revenue is reported net of all
taxes assessed by governmental authorities as a result of revenue-producing
transactions, primarily sales tax.

OUTGOING FREIGHT EXPENSES

The Company records certain outgoing freight expenses as a component of
selling, general and administrative expenses. These costs totaled $48,314,
$46,942, and $43,799 for the years ended December 31, 2007, 2006, and 2005,
respectively.

ESTIMATES

The preparation of financial statements in accordance with U.S. generally
accepted accounting principles (U.S. GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company accounts for cash on hand, deposits in banks, and other short-term,
highly liquid investments with an original maturity of three months or less as
cash and cash equivalents.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company performs ongoing credit evaluations of its customers and a
significant portion of its trade receivables is secured by mechanic's lien or
payment bond rights. The Company maintains allowances to reflect the expected
uncollectibility of trade receivables based on past collection history, the
economic environment, and specific risks identified in the receivables
portfolio. Although actual credit losses have historically been within
management's expectations, additional allowances may be required if the
financial condition of the Company's customers were to deteriorate.



                                      23

<PAGE>
<PAGE>

The following table summarizes the activity in the allowances for doubtful
accounts and cash discounts:

<TABLE>
<CAPTION>
                                                                     PROVISION
                                                BEGINNING           (CHARGED TO           WRITE-OFFS               ENDING
                                                BALANCE               INCOME)            (DEDUCTIONS)             BALANCE
                                                -------               -------            ------------             -------
<C>                                             <C>                 <C>                 <C>                     <C>
FOR THE YEAR ENDED DECEMBER 31, 2007
------------------------------------
Allowance for cash discounts                    $       1,305       $     21,352        $    (21,112)           $   1,545
Allowance for doubtful accounts                         7,217              4,287              (4,801)               6,703
                                                -------------       ------------        -------------           ---------
  Total                                         $       8,522       $     25,639        $    (25,913)           $   8,248
                                                                                                                =========

For the Year Ended December 31, 2006
------------------------------------
Allowance for cash discounts                    $       1,024       $     19,684        $    (19,403)           $   1,305
Allowance for doubtful accounts                         6,502              8,759              (8,044)               7,217
                                              ---------------       ------------        -------------           ---------
  Total                                         $       7,526       $     28,443        $    (27,447)           $   8,522
                                                                                                                =========

For the Year Ended December 31, 2005
------------------------------------
Allowance for cash discounts                    $         981       $     16,144        $    (16,101)           $   1,024
Allowance for doubtful accounts                         7,323              5,956              (6,777)               6,502
                                              ---------------   ----------------        -------------           ---------
  Total                                         $       8,304       $     22,100        $    (22,878)           $   7,526
                                                                                                                =========
</TABLE>

MERCHANDISE INVENTORY

The Company's inventory is stated at the lower of cost (determined using the
last-in, first-out (LIFO) cost method) or market. LIFO accounting is a method
of accounting that, compared with other inventory accounting methods,
generally provides better matching of current costs with current revenues. Had
the first-in, first-out (FIFO) method been used, inventory would have been
approximately $112,777 and $109,773 greater than reported under the LIFO
method at December 31, 2007 and 2006, respectively. The Company did not
liquidate any portion of previously created LIFO layers in 2007. In 2006 and
2005, the Company liquidated portions of previously created LIFO layers
resulting in decreases in cost of goods sold of $(10,176) and $(5,015),
respectively.

The Company makes provisions for obsolete or slow-moving inventories as
necessary to reflect reduction in inventory value. Reserves for excess and
obsolete inventories were $5,400 and $6,560 at December 31, 2007 and 2006,
respectively. The total net reserve expense related to excess and obsolete
inventories, included in cost of goods sold, was $(1,160), $2,900, and $2,060
for 2007, 2006, and 2005, respectively.

SUPPLIER VOLUME INCENTIVES

The Company's agreements with many of its suppliers provide for the Company to
earn volume incentives based on purchases during the agreement period. These
agreements typically provide for the incentives to be paid in arrears. The
Company estimates amounts to be received from suppliers at the end of each
reporting period based on the earnout level that the Company believes is
probable of being achieved. The Company records the incentive ratably over the
year as a reduction of cost of merchandise sold as the related inventory is
sold. Changes in the estimated amount of incentives are treated as changes in
estimate and are recognized using a cumulative catch-up adjustment. Actual
amounts of incentives received have historically been within management's
estimates. In the event that the operating performance of the Company's
suppliers were to decline, however, there can be no assurance that amounts
earned would be paid or that the volume incentives would continue to be
included in future agreements.

PROPERTY AND DEPRECIATION

The Company provides for depreciation and amortization using the straight-line
method over the following estimated useful lives of the assets:

<TABLE>
<CAPTION>
     CLASSIFICATION                                      ESTIMATED USEFUL LIFE
     --------------                                      ---------------------
     <C>                                                 <C>
     Buildings                                           42 years
     Permanent fixtures -- leased property               Over the shorter of the asset's life or the lease term
     Furniture, fixtures, equipment and software         4 to 14 years
     Capital leases                                      Over the shorter of the asset's life or the lease term
</TABLE>

Depreciation expense was $24,168, $23,088, and $21,977 in 2007, 2006, and
2005, respectively.

                                      24

<PAGE>
<PAGE>

At the time property is retired, or otherwise disposed of, the asset and
related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is credited or charged to other income, net.

Property under capital leases, consisting primarily of computer equipment, is
recorded in property with the corresponding obligations carried in long-term
debt. The amount capitalized is the present value at the beginning of the
lease term of the aggregate future minimum lease payments.

Maintenance and repairs are expensed as incurred. Major renewals and
betterments that extend the life of property are capitalized.

The Company capitalizes interest expense on major construction and development
projects while in progress. Interest capitalized in 2007, 2006, and 2005 was
$21, $144, and $47, respectively.

The Company capitalizes qualifying internal and external costs incurred to
develop or obtain software for internal use during the application development
stage. Costs incurred during the pre-application development and
post-implementation stages are expensed as incurred. The Company capitalized
$1,588 and $799 in 2007 and 2006, respectively, and the amount is recorded in
furniture and fixtures.

Unamortized software totaled $32,345 and $42,305 at December 31, 2007 and
2006, respectively. The estimated useful life of capitalized software is eight
years.

The Company had various properties listed for sale in 2007 and 2006. The net
book value of some of these properties exceeded the expected selling price
less estimated selling expenses. The Company determined that the expected
sales of these various properties met the recognition criteria for assets held
for sale as outlined in Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144). In accordance
therewith, the Company recorded impairment losses totaling $(1,727) and $(2,575)
to account for the expected losses on the sale of these properties for the
years ended December 31, 2007 and 2006, respectively. The impairment losses are
included in other income, net in the consolidated statements of income for the
years ended December 31, 2007 and 2006. The properties listed for sale in 2006
were sold in 2007 and as required by SFAS 144, the associated gain or loss
that resulted from the sale of those assets that was not previously recognized
was recognized as of the date of the sale. The remaining property listed for
sale at December 31, 2007 is expected to be sold within the year.

CREDIT RISK

Financial instruments that potentially expose the Company to concentrations of
credit risk consist primarily of trade receivables. The Company performs
ongoing credit evaluations of its customers and a significant portion of its
trade receivables is secured by mechanic's lien or payment bond rights. The
Company maintains allowances for potential credit losses and such losses
historically have been within management's expectations.

DERIVATIVE FINANCIAL INSTRUMENTS

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities",
as amended by SFAS No. 138 and SFAS No. 149, requires the Company to recognize
all derivative instruments on the balance sheet at fair value. The Company has
entered into an interest rate swap agreement that effectively converts its
floating rate payments to a fixed-rate basis. The Company manages interest
rates on amounts due under certain lease arrangements through its swap
agreement. The Company's interest rate swap agreement is designated as a cash
flow hedge.

On an ongoing basis, the Company reflects the current fair value of the
interest rate swap on its balance sheet. At December 31, 2007 and 2006, the
Company has recorded a liability of $(4,072) and $(3,160), respectively, in
other current liabilities on the consolidated balance sheet for the fair value
of the swap. The effective portion of the related gains or losses on the swap
are deferred in accumulated other comprehensive loss. No ineffectiveness was
recorded in the consolidated statements of income during 2007, 2006, and 2005.
Unrealized (loss) gains (net of tax) of $(557), $533, and $935 related to the
swap were recorded in accumulated other comprehensive loss during the years
ended December 31, 2007, 2006, and 2005, respectively. At December 31, 2007 an
unrealized net loss of $(2,489) (net of tax) is recorded in accumulated other
comprehensive loss. These deferred gains and losses are recognized in income
in the period in which the related interest payments being hedged are
recognized in expense.

GOODWILL

The Company follows SFAS No. 142, "Goodwill and Other Intangible Assets",
under which goodwill and indefinite-lived intangible assets are not amortized,
but rather tested annually for impairment. Goodwill is reviewed annually in
the fourth quarter and/or when circumstances or other events might indicate
that impairment may have occurred. The annual impairment test involves a
comparison of the estimated fair value of a reporting unit to its carrying
amount. The fair value is


                                      25

<PAGE>
<PAGE>

determined on a variety of assumptions including estimated future cash flows
of the reporting unit and discount rates. As of December 31, 2007, the Company
has completed its annual impairment test and concluded that there is no
impairment of the Company's goodwill. At December 31, 2007 and 2006, the
Company had $6,680 of goodwill included in other non-current assets on its
consolidated balance sheets.

INCOME TAXES

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). Under this standard, the Company determines its deferred tax assets and
liabilities based upon the difference between the financial statement and tax
bases of its assets and liabilities using enacted applicable tax rates. The
Company then assesses the likelihood that its deferred tax assets will be
recovered from future taxable income and to the extent it believes that
recovery is not likely, a valuation allowance is established. Changes in the
valuation allowance, when recorded, are included in the provision for (benefit
from) income taxes in its consolidated financial statements.

NEW ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business
Combinations" (SFAS 141R). This Statement replaces FASB Statement No. 141,
"Business Combinations", and will change the accounting treatment and
disclosure for certain specific items in a business combination. Under SFAS
141R, an acquiring entity will be required to recognize all the assets
acquired and liabilities assumed in a transaction at the acquisition-date fair
value with limited exceptions. SFAS 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2008.
Accordingly, if the Company were to engage in a business combination, it will
be recorded and disclosed following existing U.S. GAAP until January 1, 2009.
SFAS 141R may have an impact on the accounting for business combinations, if
any, the Company may consummate after SFAS 141R is adopted.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements - an Amendment of ARB No. 51" (SFAS 160).
SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 is effective for fiscal years beginning on or after
December 15, 2008. The Company has not completed its evaluation of the
potential impact of the adoption of SFAS 160 on its consolidated financial
statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115", which permits an entity to measure certain financial
assets and liabilities at fair value. The statement's objective is to improve
financial reporting by allowing entities to mitigate volatility in reported
earnings caused by the measurement of related assets and liabilities using
different attributes, without having to apply complex hedge accounting
provisions. This statement became effective for fiscal years beginning after
November 15, 2007 and is to be applied prospectively. The Company does not
expect that this statement will have a material effect on the Company's
financial statements for the period ending December 31, 2008.

In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (SFAS 158). This statement requires
that a company recognize a net liability or asset, to report the funded status
of their defined benefit pension and other postretirement plans on its balance
sheet, and measure benefit plan assets and benefit obligations as of the
Company's balance sheet date. The portion of this statement related to
recognizing a net liability or asset for the funded status became effective
for fiscal years ending after June 15, 2007 for employers, such as the
Company, that do not issue publicly-traded securities. Upon the adoption of
SFAS 158 at December 31, 2007, the Company recorded an after-tax charge to
accumulated other comprehensive loss of $73,707. The requirements related to
the measurement date of the assets and benefit obligations will be effective
for fiscal years ending after December 15, 2008. The Company currently uses
its year-end balance sheet date as the measurement date as required by SFAS
158.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
(SFAS 157). This statement does not require any new fair value measurements,
but rather, provides enhanced guidance to other pronouncements that require or
permit assets or liabilities to be measured at fair value. The changes to
current practice resulting from the application of this statement relate to
the definition of fair value, the methods used to estimate fair value, and the
requirement for expanded disclosures about estimates of fair value. This
statement becomes effective for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years. Subsequent to the issuance of
SFAS 157, the FASB issued Staff Position No. FAS 157-2, "Effective Date of
FASB Statement No. 157" (FSP 157-2). FSP 157-2 delays the effective date of
SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for
items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually) for fiscal years beginning
after November 15, 2008.

In addition, the FASB issued Staff Position No. FAS 157-1, "Application of
FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13" (FSP 157-1), on February 14,
2008. FSP 157-1 amends SFAS 157 to exclude FASB Statement No. 13, "Accounting
for Leases" (SFAS 13), and other accounting pronouncements that address fair
value measurements for purposes of lease classification or measurement under
SFAS 13. The Company does not expect that its adoption of SFAS 157, FSP
157-2, the deferral related to nonfinancial assets and nonfinancial
liabilities, and FSP 157-1, the amendment regarding the applicability of SFAS
157 to leases, will have a material effect on its financial statements.

The FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes, an Interpretation of SFAS No. 109" (FIN 48), in June 2006. FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with SFAS 109. A complete
discussion of FIN 48 may be found in the following Note 2, "Income Taxes", of
the notes to the consolidated financial statements.



                                      26

<PAGE>
<PAGE>

2/INCOME TAXES

The FASB issued FIN 48, in June 2006. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with SFAS 109. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. It also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition.

The Company adopted the provisions of FIN 48 on January 1, 2007. Under FIN
48, the Company had $6,980 of unrecognized tax benefits recorded in its
statement of financial position as of January 1, 2007. Of this amount, $406
was recorded as a reduction to the January 1, 2007 balance of retained
earnings. The Company's unrecognized tax benefits of $6,945 as of December 31,
2007 are uncertain tax positions that would impact the Company's effective tax
rate if recognized. The Company is periodically engaged in tax return
examinations, reviews of statute of limitations periods, and settlements
surrounding income taxes. As a result, the Company estimates it is reasonably
possible that its unrecognized tax benefits could change in the next twelve
months by an amount between $2,000 and $3,000.

The Company's uncertain tax benefits, and changes thereto, during 2007 were as
follows:

<TABLE>
<CAPTION>
                                                                                             2007
                                                                                             ----
                  <C>                                                                <C>
                  BALANCE AT JANUARY 1:                                              $      6,980
                  Additions based on tax positions related to current year                    947
                  Additions based on tax positions of prior years                              --
                  Reductions for tax positions of prior years                                (749)
                  Settlements                                                                (233)
                                                                                     -------------
                  BALANCE AT DECEMBER 31:                                            $      6,945
                                                                                     =============
</TABLE>

Included in the balance at December 31, 2007 is $0 of tax positions for which
the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. Because of the impact of
deferred tax accounting, other than interest and penalties, the disallowance
of the shorter deductibility period would not affect the annual effective tax
rate but would accelerate the payment of cash to the taxing authority to an
earlier period.

The Company classifies interest expense and penalties as part of its provision
for income taxes based upon applicable federal and state interest/underpayment
percentages. The Company has accrued $2,807 and $2,002 in interest and
penalties in its statement of financial position at December 31, 2007 and
2006, respectively. Interest was computed on the difference between the
provision for income taxes recognized in accordance with FIN 48 and benefit
previously taken or expected to be taken in the Company's federal, state, and
local income tax returns.

The Company's federal income tax returns for the tax years 2004 and forward
are available for examination by the United States Internal Revenue Service.
The Company has not agreed to extend its federal statute of limitations for
the 2004 tax year as of December 31, 2007. The federal statute of limitations
for the 2004 tax year will expire on September 15, 2008. The Company's state
income tax returns for 2003 through 2006 remain subject to examination by
various state authorities with the latest closing period on October 15, 2011.
The Company has not extended the statutes of limitations for any state
jurisdictions with respect to years prior to 2003. Such statutes of
limitations will expire on or before October 15, 2008 unless extended.

The provisions for income taxes recorded in the consolidated statements of
income are as follows:

<TABLE>
<CAPTION>
                  FOR THE YEARS ENDED DECEMBER 31,                              2007           2006        2005
                  --------------------------------                              ----           ----        ----
                  <C>                                                     <C>            <C>          <C>
                  Federal income tax
                      Current                                             $   38,052     $   43,514   $   2,082
                      Deferred                                                17,823         (5,030)     10,672

                  State income tax
                      Current                                                  3,870          4,049       1,803
                      Deferred                                                 1,541           (918)      1,364
                                                                          ----------     ----------   ---------
                  PROVISION FOR INCOME TAXES                              $   61,286     $   41,615   $  15,921
                                                                          ==========     ==========   =========
</TABLE>




                                      27

<PAGE>
<PAGE>

Deferred income taxes are provided based upon differences between the
financial statement and tax bases of assets and liabilities. The following
deferred tax assets (liabilities) are recorded at December 31:

<TABLE>
<CAPTION>
                  ASSETS (LIABILITIES)                                                         2007           2006
                  --------------------                                                         ----           ----
                  <C>                                                                    <C>             <C>
                  Postretirement benefits                                                $   33,481      $  29,385
                  Payroll accruals                                                            2,487          2,307
                  Bad debt reserves                                                           2,950          3,029
                  Other deferred tax assets                                                   9,722         11,647
                  Prepaid pension                                                            16,167         10,148
                  Inventory                                                                      --          2,100
                                                                                         -----------     ----------
                      GROSS DEFERRED TAX ASSETS                                              64,807         58,616

                  Inventory                                                                    (242)            --
                  Fixed assets                                                              (18,144)       (19,666)
                  Computer software                                                         (12,582)       (16,415)
                  Other deferred tax liabilities                                             (3,906)        (7,873)
                                                                                         -----------     ----------
                      GROSS DEFERRED TAX LIABILITIES                                        (34,874)       (43,954)
                                                                                         -----------     ----------
                  NET DEFERRED TAX ASSETS                                                $   29,933      $  14,662
                                                                                         ===========     ==========
</TABLE>

Deferred tax assets included in other current assets were $9,503 and $10,442
in 2007 and 2006, respectively. Deferred tax assets included in other
non-current assets were $20,430 and $4,220 in 2007 and 2006, respectively. The
Company's deferred tax assets include state net operating loss carryforwards
of $3,151 and $4,422 as of December 31, 2007 and 2006, respectively, that
expire from 2007 to 2025. Valuation allowances of $1,920 and $0 have been
established as of December 31, 2007 and 2006, respectively.

A reconciliation between the "statutory" federal income tax rate and the
effective tax rate in the consolidated statements of income is as follows:

<TABLE>
<CAPTION>
                  FOR THE YEARS ENDED DECEMBER 31,                              2007         2006       2005
                  --------------------------------                              ----         ----       ----
                  <C>                                                           <C>          <C>        <C>
                  "Statutory" federal tax rate                                  35.0%        35.0%      35.0%
                  State and local income taxes,
                    net of federal benefit                                       4.2          4.9        3.2
                  Other, net                                                     3.2          2.1        3.3
                                                                                 ---          ---        ---
                  EFFECTIVE TAX RATE                                            42.4%        42.0%      41.5%
</TABLE>

3/CAPITAL STOCK

The Company's capital stock is one hundred percent (100%) owned by its
employees and retirees and there is no public market for its stock. Shares of
common stock or the voting trust interests issued with respect thereto
("common stock", "common shares", or "shares") may not be sold by the holder
thereof, except after first offering them to the Company. The Company may buy
any common shares so offered at the price at which they were issued ($20.00
per share) with appropriate adjustments for current dividends.

During 2007, the Company offered to eligible employees and qualified retirees
the right to subscribe to 950,000 shares of common stock at $20.00 per share
in accordance with the provisions of the Company's Three-year Common Stock
Purchase Plan dated June 14, 2007. This resulted in the subscription of
557,704 shares ($11,154). Subscribers under the Plan elected to make payments
under one of the following options: (i) all shares subscribed for on or before
January 10, 2008; or (ii) all shares subscribed for in installments paid
through payroll deductions (or in certain cases where a subscriber is no
longer on the Company's payroll, through direct monthly payments) over an
eleven-month period.

Common shares were delivered to subscribers as of January 10, 2008, in the
case of shares paid for prior to January 10, 2008. Shares will be issued and
delivered to subscribers on a quarterly basis, as of the tenth day of March,
June, September, and December to the extent full payments of shares are made
in the case of subscriptions under the installment method.

Shown below is a summary of shares repurchased and retired by the Company in
the three years ended December 31:

                         COMMON SHARES
                         -------------
                  REPURCHASED        RETIRED
                  -----------        -------
2007                  321,820        298,061
2006                  306,131        318,401
2005                  290,194        294,180

                                      28

<PAGE>
<PAGE>

The Company amended its Certificate of Incorporation to authorize a new class
of 10,000,000 shares of Delegated Authority Preferred Stock ("preferred
stock"), par value one cent ($0.01), on June 10, 2004. The preferred stock may
be issued in one or more series, with the designations, relative rights,
preferences and limitations of shares of each such series being fixed by a
resolution of the Board of Directors of the Company. There were no shares of
preferred stock outstanding at December 31, 2007 and 2006.

On December 13, 2007, the Company declared a twenty percent (20%) common stock
dividend. Each shareholder was entitled to one share of common stock for every
five shares held as of January 3, 2008. The stock was issued February 1, 2008.
On December 14, 2006, the Company declared a ten percent (10%) common stock
dividend. Each shareholder was entitled to one share of common stock for every
ten shares held as of January 3, 2007. The stock was issued February 1, 2007.
On December 8, 2005, the Company declared a five percent (5%) common stock
dividend. Each shareholder was entitled to one share of common stock for every
twenty shares held as of January 3, 2006. The stock was issued February 1,
2006. The per share computations for periods presented have been adjusted to
reflect the new number of shares as required by SFAS No. 128, "Earnings Per
Share".

4/LONG-TERM DEBT AND BORROWINGS UNDER SHORT-TERM CREDIT AGREEMENTS

<TABLE>
<CAPTION>
                                                                                                                   DECEMBER 31,
LONG-TERM DEBT                                                                                                  2007          2006
--------------                                                                                                  ----          ----
<C>                                                                                                       <C>           <C>
7.49% senior note, unsecured, due in annual installments of $14,286 beginning in July 2005
   through July 2011                                                                                      $   57,143    $   71,429
Variable rate lease arrangement, secured by facilities, due July 2008                                         27,715        56,720
6.59% senior note, unsecured, due in semiannual installments of $3,750 beginning in
   October 2003 through April 2013                                                                            41,250        48,750
7.36% senior note, unsecured, due in semiannual installments of $3,095 beginning in May
   2001 through November 2010, with a final payment of $3,094 due in May 2011                                 21,666        27,856
6.65% senior note, unsecured, due in annual installments of $3,636 beginning in June 2003
   through June 2013                                                                                          21,818        25,455
5.87% note, secured by facility, due in monthly installments of $32 through June 2010,
   with a final payment of $3,167 due in July 2010                                                             3,626         3,196
6.48% capital lease, secured by equipment, due in monthly installments of $47 beginning in
   January 2007 through December 2011                                                                          1,990         2,413
Fixed and variable rate mortgages, secured by facilities, various maturities                                     272           369
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                          $  175,480   $   236,188
   Less current portion                                                                                       60,061        32,319
-----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT                                                                                            $  115,419   $   203,869
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
LONG-TERM DEBT MATURES AS FOLLOWS:
------------------------------------------------------------------------
<C>                                                         <C>
2008                                                        $   60,061
2009                                                            32,346
2010                                                            35,441
2011                                                            29,109
2012                                                            11,137
2013 and beyond                                                  7,386
------------------------------------------------------------------------
                                                            $  175,480
------------------------------------------------------------------------
</TABLE>

The net book value of property securing various long-term debt instruments was
$25,794 and $51,105 at December 31, 2007 and 2006, respectively.

The Company's borrowings under short-term credit agreements consist of
issuances of commercial paper under the trade receivable securitization
program, borrowings under revolving credit agreements, and bank lines of
credit.

The Company had a revolving credit agreement with a group of banks at
an interest rate based on the London Interbank Offered Rate (LIBOR) that
consisted of an unsecured $150,000, 364-day facility that was to have expired
in July 2007. Prior to expiration, the Company executed a new unsecured
LIBOR-based revolving credit agreement that consists of a $200,000 five-year
facility expiring in May 2012. There were no amounts outstanding under the
credit agreements at December 31, 2007 and 2006.

At December 31, 2007 and 2006, the Company had a $215,000 trade receivable
securitization program that expires in October 2009. The trade receivable
securitization program provides for the sale of certain of the Company's trade
receivables on a revolving basis to Graybar Commerce Corporation (GCC), a
wholly-owned, bankruptcy-remote, special-purpose subsidiary. GCC sells an
undivided interest in the trade receivables to an unrelated multi-seller
commercial paper


                                      29

<PAGE>
<PAGE>
conduit. The Company accounts for the securitization as an on-balance sheet
financing arrangement because the Company has maintained effective control of
the trade receivables through a call option that gives GCC the unilateral
right to repurchase the undivided interests. Accordingly, the trade
receivables and related debt are included in the accompanying consolidated
balance sheets. GCC has granted a security interest in its trade receivables
to the commercial paper conduit. There were no borrowings outstanding under
the trade receivable securitization program at December 31, 2007 and 2006.

At December 31, 2007, the Company had available to it unused lines of credit
amounting to $436,575, compared to $377,076 at December 31, 2006. These lines
are available to meet the short-term cash requirements of the Company and
certain committed lines of credit have annual fees of up to 50 basis points
(0.5%) of the committed lines of credit.

Short-term borrowings outstanding during 2007 and 2006 ranged from a minimum
of $14,027 and $13,667 to a maximum of $49,560 and $140,924, respectively. The
average daily amount of borrowings outstanding under short-term credit
agreements during 2007 and 2006 amounted to approximately $20,000 and $82,000
at weighted-average interest rates of 5.57% and 5.31%, respectively. The
weighted-average interest rate for amounts outstanding at December 31, 2007
was 6.00%.

The credit agreement, the trade receivable securitization program, and certain
other note agreements have various covenants that limit the Company's ability
to make investments, pay dividends, incur debt, dispose of property, and issue
equity securities. The Company is also required to maintain certain financial
ratios as defined in the agreements. The Company was in compliance with all
covenants as of December 31, 2007 and 2006, respectively.

The carrying amount of the Company's outstanding long-term, fixed-rate debt
exceeded its fair value by $11,004 and $2,735 at December 31, 2007 and 2006,
respectively. The fair value of the Company's variable-rate short- and
long-term debt approximates its carrying value at December 31, 2007 and 2006,
respectively.

5/PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company has a noncontributory defined benefit pension plan covering
substantially all full-time employees. The plan provides retirement benefits
based on an employee's final average earnings and years of service. Employees
become one hundred percent (100%) vested after five years of service
regardless of age. The Company's funding policy is to contribute the net
periodic pension cost accrued each year, provided that the contribution will
not be less than the Employee Retirement Income Security Act (ERISA) minimum
or greater than the maximum tax-deductible amount. The assets of the defined
benefit pension plan are invested primarily in equity and fixed income
securities, money market funds, and other investments.

The Company and its subsidiaries provide certain health care and life
insurance benefits for retired employees through the Retiree Welfare Plan
("Plan"). Substantially all of the Company's employees may become eligible to
participate in the Plan if they reach normal retirement age while working for
the Company. Benefits are provided through insurance coverage with premiums
based on the benefits paid during the year. The Company funds the Plan on a
pay-as-you-go basis, and accordingly, the Plan had no assets at December 31,
2007 or 2006.

In September 2006, the FASB issued SFAS 158. This statement requires that a
company recognize a net liability or asset, to report the funded status of its
defined benefit pension and other postretirement plans on its balance sheet
and measure benefit plan assets and obligations as of the company's balance
sheet date. SFAS 158 became effective for the fiscal year ending after June
15, 2007 for employers, such as the Company, that do not issue publicly-traded
securities. At December 31, 2007, the Company adopted SFAS 158 and recorded an
after-tax charge to accumulated other comprehensive loss of $73,707.

SFAS 158 also requires that the measurement date of the assets and benefit
obligations be a firm's fiscal year-end, effective for fiscal years ending
after December 15, 2008. The Company currently uses its year-end balance sheet
date as the measurement date and, as a result, the new measurement date
requirement will not have an effect on the Company's financial statements in
2008.

SFAS 158 requires a transition year disclosure of the effect of applying the
new standard. In August 2007, the Company made a voluntary additional
contribution to its qualified defined benefit pension plan of $28,000. This
voluntary, additional contribution coupled with the 2007 planned contributions
of $37,500 made to its qualified defined benefit plan resulted in an
over-funded position prior to year-end under SFAS No. 87, "Employers'
Accounting for Pensions" (SFAS 87). An over-funded position exists when the
market value of the assets exceeds the accumulated benefit obligation at the
measurement date. As a result of the over-funded position in its qualified
defined benefit pension plan, the amounts previously recorded in the pension
liability for additional minimum pension liability adjustments were reversed
and prepaid pension costs were recognized on the balance sheet under SFAS 87.
This recording of prepaid pension assets increased the effect of the adoption
of SFAS 158. The Company also has a supplemental non-qualified defined benefit
pension plan. There are no assets in this non-qualified defined benefit
pension plan. SFAS 87 requires the recognition of an additional minimum

                                      30

<PAGE>
<PAGE>

pension liability adjustment if the market value of the plan assets was less
than the accumulated benefit obligation at the measurement date. This was the
case for the supplemental non-qualified pension plan. The benefit obligations
of this plan are included in the pension obligations discussed below.

The following table shows the effect of SFAS 158 on individual items in the
Company's consolidated balance sheet:

<TABLE>
<CAPTION>

                                                                   CHANGE IN        BALANCE PRIOR       EFFECT OF
                                               DECEMBER 31,      BALANCE UNDER      TO ADOPTION         SFAS 158       DECEMBER 31,
                                                  2006              SFAS 87         OF SFAS 158         ADOPTION          2007
                                                  ----              -------         -----------         --------          ----
<C>                                           <C>               <C>                 <C>                <C>             <C>
ASSETS
   Intangible asset                           $      8,669      $      (8,669)      $        --        $       --      $         --
   Non-current deferred tax asset             $     19,888            (19,599)              289            46,927      $     47,216
LIABILITIES
   Other current liabilities                            --               (800)             (800)           (9,000)     $     (9,800)
   Postretirement benefits liability          $    (74,447)             2,507           (71,940)           (3,496)     $    (75,436)
   Net pension (liability) asset              $    (43,449)            98,649            55,200          (108,138)     $    (52,938)
SHAREHOLDERS' EQUITY
   Accumulated other comprehensive
       loss, net of tax                       $     31,722            (31,267)              455            73,707      $     74,162
</TABLE>

The following table sets forth information regarding the Company's pension and
other postretirement benefits as of December 31, 2007 and 2006 using a
December 31 measurement date:

<TABLE>
<CAPTION>
                                                               PENSION BENEFITS               POSTRETIREMENT BENEFITS
                                                               ----------------               -----------------------
                                                             2007               2006              2007            2006
                                                             ----               ----              ----            ----
<C>                                                    <C>                <C>               <C>             <C>
Projected benefit obligation                           $ (317,862)        $ (295,580)       $  (84,436)     $  (91,061)
Fair value of plan assets                                 264,124            193,047                --              --
                                                          -------            -------           -------         -------
Funded status                                          $  (53,738)        $ (102,533)       $  (84,436)     $  (91,061)
</TABLE>

The accumulated benefit obligation for the Company's defined benefit pension
plan was $249,751 and $236,496 at December 31, 2007 and 2006, respectively.

Amounts recognized in the consolidated balance sheet for the year ended
December 31, net of tax, consist of the following:

<TABLE>
<CAPTION>
                                                               PENSION BENEFITS               POSTRETIREMENT BENEFITS
                                                               ----------------               -----------------------
                                                             2007               2006              2007            2006
                                                             ----               ----              ----            ----
<C>                                                    <C>                <C>               <C>             <C>
Current accrued benefit cost                           $     (800)        $       --        $   (9,000)     $       --
Non-current accrued benefit cost                          (52,938)           (43,449)          (75,436)        (74,447)
Intangible asset                                               --              8,669                --              --
Accumulated other comprehensive loss,
   net of tax                                              66,527             31,722             7,635              --
                                                       ----------         ----------        ----------      ----------
Net amount recognized                                  $   12,789         $   (3,058)       $  (76,801)     $  (74,447)
</TABLE>

Amounts recognized in accumulated other comprehensive loss for the year ended
December 31, net of tax, consist of the following:

<TABLE>
<CAPTION>
                                                       PENSION BENEFITS        POSTRETIREMENT BENEFITS
                                                       ----------------        -----------------------
                                                             2007                       2007
                                                             ----                       ----
<C>                                                    <C>                        <C>
Net actuarial loss                                     $   61,908                 $   23,991
Prior service cost (gain)                                   4,619                    (16,356)
                                                          -------                    -------
Accumulated other comprehensive loss,
   net of tax                                          $   66,527                 $    7,635
</TABLE>



                                      31

<PAGE>
<PAGE>

Amounts estimated to be amortized from accumulated other comprehensive loss
into net periodic benefit costs in 2008, net of tax, consist of the following:

<TABLE>
<CAPTION>
                                                       PENSION BENEFITS        POSTRETIREMENT BENEFITS
                                                       ----------------        -----------------------
<C>                                                    <C>                          <C>
Net actuarial loss                                     $    5,156                   $    1,458
Prior service cost (gain)                                     771                       (1,501)
                                                          -------                      -------
Accumulated other comprehensive loss,
   net of tax                                          $    5,927                   $      (43)
</TABLE>

Weighted average assumptions for the years ended December 31 are:

<TABLE>
<CAPTION>
                                                                  PENSION BENEFITS             POSTRETIREMENT BENEFITS
                                                                  ----------------             -----------------------
                                                               2007              2006            2007             2006
                                                               ----              ----            ----             ----
<C>                                                            <C>               <C>            <C>             <C>
Discount rate                                                   6.00%             5.75%           5.75%            5.75%
Expected return on plan assets                                  8.00%             8.00%            --               --
Rate of compensation increase                                   4.25%             4.00%            --               --
Health care cost trend on covered charges                         --                --          9% / 5%         10% / 5%
</TABLE>

The expected return on plan assets assumption for the defined benefit pension
plan is a long-term assumption and was determined after evaluating input from
the plan's actuary and pension fund investment advisor, and also considering
actual plan experience and historical and anticipated rates of return on the
various classes of assets in which the plan invests. The Company anticipates
that its investment managers will continue to generate long-term returns
consistent with its assumed rate, despite temporary downturns in market
performance.

The following presents information regarding the plans for the years ended
December 31:

<TABLE>
<CAPTION>
                                                                PENSION BENEFITS                POSTRETIREMENT BENEFITS
                                                                ----------------                -----------------------
                                                             2007               2006              2007            2006
                                                             ----               ----              ----            ----
   <C>                                                 <C>                <C>               <C>             <C>
   Employer contributions                              $   66,379         $   30,882        $    9,444      $   12,194
   Participant contributions                                   --                 --             2,030           1,095
   Benefits paid                                       $  (14,637)        $  (22,604)       $  (11,474)     $  (13,289)
                                                          --------           --------          --------        --------
</TABLE>


The Company expects to make contributions totaling $33,300 to its defined
benefit pension plan during 2008.

The net periodic benefit cost for the years ended December 31, 2007, 2006, and
2005 included the following components:

<TABLE>
<CAPTION>
                                                       PENSION BENEFITS                           POSTRETIREMENT BENEFITS
                                                       ----------------                           -----------------------
                                               2007            2006           2005           2007            2006           2005
                                               ----            ----           ----           ----            ----           ----
<C>                                     <C>             <C>            <C>            <C>             <C>            <C>
Service cost                            $    14,066     $    14,367    $    13,127    $     1,899     $     1,733    $     2,351
Interest cost                                17,500          16,817         15,534          4,851           5,046          6,345
Expected return on plan assets              (15,398)        (13,393)       (13,030)            --              --             --
Amortization of:
   Actuarial loss                            10,740          13,266          8,067          2,639           2,995          2,880
   Prior service cost (gain)                  1,158             882            568         (2,457)         (2,457)          (968)
                                         -----------     -----------    -----------    -----------     -----------    -----------
Net periodic benefit cost               $    28,066     $    31,939    $    24,266    $     6,932     $     7,317    $    10,608
</TABLE>

For measurement of the net periodic postretirement benefit obligation, a 9.00%
annual rate of increase in per capita cost of covered health care benefits was
assumed for 2007. The rate was assumed to decrease 1.00% per year to 5.00% at
January 1, 2012 and to remain at that level thereafter.

Estimated future defined benefit pension and other postretirement plan benefit
payments for the years ending December 31 are as follows:

<TABLE>
<CAPTION>
                                                            PENSION           POSTRETIREMENT
                             YEAR                           BENEFITS             BENEFITS
                             ----                           --------             --------
                             <C>                       <C>                  <C>
                             2008                      $     18,800         $      9,000
                             2009                            19,800                9,000
                             2010                            21,800                9,000
                             2011                            22,600                8,000
                             2012                            25,600                9,000
                             2013-2017                 $    146,900         $     42,000
</TABLE>


                                      32

<PAGE>
<PAGE>

The investment objective of the Company's defined benefit pension plan is to
ensure that there are sufficient assets to fund regular pension benefits
payable to employees over the long-term life of the plan. The Company's
pension plan seeks to earn the highest possible long-term, total rate of
return on assets consistent with prudent standards for preservation of
capital, tolerance of investment risk, and maintenance of liquidity.

Asset allocation information for pension plan assets at December 31, 2007 and
2006 is as follows:

<TABLE>
<CAPTION>
                                                             2007              2006             Target
                                                           ACTUAL            Actual         Allocation
   INVESTMENT                                          ALLOCATION        Allocation              Range
   ----------                                         -----------        ----------              -----
   <C>                                                <C>                <C>                <C>
   Equity securities-U.S.                                     21%               25%             15-50%
   Equity securities-International                            20%               24%             10-30%
   Fixed income investments-U.S.                              28%               31%             10-50%
   Fixed income investments-International                      5%                5%              0-15%
   Other                                                      26%               15%              0-25%
                                                              ---               ---
                                                             100%              100%
                                                             ====              ====
</TABLE>

The Company also provides a defined contribution profit sharing and savings
plan covering substantially all of its full-time employees. Annual
contributions by the Company to the plan are at the discretion of management
and are generally determined based on the profitability of the Company.
Employees may also contribute to the plan subject to limitations imposed by
federal tax law and ERISA.

6/NET INCOME PER SHARE OF COMMON STOCK

The per share computations for periods presented have been adjusted to reflect
the new number of shares as required by SFAS No. 128, "Earnings Per Share".
The computation of net income per share of common stock is based on the
average number of common shares outstanding during each year, adjusted in all
periods presented for the declaration of a twenty percent (20%) stock dividend
in 2007, a ten percent (10%) stock dividend in 2006, and a five percent (5%)
stock dividend in 2005. The average numbers of shares used in computing net
income per share of common stock as of December 31, 2007 were 7,888, 7,730,
and 7,680 in 2007, 2006, and 2005, respectively.

7/COMMITMENTS AND CONTINGENCIES

The Company had two lease arrangements with an independent lessor which
provided $58,777 of financing for eight of the Company's distribution
facilities. The agreements carry five-year terms expiring July 2008 and
December 2009.

The Company has the option, with the consent of the lessor's lenders, to renew
the leases for an additional five-year term or to purchase the property for a
price including the outstanding lease balance. If the Company elects not to
renew the lease or purchase the property, or such lenders refuse to consent to
a renewal, the Company may elect to remarket the property and arrange for its
sale to a third party.

The financing structures used in these two lease arrangements qualify as silos
of a variable interest entity under FASB Interpretation No. 46, "Consolidation
of Variable Interest Entities, (revised) December 2003 - an interpretation of
ARB No. 51" (FIN 46). On January 1, 2005, the Company adopted the provisions
of FIN 46, which was subsequently amended by FIN 46R, and in accordance
therewith, as the primary beneficiary, consolidated these silos in its
financial statements as if FIN 46 had been in place from the inception of
these leases. The impact of consolidation increased the Company's property by
$64,257, the net book value of the nine distribution facilities then financed
under the two leases. Additionally, the Company increased long-term debt by
$70,906, and recorded a minority interest in the silos of $2,572 at the date
of adoption. The Company recorded a cumulative effect of change in accounting
principle of $(5,634), net of income tax effect of $3,587, during the first
quarter of 2005 to effect the consolidation. The Company has treated the
adoption of FIN 46 as a non-cash item in its consolidated statements of cash
flows.

Had the provisions of FIN 46 been applied retrospectively, rather than as the
cumulative effect of a change in accounting principle, net income and net
income per share on a pro forma basis, adjusted for the twenty percent (20%)
stock dividend declared in 2007 and the ten percent (10%) stock dividend
declared in 2006, would be as follows for the years ended December 31:

<TABLE>
<CAPTION>
          Actual Results
          --------------                                                2007            2006           2005
                                                                        ----            ----           ----
          <C>                                                    <C>             <C>            <C>
          Net income                                             $    83,421     $    57,388    $    16,764
          Net income per share of common stock                   $     10.58     $      7.42    $      2.18

                                      33

<PAGE>
<PAGE>

<CAPTION>
          Pro Forma Results
          -----------------                                             2007            2006           2005
                                                                        ----            ----           ----
          <C>                                                    <C>             <C>            <C>
          Net income                                             $        --     $        --    $    22,398
          Net income per share of common stock                   $        --     $        --    $      2.91
</TABLE>

The Company terminated the lease arrangement expiring in December 2009 on
September 28, 2007 by exercising its purchase option. The independent lessor
conveyed clear title to three distribution facilities to the Company in
exchange for a cash payment of $30,479, which included the outstanding
principal owed on the three properties totaling $30,057, unpaid interest, and
other closing costs.

As of December 31, 2007, the remaining consolidated silo included in the
Company's financial statements had a net property balance of $17,203,
long-term debt of $27,715, and a minority interest of $1,005. At December 31,
2006, the consolidated silos included in the Company's financial statements
had a net property balance of $42,536, long-term debt of $56,720 and a
minority interest of $2,057. The Company's maximum exposure to loss at
December 31, 2007 and 2006, in respect of the properties subject to the lease
arrangement(s), was $24,412 and $49,961, respectively, the amount guaranteed
by the Company as the residual fair value of the property.

Rental expense was $27,687, $27,730, and $31,404 in 2007, 2006, and 2005,
respectively. Future minimum rental payments required under operating leases
that have either initial or remaining noncancellable lease terms in excess of
one year as of December 31, 2007 are as follows:

<TABLE>
<CAPTION>
          FOR THE YEARS ENDING DECEMBER 31,                      MINIMUM RENTAL PAYMENTS
          ---------------------------------                      -----------------------
          <C>                                                        <C>
          2008                                                       $       26,964
          2009                                                               20,450
          2010                                                               12,996
          2011                                                                9,139
          2012                                                                5,368
          2013 and Beyond                                                    22,289
        -----------------------------------------------------------------------------------
</TABLE>

The Company entered into a swap agreement to manage interest rates on amounts
due under one of the lease arrangements discussed above in September 2000. The
swap agreement, which expires in July 2013, is based on a notional amount of
$28,720. The agreement calls for an exchange of interest payments with the
Company receiving payments based on the LIBOR floating rate and making
payments based on a fixed rate of 6.92%. There is no exchange of the notional
amount upon which the payments are based. As discussed in Note 1 of the
consolidated financial statements, the swap is designated as a completely
effective cash flow hedge of the variable interest payments due under the
lease. The fair value of the swap was $(4,072) and $(3,160) at December 31,
2007 and 2006, respectively, and is recorded in other current liabilities
in the consolidated balance sheet.

The Company and its subsidiaries are subject to various claims, disputes,
administrative, and legal matters incidental to the Company's past and current
business activities. As a result, contingencies arise resulting from an
existing condition, situation, or set of circumstances involving an
uncertainty as to the realization of a possible loss.

The Company accounts for loss contingencies in accordance with the provisions
of SFAS No. 5, "Accounting for Contingencies". Estimated loss contingencies
are accrued only if the loss is probable and the amount of the loss can be
reasonably estimated. With respect to a particular loss contingency, it may be
probable that a loss has occurred but the estimate of the loss is a wide
range. If the Company deems some amount within the range to be a better
estimate than any other amount within the range, that amount shall be accrued.
However, if no amount within the range is a better estimate than any other
amount, the minimum amount in the range is accrued. While the Company believes
that none of these claims, disputes, administrative, and legal matters will
have a material adverse effect on its financial position, these matters are
uncertain and the Company cannot at this time determine whether the financial
impact, if any, of these matters will be material to its results of operations
in the period in which such matters are resolved or a better estimate becomes
available.



                                      34

<PAGE>
<PAGE>


8/ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive loss as of December 31 are
as follows:

<TABLE>
<CAPTION>
                                                                          2007              2006
                                                                          ----              ----
          <C>                                                      <C>               <C>
          Currency translation                                     $    11,418       $     4,719
          Unrealized loss from interest rate swap                       (2,489)           (1,932)
          Minimum pension liability                                         --           (31,722)
          Pension liability                                            (66,527)               --
          Postretirement benefits liability                             (7,635)               --
                                                                 --------------    -------------
          Accumulated Other Comprehensive Loss                     $   (65,233)      $   (28,935)
</TABLE>

9/QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for 2007 and 2006, adjusted for the
declaration of stock dividends of twenty percent (20%) and ten percent (10%)
in 2007 and 2006, respectively, is as follows:

<TABLE>
<CAPTION>
                                                                                         2007
                                                     ------------------------------------------------------------------------------
FOR THE QUARTER ENDED                                      March 31,          June 30,        September 30,          December 31,
---------------------                                      ---------          --------        -------------    ------------------
<C>                                                   <C>               <C>               <C>                   <C>
Net sales                                             $    1,223,558    $    1,339,458    $       1,364,666     $       1,330,619
Gross margin                                          $      239,184    $      262,624    $         262,951     $         267,559
Net income                                            $       11,940    $       27,729    $          26,556     $          17,196
Net income per share of common stock (A)              $         1.52    $         3.52    $            3.36     $            2.18

<FN>
(A)  All periods adjusted for a twenty percent (20%) stock dividend declared
     in December 2007. Prior to these adjustments, the average common shares
     outstanding for the first, second and third quarters of 2007 were 6,546,
     6,567, and 6,587, respectively.

<CAPTION>
                                                                                          2006
                                                     ---------------------------------------------------------------------------
FOR THE QUARTER ENDED                                      March 31,          June 30,        September 30,         December 31,
---------------------                                      ---------          --------        -------------         ------------
<C>                                                   <C>               <C>                  <C>                  <C>
Net sales                                             $    1,121,211    $    1,316,475       $    1,328,461       $    1,242,996
Gross margin                                          $      222,764    $      242,527       $      245,738       $      250,422
Net income                                            $       10,388    $       18,481       $       17,879       $       10,640
Net income per share of common stock (B)              $         1.34    $         2.38       $         2.31       $         1.39

<FN>
(B)  All periods adjusted for a twenty percent (20%) stock dividend declared
     in December 2007 and a ten percent (10%) stock dividend declared in
     December 2006. Prior to these adjustments, the average common shares
     outstanding for the first, second, third and fourth quarters of 2006 were
     5,866, 5,871, 5,861, and 6,371 respectively.
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation
of the Company's management of the effectiveness of the design and operation
of the Company's disclosure controls and procedures as of December 31, 2007.
Based on that evaluation, the Company's management, including the Principal
Executive Officer and Principal Financial Officer, concluded that the
Company's disclosure controls and procedures were effective to ensure that
information required to be disclosed in the reports filed or submitted by the
Company under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission's
rules and forms.

This Annual Report does not include an attestation report of the company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the company's
registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management's report in this Annual Report.

ITEM 9B. OTHER INFORMATION

Not applicable.



                                      35

<PAGE>
<PAGE>

                                   PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information with respect to the directors of the Company required to be
included pursuant to this Item 10 will be included under the caption
"Directors -- Nominees for Election as Directors" and "Directors - Information
About the Board of Directors and Corporate Governance Matters" in the
Company's Information Statement relating to the 2008 Annual Meeting (the
"Information Statement") to be filed with the SEC pursuant to Rule 14c-5
under the Exchange Act, and is incorporated herein by reference.

The following directors are also executive officers of the Company: D. B.
D'Alessandro, D. E. DeSousa, T. F. Dowd, L. R. Giglio, K. M. Mazzarella, R. D.
Offenbacher and R. A. Reynolds, Jr. Information regarding the other executive
officers appears below.

<TABLE>
<CAPTION>
Name                        Age     Business experience last five years
----                        ---     -----------------------------------
<C>                         <C>     <C>
M. J. Beagen                51      Employed by Company in 1980; Assistant Treasurer, 2000 to 2005; Vice President and
                                    Controller, 2005 to present.
J.  N. Reed                 51      Employed by Company in 1980, Vice President and Treasurer, 2000 to present.
</TABLE>

The information with respect to audit committee financial experts required to
be included pursuant to this Item 10 will be included under the caption
"Directors -- Information About the Board of Directors and Corporate
Governance Matters" in the Company's Information Statement and is incorporated
herein by reference.

The Company has adopted a code of ethics that applies specifically to the
Principal Executive Officer, Principal Financial Officer and Principal
Accounting Officer ("Covered Officers"). This code of ethics is appended to
the Company's business conduct guidelines for all employees. The business
conduct guidelines and specific code for Covered Officers may be accessed at
the "About Us" page under "Code of Ethics" at the Company's website at
http://www.graybar.com and is also available in print without charge upon
written request addressed to the Secretary of the Company at its principal
executive offices.

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to executive compensation required to be included
pursuant to this Item 11 will be included under the caption "Compensation
Discussion and Analysis" in the Information Statement and is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information with respect to the security ownership of beneficial owners of
more than five percent (5%) of the Common Stock and of directors and executive
officers of the Company required to be included pursuant to this Item 12, will
be included under the captions "Beneficial Ownership of More Than 5% of the
Outstanding Common Stock" and "Beneficial Ownership of Management" in the
Information Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

At the date of this report, other than as described under the caption
"Directors - Transactions with Director" in the Information Statement, there
are no reportable transactions, business relationships or indebtedness of the
type required to be included pursuant to this Item 13 between the Company and
the beneficial owners of more than five percent (5%) of the Common Stock, the
directors or nominees for director of the Company, the executive officers of
the Company or the members of the immediate families of such individuals. If
there is any change in that regard prior to the filing of the Information
Statement, such information will be included under such caption in the
Information Statement and shall be incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information with respect to principal accounting fees and services
required to be included pursuant to this Item 14 will be included under the
caption "Relationship with Independent Registered Public Accounting Firm" in
the Company's Information Statement and is incorporated herein by reference.



                                      36

<PAGE>
<PAGE>

                                    PART IV
                                    -------


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

         (a) DOCUMENTS FILED AS PART OF THIS REPORT:

                  The following financial statements and Report of Independent
                  Registered Public Accounting Firm are included on the
                  indicated pages in this 2007 Annual Report on Form 10-K.

                  1.  INDEX TO FINANCIAL STATEMENTS
                      -----------------------------

                      (i)   Consolidated Statements of Income for each of the
                            three years ended December 31, 2007 (page 19).

                      (ii)  Consolidated Balance Sheets, as of December 31,
                            2007 and 2006 (page 20).

                      (iii) Consolidated Statements of Cash Flows for each of
                            the three years ended December 31, 2007 (page 21).

                      (iv)  Consolidated Statements of Changes in Shareholders'
                            Equity for each of the three years ended December
                            31, 2007 (page 22).

                      (v)   Notes to Consolidated Financial Statements (pages
                            23 to 35).

                      (vi)  Report of Independent Registered Public Accounting
                            Firm (page 18).

                  2.  INDEX TO FINANCIAL SCHEDULES
                      ----------------------------

                      All schedules are omitted because of the absence of the
                      conditions under which they are required or because the
                      required information is set forth in the financial
                      statements and the accompanying notes thereto.

                  3.  EXHIBITS
                      --------

                      The following exhibits required to be filed as part of
                      this Annual Report on Form 10-K have been included:

                  (3) Articles of Incorporation and By-laws

                      (i)   Restated Certificate of Incorporation, as amended,
                            filed as Exhibit 4(i) to the Company's Registration
                            Statement on Form S-1 (Registration No. 333-15761)
                            and incorporated herein by reference.

                      (ii)  By-laws as amended through June 14, 2007 filed as
                            Exhibit 9.01(d)(3)(ii) to the Company's Current
                            Report on Form 8-K dated June 14, 2007 (Commission
                            File No. 0-255) and incorporated herein by
                            reference.

                      (iii) Certificate of Amendment of Certificate of
                            Incorporation, filed as Exhibit 4(ii) of the
                            Company's Registration Statement on Form S-2
                            (Registration No. 333-118575) and incorporated
                            herein by reference.

                  (4) and (9) Voting Trust Agreement

                           Voting Trust Agreement dated as of March 16, 2007,
                           attached as Annex A to the Prospectus, effective
                           January 18, 2007, constituting a part of the
                           Company's Registration Statement on Form S-1
                           (Registration No. 333-139992) and incorporated
                           herein by reference.



                                      37

<PAGE>
<PAGE>

                           The Company hereby agrees to furnish to the
                           Commission upon request a copy of each instrument
                           omitted pursuant to Item 601(b)(4)(iii)(A) of
                           Regulation S-K.

                  (10) Material contracts.

                      (i)   Management Incentive Plan, filed as Exhibit
                            4(a)(1) to the Annual Report on Form 10-K for the
                            year ended December 31, 1972 (Commission File No.
                            0-255), as amended by the Amendment effective
                            January 1, 1974, filed as Exhibit 13-c to the
                            Registration Statement on Form S-1 (Registration
                            No. 2-51832), the Amendment effective January 1,
                            1977, filed as Exhibit 13(d) to the Registration
                            Statement on Form S-1 (Registration No. 2-59744),
                            and the Amendment effective January 1, 1980, filed
                            as Exhibit 5(f) to the Registration Statement on
                            Form S-7 (Registration No. 2-68938) and
                            incorporated herein by reference.*

                      (ii)  Form of Deferral Agreement entered into between
                            the Company and certain employees, filed as
                            Exhibit 10(ii) to the Company's Annual Report on
                            Form 10-K for the year ended December 31, 2002 and
                            incorporated herein by reference.*

                      (iii) Form of Supplemental Benefit Plan covering certain
                            employees, filed as Exhibit 10(iii) to the
                            Company's Annual Report on Form 10-K for the year
                            ended December 31, 2002 and incorporated herein by
                            reference.*

                      (iv)  Receivables Sale Agreement, dated June 30, 2000,
                            between Graybar Electric Company, Inc. and Graybar
                            Commerce Corporation filed as Exhibit 10.1 to the
                            Company's Quarterly Report on Form 10-Q for the
                            period ended June 30, 2003 (Commission File No.
                            0-255) and incorporated herein by reference;
                            Amendment to Receivables Sale Agreement, dated
                            August 15, 2006, filed as Exhibit 10(x) to the
                            Company's Registration Statement on Form S-1
                            (Registration No. 333-137249) and incorporated
                            herein by reference.

                      (v)   Receivables Purchase Agreement, dated June 30,
                            2000, among Graybar Commerce Corporation, as
                            Seller, Graybar Electric Company, Inc., as
                            Servicer, Falcon Asset Securitization Corporation
                            and Bank One, NA, as Agent, and other financial
                            institutions named therein; Amendments to
                            Receivables Purchase Agreement dated January 1,
                            2001, June 22, 2001, August 29, 2001, October 26,
                            2001, December 31, 2001, October 23, 2002, and
                            December 23, 2002, filed as Exhibit 10.2 to the
                            Company's Quarterly Report on Form 10-Q for the
                            period ended June 30, 2003 (Commission File No.
                            0-255) and incorporated herein by reference;
                            Amendment to Receivables Purchase Agreement dated
                            October 22, 2003, filed as Exhibit 10(v) of the
                            Company's Registration Statement on Form S-2
                            (Registration No. 333-118575) and incorporated
                            herein by reference; Amendment to Receivables
                            Purchase Agreement, dated September 26, 2005,
                            filed as Exhibit 10(v) to the Company's Annual
                            Report on Form 10-K for the year ended December
                            31, 2005; Amendment to Receivables Purchase
                            Agreement dated August 15, 2006, filed as Exhibit
                            10(ix) to the Company's Registration Statement on
                            Form S-1 (Registration No. 333-137249) and
                            incorporated herein by reference.

                      (vi)  Five-Year Credit Agreement, dated May 8, 2007,
                            among Graybar Electric Company, Inc., Bank of
                            America N.A., as Agent, and other banks named
                            therein; filed as Exhibit 10.1 to the Company's
                            Quarterly Report on Form 10-Q for the period ended
                            March 31, 2007 (Commission File No. 0-255) and
                            incorporated herein by reference.

<FN>
   *Compensation arrangement



                                      38

<PAGE>
<PAGE>




                (21)     List of subsidiaries of the Company.

                (31.1)   Certification Pursuant to Section 302 of the
                         Sarbanes-Oxley Act of 2002 - Principal Executive
                         Officer.

                (31.2)   Certification Pursuant to Section 302 of the
                         Sarbanes-Oxley Act of 2002 - Principal Financial
                         Officer.

                (32.1)   Certification Pursuant to 18 U.S.C. Section 1350, as
                         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002 - Principal Executive Officer.

                (32.2)   Certification Pursuant to 18 U.S.C. Section 1350, as
                         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002 - Principal Financial Officer.




                                      39

<PAGE>
<PAGE>

SIGNATURES
----------

        Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized, as of
the 12th day of March, 2008.

                             GRAYBAR ELECTRIC COMPANY, INC.



                             By          /S/ R. A. REYNOLDS, JR.
                               ------------------------------------------------
                                (R. A. Reynolds, Jr., Chairman of the Board
                                                      and President)

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed below by the following persons
on behalf of the Registrant, in the capacities indicated, on March 12, 2008.

<TABLE>
<C>                                                                         <C>
 /S/ R. A. REYNOLDS, JR.                                                    Director, Chairman of
-----------------------------------------------------------------------     the Board and President
(R. A. Reynolds, Jr.)                                                       (Principal Executive Officer)


 /S/ D. B. D'ALESSANDRO                                                     Director
-----------------------------------------------------------------------     (Principal Financial Officer)
 (D. B. D'Alessandro)


/S/ M. J. BEAGEN                                                            Vice President and Controller
-----------------------------------------------------------------------     (Principal Accounting Officer)
 (M. J. Beagen)


 /S/ R. A. COLE                                                             Director
-----------------------------------------------------------------------
 (R. A. Cole)


 /S/ D. E. DeSOUSA                                                          Director
-----------------------------------------------------------------------
 (D. E. DeSousa)


 /S/ T. F. DOWD                                                             Director
-----------------------------------------------------------------------
 (T. F. Dowd)


 /S/ L. R. GIGLIO                                                           Director
-----------------------------------------------------------------------
 (L. R. Giglio)


 /S/ T. S. GURGANOUS                                                        Director
-----------------------------------------------------------------------
 (T. S. Gurganous)


 /S/ F. H. HUGHES                                                           Director
-----------------------------------------------------------------------
 (F. H. Hughes)


 /S/ R. C. LYONS                                                            Director
-----------------------------------------------------------------------
 (R. C. Lyons)


 /S/ K. M. MAZZARELLA                                                       Director
-----------------------------------------------------------------------
 (K. M. Mazzarella)



                                      40

<PAGE>
<PAGE>



 /S/ R. L. NOWAK                                                            Director
-----------------------------------------------------------------------
 (R. L. Nowak)


 /S/ R. D. OFFENBACHER                                                      Director
-----------------------------------------------------------------------
 (R. D. Offenbacher)


 /S/ K. B. SPARKS                                                           Director
-----------------------------------------------------------------------
 (K. B. Sparks)
</TABLE>






                                      41

<PAGE>
<PAGE>
INDEX TO EXHIBITS


EXHIBITS
--------

         (3)    Articles of Incorporation and By-laws.

                      (i)   Restated Certificate of Incorporation, as amended,
                            filed as Exhibit 4(i) to the Company's
                            Registration Statement on Form S-1 (Registration
                            No. 333-15761) and incorporated herein by
                            reference.

                      (ii)  By-laws as amended through June 14, 2007 filed as
                            Exhibit 9.01(d)(3)(ii) to the Company's Current
                            Report on Form 8-K dated June 14, 2007 (Commission
                            File No. 0-255) and incorporated herein by
                            reference.

                      (iii) Certificate of Amendment of Certificate of
                            Incorporation, filed as Exhibit 4(ii) to the
                            Company's Registration Statement on Form S-2
                            (Registration No. 333-118575) and incorporated
                            herein by reference.

 (4) and (9)    Voting Trust Agreement

                     Voting Trust Agreement dated as of March 16, 2007, attached
                as Annex A to the Prospectus, effective January 18, 2007,
                constituting a part of the Company's Registration Statement on
                Form S-1 (Registration No. 333-139992) and incorporated herein
                by reference.

        (10)    Material contracts.

                      (i)   Management Incentive Plan, filed as Exhibit
                            4(a)(1) to the Annual Report on Form 10-K for the
                            year ended December 31, 1972 (Commission File No.
                            0-255), as amended by the Amendment effective
                            January 1, 1974, filed as Exhibit 13-c to the
                            Registration Statement on Form S-1 (Registration
                            No. 2-51832), the Amendment effective January 1,
                            1977, filed as Exhibit 13(d) to the Registration
                            Statement on Form S-1 (Registration No. 2-59744),
                            and the Amendment effective January 1, 1980, filed
                            as Exhibit 5(f) to the Registration Statement on
                            Form S-7 (Registration No. 2-68938) and
                            incorporated herein by reference.*

                      (ii)  Form of Deferral Agreement entered into between
                            the Company and certain employees, filed as
                            Exhibit 10(ii) to the Company's Annual Report on
                            Form 10-K for the year ended December 31, 2002 and
                            incorporated herein by reference.*

                      (iii) Form of Supplemental Benefit Plan covering certain
                            employees, filed as Exhibit 10(iii) to the
                            Company's Annual Report on Form 10-K for the year
                            ended December 31, 2002 and incorporated herein by
                            reference.*

                      (iv)  Receivables Sale Agreement, dated June 30, 2000,
                            between Graybar Electric Company, Inc. and Graybar
                            Commerce Corporation filed as Exhibit 10.1 to the
                            Company's Quarterly Report on Form 10-Q for the
                            period ended June 30, 2003 (Commission File No.
                            0-255) and incorporated herein by reference;
                            Amendment to Receivables Sale Agreement, dated
                            August 15, 2006, filed as Exhibit 10(x) to the
                            Company's Registration Statement on Form S-1
                            (Registration No. 333-137249) and incorporated
                            herein by reference.

                      (v)   Receivables Purchase Agreement, dated June 30,
                            2000, among Graybar Commerce Corporation, as
                            Seller, Graybar Electric Company, Inc., as
                            Servicer, Falcon Asset Securitization Corporation
                            and Bank One, NA, as Agent, and other financial
                            institutions named therein; Amendments to
                            Receivables Purchase Agreement dated January 1,
                            2001, June 22, 2001, August 29, 2001, October 26,
                            2001, December 31, 2001, October 23, 2002, and
                            December 23, 2002, filed as Exhibit 10.2 to the
                            Company's Quarterly Report on Form 10-Q for the
                            period ended June 30, 2003 (Commission File No.
                            0-255) and incorporated herein by reference;
                            Amendment to Receivables Purchase Agreement dated
                            October 22, 2003, filed as Exhibit 10(v) to the
                            Company's Registration Statement on Form S-2
                            (Registration No. 333-118575) and incorporated
                            herein by reference; Amendment to Receivables
                            Purchase Agreement, dated September 26, 2005,
                            filed as Exhibit 10(v) to the Company's Annual
                            Report on Form 10-K for the year ended December
                            31, 2005 and incorporated herein by reference;
                            Amendment to Receivables Purchase Agreement dated
                            August 15, 2006, filed as Exhibit 10(ix) to the
                            Company's Registration Statement on Form S-1
                            (Registration No. 333-137249) and incorporated
                            herein by reference.

                      (vi)  Five-Year Credit Agreement, dated May 8, 2007,
                            among Graybar Electric Company, Inc., Bank of
                            America N.A., as Agent, and other banks named
                            therein; filed as Exhibit 10.1 to the Company's
                            Quarterly Report on Form 10-Q for the period ended
                            March 31, 2007 (Commission File No. 0-255) and
                            incorporated herein by reference.

                                      42

<PAGE>
<PAGE>

<FN>
*Compensation arrangement

         (21)     List of subsidiaries of the Company.

         (31.1)   Certification Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002 - Principal Executive Officer.

         (31.2)   Certification Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002 - Principal Financial Officer.

         (32.1)   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
                  Principal Executive Officer.

         (32.2)   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
                  Principal Financial Officer.







                                      43