Exhibit 13
----------

<PAGE> 1

[GRAYBAR LOGO]


ANNUALReport
2000

[PHOTO]




<PAGE>
<PAGE> 2

-----------------------------------------------------------------------------
                             GRAYBAR DIRECTORS
-----------------------------------------------------------------------------

[PHOTO]

STANDING (left to right):
DENNIS E. DESOUSA
Senior Vice President,
Comm/Data Business

ROBERT A. REYNOLDS, JR.
President and
Chief Executive Officer

SEATED:
JUANITA H. HINSHAW
Senior Vice President and
Chief Financial Officer

CARL L. HALL
Chairman of the Board

CHARLES R. UDELL
Senior Vice President,
Electrical Business

[PHOTO]

STANDING (left to right):
GOLDEN W. HARPER
Vice President-
Operations

JACK F. VAN PELT
Vice President-
Human Resources

SEATED:
THOMAS S. GURGANOUS
District Vice President-
Richmond District

THOMAS F. DOWD
Vice President,
Secretary and General Counsel

[PHOTO]

STANDING (left to right):
GARY D. HODGES
District Vice President-
Phoenix District

GERARD J. MCCREA
District Vice President-
Northeastern Comm/Data District

SEATED:
RICHARD D. OFFENBACHER
District Vice President-
Southeastern Comm/Data District

JOHN C. LOFF
District Vice President-
Seattle District

RICHARD A. COLE
District Vice President-
Chicago District



<PAGE>
<PAGE> 3

COMPANY'S BUSINESS
Graybar Electric Company, Inc. is engaged internationally in the distribution
of electrical and communications products and integrated supply services
primarily to contractors, industrial plants, telephone companies, power
utilities, and commercial users.  All products sold by the Company are
purchased by the Company from others.

MARKETS SERVED
Electrical Contractor
Commercial & Industrial
Voice & Data Communications
Power Utility
International

---------------------------------------------------------
                   CAPITAL STOCK DATA
---------------------------------------------------------

Number of Equity Security Holders as of December 31, 2000:

<TABLE>
---------------------------------------------------------
<CAPTION>
Title of Class                 Number of Security Holders
---------------------------------------------------------
<S>                                                 <C>
Preferred Stock                                        72
Common Stock                                          155
Voting Trust Certificates for Common Stock          5,270
---------------------------------------------------------
</TABLE>


---------------------------------------------------------
                    DIVIDEND DATA
---------------------------------------------------------

Common Stock, par value $1; stated value $20.

<TABLE>
<CAPTION>
Dividends declared for year:     2000       1999     1998
---------------------------------------------------------
<S>                             <C>        <C>      <C>
First Quarter                   $ .30      $ .30    $ .30
Second Quarter                    .30        .30      .30
Third Quarter                     .30        .30      .30
Fourth Quarter                  $1.10      $1.10    $1.10
---------------------------------------------------------
</TABLE>

On December 13, 2000 a five percent stock dividend was declared to
shareholders of record on January 15, 2001. Shares representing this
dividend were issued on February 1, 2001.

---------------------------------------------------------
                       CONTENTS
---------------------------------------------------------

<TABLE>
<S>                                    <C>
Graybar Officers
and Directors                          Inside Front Cover
Letter to Shareholders                                  2
Market Review                                           4
Operations Review                                      13
Financial Review                                       17
District Management                                    30
Locations                                              32
</TABLE>


                                                                           1


<PAGE>
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-----------------------------------------------------------------------------
                         LETTER TO SHAREHOLDERS
-----------------------------------------------------------------------------

      Two thousand was an intriguing, exciting and memorable year. Graybar
achieved another annual record with revenue growth of more than 21%, gaining
market share as we reached a new sales milestone of $5.2 billion.

      Early in the year, Richard H. Haney, Senior Vice President of the
Electrical Business, became ill and, upon his return, elected to retire.
Shortly thereafter, Carl L. Hall stepped down as President and CEO for health
reasons, but at the request of the Board, stayed on as Chairman.  This led to
significant changes within the management of the Company; however, our
attention to succession planning and our management strength and depth
enabled us to continue to move ahead despite these unfortunate circumstances.
Consequently, Robert A. Reynolds, Jr. was elected President and CEO; Charles
R. Udell was elected Senior Vice President of our Electrical Business and
Dennis E. DeSousa was elected Senior Vice President of our Comm/Data
Business.  Chuck and Dennis were succeeded in their marketing assignments by
Bruce C. Judkins as Vice President-Electrical Marketing, and Alan L. Eddings
as Vice President-Comm/Data Marketing.

      John W. Wolf, Vice President and Treasurer, retired April 1.  John was
a valuable member of the Board of Directors, and we wish him well in his
retirement.  He was succeeded as Vice President and Treasurer by Jon N. Reed.
In May, we were very pleased to announce the appointment of Juanita H.
Hinshaw to the new position of Senior Vice President and Chief Financial
Officer.  Juanita comes to us most recently from Monsanto where she held the
position of Vice President and Treasurer.

      Two District Vice Presidents, William L. King at Boston and Frank Mossa
at New York, elected to retire in 2000.  This prompted the appointments of
Donald M. Block and Ronald P. Segraves as District Vice Presidents in these
districts.  Gary D. Hodges, District Vice President at Phoenix, was
subsequently appointed to succeed Bill on the Board of Directors.

      Other significant senior management changes were:

      Dennis J. Grousosky appointed Vice President-Service at Corporate
Headquarters.

      Michael W. Fowler named Vice President-Corporate Accounts and
Integrated Supply.

      Rob R. Bezjak appointed District Vice President of the South Central
Comm/Data District.

      John C. Mansfield named District Vice President of the new SPN
District.

      John H. Hawfield appointed District Vice President of the new Houston
District, and Ted M. Choate named District Vice President-Service at Houston.

      In the Tampa District, Robert C. Lyons appointed District Vice
President, and Jerry D. Nichols named District Vice President-Service.

      Driven by our growth, 2000 was another year of planned investment in
personnel and facilities, as well as in improved processes, training,
information systems and e-business.

      In 2000, the Company added 1,411 new employees, increasing our sales
force by 10% and our customer service personnel by 12%.  One of our largest
investments was in corporate accounts personnel.  The centralized merchandise
accounts payable project (MAPP) has had a positive effect on our headcount
while providing processing efficiencies to the Company.  We expect to see the
same effect from our zones and central purchasing as we centralize and
redeploy personnel to align with our strategic initiatives.  Overall, we


      [SALES GRAPH]                           [NET INCOME GRAPH]

2


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-----------------------------------------------------------------------------
                         LETTER TO SHAREHOLDERS
-----------------------------------------------------------------------------

continue to see gains in productivity as measured by sales and gross margin
per employee and salaries as a percentage of sales.

      Our zone initiative continues to move forward with nine zones currently
open and seven more to follow.  The newest zones are opened with a Warehouse
Management System (WMS) installed, and simultaneously we are retrofitting the
existing zones with WMS.  The impact of the zone warehouses has been
significant.  Today, approximately 30% of warehouse sales are flowing through
these nine zones, which is equivalent to the warehouse sales of 240 locations
just a few years ago.  Late in the year, we realigned the districts around
the zone clusters to improve our processes and the flow of product to our
customers.  This led to the reopening of the Houston District in October and
the opening of the California District effective January 1, 2001.

=============================================================================
"GRAYBAR ACHIEVED ANOTHER ANNUAL RECORD WITH REVENUE GROWTH OF MORE THAN 21%,
GAINING MARKET SHARE AS WE REACHED A NEW SALES MILESTONE OF $5.2 BILLION."
=============================================================================

      We added five new facilities in 2000 with the acquisition of Ireland
Electric in Augusta, Georgia, and Splane Electric in the Detroit area.  In
addition, we opened two customer-specific districts.  Our SPN District
supports Lucent Technologies with headquarters in Greensboro, North Carolina,
and service facilities in Northborough, Massachusetts; Nashville, Tennessee;
Oklahoma City, Oklahoma; and Fresno, California.  Our Aurora District near
Denver supports our business with Qwest, formerly U S WEST. These two
significant customers require support and service that is unique and
deserving of a dedicated offering.

      We stepped up our customer diversity initiatives in 2000 with an
investment in "INNOV8," a minority company that provides customers with
services not provided by traditional distribution.

      The knowledge and skills of our employees are key to our continued
success, and we believe our investment in employee training is paying off.
Beginning in 2000, all required training on product, management, personal
skills and procedures was offered and tracked from a single source--the
Graybar Virtual Campus.  This simplified access to training in all
formats--classroom, online, e-class, workbook, job aids and videos--for all
employees and enhanced and simplified training progress reporting for
supervisors.

      We continue to make progress in our information systems initiatives,
our largest capital expenditure year over year.  Late in the year, we
purchased a mainframe upgrade for installation in early 2001.  Our Strategic
Planning Group is currently leading an initiative to assess our long-term
systems needs.

      Graybar's e-business strategy is to continue to be "fast to follow."
That means building the platform we need to move the direction e-business
moves, while building the catalog to support our customers and the
marketplaces our customers are requesting we support.  We think this strategy
is sound and aggressive, yet conservative enough to avoid costly investments
in unproven ventures.

      Overall, Graybar is on solid ground.  Plans are being implemented,
management is sound and all of us are focused on the customer.  We believe
this formula for success will lead to further growth and bottom line
profitability.


/s/ ROBERT A. REYNOLDS, JR.
Robert A. Reynolds, Jr.
President and CEO

/s/ CARL L. HALL
Carl L. Hall
Chairman of the Board

St. Louis, Missouri
March 2001


                                                                           3


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                             MARKET REVIEW
-----------------------------------------------------------------------------

      Year 2000 ushered in unprecedented growth for Graybar as we further
penetrated major markets and achieved double-digit sales increases in both
the Electrical and Comm/Data Business Groups.  It was a year of transition as
we prepared for the realignment of districts around our regional zones on
January 1, 2001.  Implementing objectives established by our strategic
planning initiative, we appointed directors at corporate headquarters to
champion our efforts in specific markets.

      Graybar has more sales people in the marketplace than ever before.  We
continue to specialize our sales force by focusing and training along
industry lines, positioning us for future growth in our targeted markets.

      Large multi-location companies remain focused on driving cost out of
the supply chain, and Graybar offers the standard and specialized
distribution services these customers are demanding.  In addition, our
business with national contractor operating companies continues to expand as
these customers seek a distributor that can provide products and services
nationwide.


                                [MAP]


4


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                             MARKET REVIEW
-----------------------------------------------------------------------------

      Our strategy of putting more resources into developing and serving
national accounts led to significant increases in this business over the
previous year.  In 2000, we further aligned our national accounts sales
organization around markets with focused sales teams serving segments such as
petrochemical, automotive, government and comm/data service providers and
end-users.  Based on our success with government agencies and national
contractor operating companies, we assigned directors of corporate accounts
to focus increased attention on these important customers. On the comm/data
side, we appointed directors to lead the sales teams focusing on the Service
Provider and End-User Markets.

=============================================================================
"WE CONTINUE TO SPECIALIZE OUR SALES FORCE BY FOCUSING AND TRAINING ALONG
INDUSTRY LINES, POSITIONING US FOR FUTURE GROWTH IN OUR TARGETED MARKETS."
=============================================================================

      To support this growth, we enhanced the corporate accounts services
group, which now includes customer service, implementation, administration
and finance.  In addition, we increased the business and financial analysis
function of the group.

      National accounts are a significant portion of the Company's total
business.  The combination of Graybar's value-added capabilities, local sales
and service and corporate sales coverage differentiates us in the marketplace
while enabling us to maximize our success with these valuable customers.

      Improved customer service and increased return on inventory investment
are among the goals of our Category Management initiative, which was refined
in 2000 in both business groups.  With Category Management, we enhance our
value to the customer by having the right products in sufficient quantities
at the right price while reducing costs throughout the supply chain.  The
coordinated efforts of corporate marketing, purchasing and logistics advanced
our development of this strategic initiative during 2000.

      Employee training remains a major focus throughout the Company.  More
than 232 instructor-led courses held during the year trained 3,897 employees
on topics ranging from performance management to presentation skills.  Live
e-classes were used to coach employees on the value and benefits of tracking
lost sales.  Using the e-class online training method allows real time
interaction between the instructor and large numbers of participants in our
branch and district locations.  Building and expanding product knowledge is
an essential element of both online and instructor-led training, and
participation in our supplier-sponsored factory training schools hit an
all-time high in 2000.

                                                                           5


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                             MARKET REVIEW
-----------------------------------------------------------------------------


[PHOTO]

GRAYBAR'S EXHIBIT AT THE NECA TRADE SHOW FEATURED THE "WHITE LIGHTNING II"
ELECTRIC CAR AND DRIVER PAT RUMMERFIELD WITH THE THEME "EFFICIENCY=SPEED."


                         CONSTRUCTION MARKET

      Graybar achieved a double-digit sales increase in the Construction
Market in 2000 as robust growth in this market was fueled by a strong
economy.  Increased emphasis throughout the Company on being the leading
provider of value-added construction services led to growth across all
districts.

      Consolidation in the Construction Market continues to be a driving
force in altering the landscape of electrical contractors.  One of the most
dynamic changes in this market is the use of the Internet to provide
e-business solutions, including design/build drawings, estimating, accounting
and material procurement.  Graybar offers the industry's best services--
including e-business solutions--to meet our customers' demands.

      Our corporate accounts team has positioned Graybar to become the
preferred distributor for national electrical contractors by helping develop
a strategy to address the needs of these significant customers.  Led by the
Director, Corporate Accounts-Construction Market and supported by a team of
corporate account managers and the corporate account services group, Graybar
is positioned as the premier distributor to many national electrical
contractors.

      In November, we finalized the strategy behind the 2001 Construction
Market Plan, which emphasizes refining our value proposition for targeted
customers.  The plan includes the enhancement of Project Manager(SM), our
proprietary project management software, and the development of project teams
in designated national markets.

=============================================================================
"INCREASED EMPHASIS THROUGHOUT THE COMPANY ON BEING THE LEADING PROVIDER OF
VALUE-ADDED CONSTRUCTION SERVICES LED TO GROWTH ACROSS ALL DISTRICTS."
=============================================================================


6


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                             MARKET REVIEW
-----------------------------------------------------------------------------

      Graybar again attracted consistently large crowds at the National
Electrical Contractors Association (NECA) Annual Trade Show.  Powered by the
theme, Graybar Construction Services--"efficiency = speed," we sent a
compelling message to electrical contractors that Graybar is the one
distributor that can provide proven capabilities to improve their
performance, reduce their expenses and help them gain a competitive
advantage.

      At the Independent Electrical Contractors (IEC) convention in San
Antonio we emphasized our service capabilities to show that efficiency does
equal speed.  Graybar was a Platinum Partner sponsor of the convention,
supporting numerous events including the IEC Apprentice Wire Off competition
with our supplier partners.

                           INDUSTRIAL MARKET

      Customers in the Industrial Market continue to look for ways
to reduce total costs and increase profitability in an ever-demanding,
competitive marketplace.  Their strategy focuses on product and process
standardization, improved productivity through technology and consolidation
of the supply base to leverage size and scale.  This relentless pursuit to
reduce costs continues to boost Graybar's growth in the Industrial Market.

      Our Industrial Market sales increased at a double-digit rate for the
fourth consecutive year in 2000.  This success is attributed to the expansion
in most industrial sectors of the economy and the increase in Graybar's
ability to provide value to customers and suppliers.  Graybar's emphasis on
providing customers with skilled and well-trained industrial sales
representatives, backed by leading product brands with inventory available
through the branches and zones, contributed to our growth in this market.

      In January, we created the position of Director, Industrial Market at
corporate headquarters.  This position has responsibility for monitoring the
changing needs of industrial customers and directing Graybar's response to
our customers' product and service requirements.

      In November, we introduced the 2001 Industrial Market Plan, which
targets specific segments of this fast-growing market.  The plan provides for
the development of additional value-added services, specialized sales and
sales management and the development of an industrial training curriculum for
new as well as experienced industrial sales personnel.


[PHOTO]

OUR TOOL TABLOID OFFERED CUSTOMERS A WIDE SELECTION OF HAND AND POWER TOOLS,
METERS AND TESTERS.


                                                                           7


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-----------------------------------------------------------------------------
                             MARKET REVIEW
-----------------------------------------------------------------------------

[PHOTO]


                          COMM/DATA MARKETS

      Technological innovation has long been the driver of rapid growth in
the Comm/Data Markets.  In 2000, the dynamics of change resulted in even more
radical events.  Convergence, which previously applied primarily to new
products and applications, became associated with the business imperatives of
manufacturers and consumers, and computer power gave way to bandwidth demand.
As a result, new companies sprang up around these opportunities, spin-offs
were as significant as mergers and, in some cases, competitors found
themselves partners.  Distinctions between markets and channels were blurred.
Data manufacturers began providing key system and PBX solutions, and vice
versa.  We saw electrical contractors acquiring skills and products in
structured cabling.  Factories integrated their electrical and networking
systems.

=============================================================================
"GRAYBAR'S SALES TO DATA CONTRACTORS GREW SIGNIFICANTLY DESPITE SOME MATURING
IN THE STRUCTURED CABLING BUSINESS, WHICH HAS BEEN ROBUST OVER THE PAST
SEVERAL YEARS."
=============================================================================

      The common denominator in all this change was clearly a heightened
demand for service.  Since Graybar's product is service, our comm/data
business grew and developed ahead of the overall market.  We focused on
significant customers, and we added skilled support people and tools. We sold
more than products; we bundled and kitted.  We managed acquisition costs--for
our customers and suppliers, and ourselves.  In short, we took share.

      In January, Graybar divided the Central Comm/Data District, resulting
in improved focus and direction in the territory.  The Aurora District, and
later in the year the SPN District, were organized around the specific needs
of two strategic customers.  We developed the structure for a sixth Comm/Data
District, California, to further focus on that large market in 2001.

ENTERPRISE MARKET

      Enterprise customers are the commercial/industrial end-users of
comm/data products and services.  Understandably, this Enterprise Market
includes our largest group of customers--resellers.  Our voice


8


<PAGE>
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-----------------------------------------------------------------------------
                             MARKET REVIEW
-----------------------------------------------------------------------------

resellers (interconnects) and the manufacturers of voice products did not
experience general growth in 2000.  The sluggishness was attributed to Y2K
hangovers and uncertainty over the pending impact of IP (Internet protocol)
telephony.  However, Graybar's sales of voice products grew due to new
marketing programs, close attention to our inventory deployment and the
efforts of our specialized sales force.  Graybar introduced an award-winning,
web-based customer incentive program called "epoint."  Large numbers of voice
dealers purchased a substantial volume of products under the program, earning
valuable incentive points.  In 2001, we will expand this successful program to
cable and connectivity suppliers for our resellers.

      Graybar's sales to data contractors grew significantly despite some
maturing in the structured cabling business, which has been robust over the
past several years.  We improved profitability by refining our pricing
strategy as well as enjoying the advantages of several new regional zones.
Collaboration between marketing, logistics, purchasing, information systems
and the field organization resulted in better utilization of Graybar's
resources.

[PHOTO]

A NEW BROCHURE INTRODUCED VIP2000, THE SECOND PHASE OF OUR INDEPENDENTLY
VERIFIED STRUCTURED CABLING SOLUTION.

      The VIP(SM) (Verified Independently for Performance) program, which was
introduced in the fall of 1999, positioned Graybar as a credible resource in
the structured cabling industry.  VIP1000 assured cabling system performance
for dozens of end-user customers and put Graybar at the forefront of major
Category 5E  projects.  VIP2000 was introduced in 2000 to address the
proposed Category 6 standards, and all of our manufacturers have worked hard
to assure our inventories are nothing short of the customers' requirements.
We have the only independently verified structured cabling solution in the
industry.

      The success of VIP(SM) led to the development of additional support for
commercial and industrial customers and the community of consultants who
determine many of the procurement choices.  Sales and product training, in
conjunction with more network system specialists, sales representatives and
customer service representatives, accounted for significant growth and
momentum throughout our Enterprise Market.  Graybar has been careful to
manage these aggressive strategies to reach consultants and end-users, while
being mindful of the important role of our reseller customers and major
manufacturers.

                                                                           9


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                             MARKET REVIEW
-----------------------------------------------------------------------------

                        SERVICE PROVIDER MARKET

      For the second consecutive year, sales to service providers grew at the
highest rate among all Comm/Data Markets.  Customers demand higher speeds,
more bandwidth, quicker turn-ups, lower costs, and enhanced services.
Nowhere in the Comm/Data Market is the landscape changing more than with
these companies who build and maintain the "pipes" carrying information vital
to every business and consumer.  It is apparent that distribution's
value-added services are crucial to this success, regardless of the products
in question.  By partnering with Graybar, our service provider customers
improved their time to market and decreased their overall costs.  We
integrated and leveraged resources across the entire company, made good
fiscal decisions, introduced procurement and design solutions, aided with
forecasting and purchasing, bundled/kitted/tested, staged and delivered.

      In 2000, Graybar invested in  Innov8 Solutions, USA, LLC, a Tier-I
minority-owned business capable of providing value-added services for
strategic opportunities.  Customers in the Service Provider Market often need
partners to provide outsourcing and handling of tasks within the procurement
cycle.  When these opportunities are found, Graybar lends qualified help
through Innov8, creating unique services when necessary.

                            UTILITY MARKET

      Graybar's share in the Utility Market continues to grow in a time of
change and uncertainty for this industry.  As in previous years, the leading
areas for growth were in the northeastern and southeastern regions of the
country.  Future opportunities for serving this market will expand as we
enhance our service capabilities through our national logistics program.

      In addition to mega-mergers in 2000, the deregulated side of this
industry continues to look for new revenue-generating opportunities.  Some
of the nation's largest electrical and communication contractors are either
fully or partially owned by utility companies.  These changes will provide
new opportunities for Graybar as we continue to evaluate and augment our
service offering for this market.

                        INTERNATIONAL MARKETS

      Our international focus continues to be on servicing corporate account
customers doing business internationally.  In 2000, we increased penetration
of this business by reorganizing our teams around this goal.

                            NORTH AMERICA

      Harris & Roome (H&R) had record sales in 2000 and expanded its work
force.  H&R continued its work toward ISO registration, adding two branches
to the quality standard during the year.

      Graybar Ontario experienced double-digit sales increases and added
personnel in all locations.  The six Graybar Ontario locations received their
ISO9002 registration in 2000.  In September, the Kitchener headquarters moved
to a new, larger facility.

      During the year, plans were developed to combine the Canadian
subsidiaries into one company, Graybar Canada, with headquarters in Halifax,
Nova Scotia.

      Graybar de Mexico experienced slower than expected growth in 2000 due
to economic instabilities in Mexico.  However, plans were implemented to
refocus efforts on large engineering contractors and corporate/national
accounts with locations in Mexico.  This refocus of strategy will enhance
the strong comm/data business and allow Graybar de Mexico to participate
in several new maintenance and repair operations (MRO) agreements.

      Graybar Puerto Rico continued to increase share in all
markets--electrical, comm/data and industrial.


10


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-----------------------------------------------------------------------------
                             MARKET REVIEW
-----------------------------------------------------------------------------

During 2000, Graybar Puerto Rico moved to a state-of-the-art facility in
Carolina, Puerto Rico.  The move to Carolina strongly positions Graybar
Puerto Rico to provide better service to our corporate accounts and support
new initiatives in the pharmaceutical industry.

                             ASIA/PACIFIC

      In 2000, the Asia/Pacific business climate did not rebound as
anticipated.  As a result, business plans were put into place to focus on
multi-national corporate accounts.  During the last quarter of 2000, a new
operating system was installed for positioning our service offering to these
corporate accounts.  Meetings with key comm/data and electrical suppliers
resulted in the local support necessary to improve market share in 2001.

                          MARKETING SUPPORT

                   GRAYBAR FINANCIAL SERVICES (GFS)

      Our equipment leasing and financing subsidiary enjoyed impressive
growth over the previous year.  The GFS sales team was again expanded and
modified with the intent to place leasing sales representatives in key
Graybar locations throughout the U.S.  We now have a field presence in San
Francisco, Los Angeles, Denver, St. Louis, Chicago, Atlanta, Tampa and
Boston.  Coupled with our national account manager and the St. Louis based
sales and service team, this approach enabled us to improve and enhance the
level of service that consistently exceeds our customers' expectations.

      Leading technology and systems continue to provide our lease
administrators with the ability to relay credit decisions to our customers in
minutes, generate documents electronically and conduct business over the
Internet.

=============================================================================
"BY PARTNERING WITH GRAYBAR, OUR SERVICE PROVIDER CUSTOMERS IMPROVED THEIR
TIME TO MARKET AND DECREASED THEIR OVERALL COSTS."
=============================================================================

      In April, GFS was integrated into the Treasury Department.  Over a
four-month period, 280 financial department personnel underwent a
comprehensive training program on how to sell the benefits of leasing with
Graybar's customers.

                           COUNTER MARKETING

      Graybar's counter marketing continued to build on the theme of
targeting products and services to the professional installer.  Our suppliers
support our merchandising efforts by working with us to design effective
planograms and packaging for their products.

      The Counter Marketing Department now manages nearly 200
corporate-approved planograms, representing more than 4,500 stockkeeping
units.   These planograms were used as guides to install 15 new flagship
counters in 2000.  We have updated 107 counters to flagship standards since
the program began in 1993.  This trend will continue, with 30 flagship
counters targeted for completion in 2001.

                                                                           11


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                             MARKET REVIEW
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                              E-BUSINESS

      The vision of using web technologies to build applications and making
those applications available over the Internet has fueled unprecedented
growth in business-to-business (B2B) commerce.

      In 2000, many of Graybar's customers began implementing
Internet-enabled procurement solutions (e-procurement) to decrease
unauthorized purchasing, increase reporting capabilities across commodity
groups and improve the overall procurement process. During the year, Graybar
worked with more than 25 customers who began implementation of e-procurement
systems using Commerce One or Ariba software.

      Customer-sponsored vertical e-marketplaces--Internet-based purchasing
communities created by several companies in a particular industry--include
Covisint (automotive), Petrocosm (petrochemical), and Pantellos (utilities).
Graybar participates in some e-marketplaces, most notably Covisint and ICGC
(an exchange focused on mid- to large-size industrial companies).  Most of
Graybar's business through e-procurement systems and e-marketplaces is with
current customers.  However, we have won additional business with a number of
new customers due to our ability to provide the e-business solutions they
require.

      In addition to the e-procurement and e-marketplace activity, we
continued to work on our own Internet initiatives, including a new electronic
catalog, which will be attached to GraybarNet(R) and our Graybar.com web site
by April 2001.  Containing a more extensive set of products than our current
version, the new catalog will also provide improved search capabilities.

      Graybar continued to expand other e-commerce tools including Electronic
Data Interchange (EDI), Hot Key and GraybarNet(R).  In 2000, our EDI
transactions continued to grow, as did the number of EDI trading partners.
We are currently testing additional EDI functionality with our suppliers to
automate our cost recovery process.

      Our sales through GraybarNet(R) increased as did the number of
transactions that supported our customers' inquiries for availability,
pricing and order status.  The use of GraybarNet(R) as a customer service
tool is a trend we expect to continue even after the release of the new Gweb
application that is scheduled for completion later in 2001.

      During the year, Hot Key recorded over one million transactions
including availability checks, order status checks and some referral
transactions.  Hot Key is a differentiator for Graybar, and we continue to
add suppliers to this process.

      We expect the amount of business conducted electronically to continue
to grow as Graybar, our suppliers and our customers strive to meet sales and
profitability goals by automating as many transactions as possible.


[PHOTO]

THE GRAYBAR DIGEST REMAINED A KEY ELEMENT IN OUR DIRECT MAIL PROGRAM.


                      ADVERTISING AND SALES PROMOTION

      Graybar's advertising initiatives continued to focus on building brand
awareness of our electrical and comm/data service capabilities.  This was
accomplished through a coordinated series of print advertising, trade press
editorials, direct mail and service-specific brochures.


12


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-----------------------------------------------------------------------------
                           OPERATIONS REVIEW
-----------------------------------------------------------------------------

      Our print advertising showed favorable results, with a number of our
ads winning awards for outstanding readership and ad recall in publications
such as Purchasing, Upstart, Commercial Building and EC&M.  An ad in
Commercial Building achieved an unprecedented 100% recall score.

      Success in trade press editorials was evident, with many articles
published about our service capabilities.  From VIP(SM) and Project
Manager(SM) to our logistics initiatives and Graybar Financial Services, we
communicated the message.  The highlights were cover stories in Communication
News on our comm/data business and in Industrial Maintenance and Plant
Operation on our electrical business.

      Continuing to keep our customers informed of our service and products
solutions, Graybar's supplement to EC&M (Electrical Construction and
Maintenance) magazine was introduced, and two issues were published.  The
Comm/Data Digest and the Electrical Tool Tabloid rounded out our direct mail
efforts.

             MINORITY/WOMEN-OWNED BUSINESS ENTERPRISES (MWBE)

      In addition to the establishment of Innov8 Solutions, Graybar moved its
MWBE initiative to the next level with new teaming agreements signed between
MWBE companies and Graybar.  A variety of Graybar customers benefited from
these agreements through the procurement of traditional Graybar products and
integrated supply initiatives.

      We continue to improve our MWBE reporting system.  In 2000, we
contracted with a company that will help us identify all the MWBE companies
within our supplier database.

=============================================================================

                           CUSTOMER SERVICE

      During 2000, the Company piloted the new Service Organization in the
Tampa District.  The goal of the pilot was to form a central services group
to process orders and provide customer support to the electrical and
comm/data sales groups, allowing them to focus on increasing sales and market
share.

=============================================================================
"DURING 2000, THE COMPANY PILOTED THE NEW SERVICE ORGANIZATION IN THE TAMPA
DISTRICT."
=============================================================================

      Michael W. Fowler, Richard D. Offenbacher and Dennis J. Grousosky,
District Vice Presidents of Electrical Sales, Comm/Data Sales and Service,
respectively, collaborated on this project to ensure a smooth transition and
a successful result.


[PHOTO]


THE ROGERS, MINNESOTA, REGIONAL ZONE IS THE NINTH SUCH FACILITY IN THE
COMPANY'S LOGISTICS NETWORK.


                                                                           13


<PAGE>
<PAGE> 16

-----------------------------------------------------------------------------
                           OPERATIONS REVIEW
-----------------------------------------------------------------------------

      Many internal processes were revised to improve branch service
performance including:

* reengineering the receiving process to ensure accurate locator maintenance
during put-away;

* maintaining current status each day on shipping, receiving, put-away, cycle
counting and locator maintenance;

* creating a separately staffed will-call area to expedite the handling of
called-in orders;

* implementing a daily warehouse huddle and housekeeping schedule;

* creating the "Sweep" method at the counter to provide better service during
peak periods;

* eliminating the use of customer service representatives for back-up at the
counter to improve in-bound call handling within the office;

* implementing customer tours of our operation, giving our front-line people
the opportunity to demonstrate our order system and value-added services
first-hand to our key accounts.

      After nine months of work, the Tampa group had demonstrated significant
progress, and the Company moved forward with three additional Service
Districts.  On October 1, the new Houston District opened, using the Service
Organization structure.  On January 1, 2001, the new California District and
the New York District were added as Service Districts.  In all three cases,
management of the zone warehouse shifted to the District Vice President of
Service.

      We expect additional districts to be converted during 2001.  Main house
locations in each district are implementing the pilot's enhanced service
procedures to prepare for future conversions.

      The Company is confident this new organizational structure will support
our strategic growth goals for the coming years by improving service
performance and allowing both sales groups to improve focus on key markets.

                          ADMINISTRATIVE GROUP

      During 2000, the Administrative Group focused on identifying causes of
rework and streamlining processes.

      MAPP--electronic processing and approval of merchandise invoices--was
piloted in three districts in 1999.  During 2000, users were trained and
implementation completed at all remaining locations.

      New procedures were instituted to reduce the volume of billbacks
between Graybar locations.

      Cost Recovery Program (CRP) set-ups were restructured to permit
electronic filing of claims in 2001, and an interim electronic process was
instituted with two suppliers.

      Sales tax exceptions were identified as a large contributor to rework
issues for both administrative and accounting personnel. System changes,
which limited access to the exception options in customers' files to the
District Administrative Managers, resulted in a substantial reduction of tax
exception errors.

      Supplier statements, billbacks and claims were given high priority in
2000.  Old issues were resolved and relationships developed with all major
suppliers, facilitating the prevention and reduction of future rework.

      In mid-year, we began a review of all General Instructions, procedural
manuals and standard forms to ensure that they include current and correct
information.  This project will be completed in 2001.

                          CORPORATE PURCHASING

      Zone openings, further implementation of MAPP, refinement of our
training departmental reorganization were significant milestones for the
Corporate Purchasing Group in 2000.

      Zone warehouse openings in Rogers, Minnesota, and Youngstown, Ohio,
required substantial


14


<PAGE>
<PAGE> 17

-----------------------------------------------------------------------------
                           OPERATIONS REVIEW
-----------------------------------------------------------------------------

coordination between the Corporate Purchasing, Marketing and Logistics
Departments to determine appropriate inventory, place orders and coordinate
shipments with suppliers.

      Departmental training focused on the basics as well as certification on
our purchasing software.  For many departmental positions, Corporate
Purchasing created a syllabus outlining the required training activities
beginning with the first day of employment.  We are working toward finalizing
syllabuses for all jobs.

      In the fall, Price Cost Services became part of the Corporate
Purchasing Department.  As part of this reorganization, we appointed
Purchasing Managers specializing in electrical, comm/data, cost, price,
training and quality, and data services.

[PHOTO]

=============================================================================
"ZONE WAREHOUSES OPENING IN ROGERS, MINNESOTA, AND YOUNGSTOWN, OHIO, REQUIRED
SUBSTANTIAL COORDINATION BETWEEN THE CORPORATE PURCHASING, MARKETING AND
LOGISTICS DEPARTMENTS."
=============================================================================


                                 SAFETY

      In 2000, the Company's rate of recordable, work-related injuries
remained below the industry average. For the third consecutive year, the
Cincinnati District was the recipient of the Graybar President's Safety Award
for the lowest rate of recordable injuries per hours worked.  The St. Louis
District received the Graybar Fleet Safety Award for the fewest vehicle
accidents as a percentage of fleet size.  St. Louis has earned this award two
of the past three years.  The Richmond District was the runner-up for both
awards.

                       BUILDINGS AND PROPERTIES

New locations opened in 2000:

      Rogers, Minnesota
            (Regional Zone)

      Youngstown, Ohio
            (National Zone)

      Wilkes-Barre, Pennsylvania
      Racine, Wisconsin
      Gurnee, Illinois
      Joliet, Illinois
      Augusta, Georgia
      Belleville, Michigan
      East Livonia, Michigan
      Madison Heights, Michigan
      Shelby Township, Michigan

      In addition, four new locations were opened in 2000 to support the new
SPN District.  The new SPN locations are warehouses in Fresno, California;
Oklahoma City, Oklahoma; Smyrna, Tennessee; and an office location in
Greensboro, North Carolina.


                                                                           15


<PAGE>
<PAGE> 18

-----------------------------------------------------------------------------
                           OPERATIONS REVIEW
-----------------------------------------------------------------------------

                          INFORMATION SYSTEMS

      Warehouse Management System (WMS) installation and refinements remained
a major focus during 2000.  Systems were installed in Regional Zones in
Stafford, Texas; Rogers, Minnesota; and Youngstown, Ohio.  During the first
quarter of 2001, WMS will be installed in our zones in Fresno, California;
Lewisville, Texas; and Seattle, Washington.  In addition, several system
modifications were made to our mortgaging routines in support of the
logistics initiative.

      The Company's wide area network was restructured during the year.
Asynchronous transfer mode (ATM) and fiber ring technologies were installed
and T1 access provided for more than 100 locations.  The redesign permits
systems in each branch to operate independently in case of a network failure.

      To support our growing infrastructure, a mainframe upgrade purchased at
year end will be installed in early 2001.  Our computer infrastructure now
supports more than 9,000 connected users.

      Year 2000 saw the completion of the company-wide conversion to the
merchandise accounts payable system.  Now, imaging and workflow technologies
are used to centrally manage and process the entire Company's merchandise
payables.

      An improved method developed to manage credit card reconciliation
resulted in improved cash flow and reduced by 80% the time required for
monthly bank reconciliation.

=============================================================================
"TO SUPPORT OUR GROWING INFRASTRUCTURE, A MAINFRAME UPGRADE PURCHASED AT YEAR
END WILL BE INSTALLED IN EARLY 2001."
=============================================================================

      A new, automated accounts receivable application will be piloted in
2001.  This process permits customers to remit payments directly to our bank.
Remittance details will be provided from the bank via the Internet.

      A major revision to Interactive Quote, our quotation software program,
incorporated more than one hundred user suggestions.  This upgrade resulted
in a more user-friendly and better designed application to meet our business
needs.  Significant changes included adding the capability to convert a quote
containing both stock and non-stock items into an order and the ability to
ship the stock material from multiple locations.

      Applications provided in support of our major accounts during the year
included bar coding changes, PC report capabilities, freight carrier
interfaces and special billing processes.

      A major database restructure was completed with more than 4,500 changes
made.  With the growth of our business, the restructure was necessary to
increase the field sizes to accommodate larger transactional values such as
quantities, costs and report values.


16



<PAGE>
<PAGE> 19

                              FINANCIAL REVIEW

<TABLE>
                              TABLE OF CONTENTS

     <S>                                                               <C>
     SELECTED CONSOLIDATED FINANCIAL DATA                              18

     MANAGEMENT'S DISCUSSION AND ANALYSIS
     OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                  19

     CONSOLIDATED FINANCIAL STATEMENTS                                 21

     REPORT OF INDEPENDENT AUDITORS                                    29
</TABLE>


                                                                           17


<PAGE>
<PAGE> 20

<TABLE>

                                                    FINANCIAL REVIEW
---------------------------------------------------------------------------------------------------------------------


                                          SELECTED CONSOLIDATED FINANCIAL DATA
                                     (Stated in thousands except for per share data)

<CAPTION>
                                                        2000         1999          1998         1997          1996
---------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>           <C>          <C>           <C>
SALES                                            $ 5,227,467  $ 4,311,405   $ 3,744,075  $ 3,348,496   $ 3,001,049
   Less--Cash discounts                              (13,564)     (11,465)      (11,872)     (10,474)       (9,637)
---------------------------------------------------------------------------------------------------------------------
NET SALES                                          5,213,903    4,299,940     3,732,203    3,338,022     2,991,412
---------------------------------------------------------------------------------------------------------------------
COST OF MERCHANDISE SOLD                          (4,268,764)  (3,514,228)   (3,042,176)  (2,726,147)   (2,453,962)
---------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE                                     (46,681)     (30,241)      (23,998)     (19,713)      (16,687)
---------------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
   Current                                           (44,395)     (43,899)      (37,167)     (29,750)      (28,599)
   Deferred                                            1,196         (130)       (4,919)      (6,820)       (1,722)
---------------------------------------------------------------------------------------------------------------------
      Total provision for income taxes               (43,199)     (44,029)      (42,086)     (36,570)      (30,321)
---------------------------------------------------------------------------------------------------------------------
NET INCOME                                            66,157       64,659        59,544       52,963        44,533
---------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO
   COMMON STOCK                                       66,154       64,654        59,539       52,957        44,526
---------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES
   OUTSTANDING (A)                                     6,101        6,276         5,848        6,117         6,300
---------------------------------------------------------------------------------------------------------------------
INCOME PER SHARE OF
   COMMON STOCK (A)                                    10.84        10.30         10.18         8.66          7.07
---------------------------------------------------------------------------------------------------------------------
   Cash dividends per share                             2.00         2.00          2.00         2.00          2.00
---------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
   Balance, beginning of year                        241,473      193,838       149,226      115,218        84,801
   Add--Net income                                    66,157       64,659        59,544       52,963        44,533
---------------------------------------------------------------------------------------------------------------------
                                                     307,630      258,497       208,770      168,181       129,334
---------------------------------------------------------------------------------------------------------------------
   Less dividends
      Preferred ($1.00 per share)                         (3)          (5)           (5)          (6)           (7)
      Common (in cash)                               (11,583)     (11,442)      (10,031)      (9,576)       (9,480)
      Common (in stock)                               (5,639)      (5,577)       (4,896)      (9,373)       (4,629)
---------------------------------------------------------------------------------------------------------------------
                                                     (17,225)     (17,024)      (14,932)     (18,955)      (14,116)
---------------------------------------------------------------------------------------------------------------------
   Balance, end of year                              290,405      241,473       193,838      149,226       115,218
   Proceeds on stock subscriptions,
      shares unissued                                     49           56            --           37            52
STOCK OUTSTANDING
   Preferred                                              57           68           108          119           143
   Common                                            119,828      118,270       103,690      103,749        98,321
---------------------------------------------------------------------------------------------------------------------
                                                  $  410,339  $   359,867   $   297,636  $   253,131   $   213,734
---------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income                  (542)        (204)         (836)          --            --
---------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                        $  409,797  $   359,663   $   296,800  $   253,131   $   213,734
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                       1,843,438    1,698,544     1,167,847    1,051,821       881,636
LONG-TERM DEBT                                    $  238,349  $   255,897   $   269,570  $   139,748   $   151,659
---------------------------------------------------------------------------------------------------------------------
<FN>
(A) Adjusted for the declaration of 5% stock dividends in 2000, 1999, 1998
and 1996, and a 10% stock dividend in 1997. Prior to adjusting for the stock
dividends, the average common shares outstanding for 1999, 1998, 1997 and 1996
were 5,692, 5,052, 4,805 and 4,712, respectively.
</FN>
</TABLE>

This summary should be read in conjunction with the consolidated financial
statements and related notes thereto included elsewhere in this annual report.

18


<PAGE>
<PAGE> 21

                              FINANCIAL REVIEW
-----------------------------------------------------------------------------

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS
         (Stated in thousands except for share and per share data)

RESULTS OF OPERATIONS
2000 COMPARED TO 1999
      Net sales in 2000 were 21.3% higher than in 1999. The higher net sales
resulted from improvements in the market sectors of the economy in which the
Company operates. The impact of inflation on sales and cost of sales was not
significant in 2000.
      Gross margin in 2000 increased 20.3% compared to 1999 primarily due to
the increased sales in the electrical and communications markets.
      The increase in selling, general and administrative expenses in 2000
compared to 1999 occurred largely because of growth in personnel complement
and increases in compensation and related expenses. In addition, continued
implementation of a company-wide customer service and logistics project
resulted in higher selling, general and administrative expenses in 2000
compared to 1999 due to increases in the Company's number of facilities and
related staffing and start-up expenses. The increased expenses were
anticipated by management and are expected to provide future benefits to the
Company's results of operations.
      Interest expense increased in 2000 compared to 1999 primarily due to
increased levels of borrowing incurred to finance higher aggregate levels of
inventory and receivables. Interest rates on 2000 short-term borrowings were
higher than for the same period in 1999.
      Other income includes service charges for special services provided to
one customer of $4,434 and $3,839 and gains on sale of property of $0 and
$540 in 2000 and 1999, respectively.
      The combined effect of the increase in gross margin and the decrease in
other income, together with the increases in selling, general and
administrative expenses, interest expense and depreciation and amortization,
resulted in an increase in income before provision for income taxes of $668
in 2000 compared to 1999.

1999 COMPARED TO 1998
      Net sales in 1999 were 15.2% higher than in 1998. The higher net sales
resulted from improvements in the market sectors of the economy in which the
Company operates. The impact of inflation on sales and cost of sales was not
significant in 1999.
      Gross margin in 1999 increased 13.9% compared to 1998 primarily due to
the increased sales in the electrical and communications markets.
      The increase in selling, general and administrative expenses in 1999
compared to 1998 occurred largely because of growth in personnel complement
and increases in compensation and related expenses. In addition, continued
implementation of a company-wide customer service and logistics project
resulted in higher selling, general and administrative expenses in 1999
compared to 1998 due to increases in the Company's number of facilities and
related staffing and start-up expenses. The increased expenses were
anticipated by management and are expected to provide future benefits to the
Company's results of operations.
      Interest expense increased in 1999 compared to 1998 primarily due to
increased levels of borrowing incurred to finance higher aggregate levels of
inventory and receivables. Interest rates on 1999 short-term borrowings were
slightly higher than for the same period in 1998.
      Other income includes service charges for special services provided to
one customer of $3,839 and $1,000 and gains on sale of property of $540 and
$808 in 1999 and 1998, respectively.
      The combined effect of the increases in gross margin and other income,
together with the increases in selling, general and administrative expenses,
interest expense and depreciation and amortization, resulted in an increase
in income before provision for income taxes of $7,058 in 1999 compared to
1998.

                                                                           19


<PAGE>
<PAGE> 22

                              FINANCIAL REVIEW
-----------------------------------------------------------------------------

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS
         (Stated in thousands except for share and per share data)

FINANCIAL CONDITION AND LIQUIDITY
      The financial condition of the Company continues to be strong. At
December 31, 2000 current assets exceeded current liabilities by $449,257,
down $1,398 from December 31, 1999. The current assets at December 31, 2000
were sufficient to meet the cash needs required to pay current liabilities.
Although the average number of days of sales in accounts receivable has
increased during 2000 and 1999, the substantial increase in accounts
receivable resulted primarily from the growth in sales experienced by the
Company. Merchandise inventory levels were lower at December 31, 2000 when
compared to December 31, 1999 primarily due to a decrease in specific
inventory carried to support customer contract agreements. Inventory turnover
decreased during 2000 and 1999 due largely to the continued implementation of
a company-wide customer service and logistics project to redeploy inventory
into a system of national zones, regional zones and branch locations.
Although the project objective is to provide better customer service, reduce
overall costs and reduce inventory as a percentage of sales, management
expected a temporary increase in inventory, unrelated to sales volume, during
the transition to the new system. This transition to the new customer service
and logistics system is planned to be complete by early 2002. The Company
does not have any other plans or commitments that would require significant
amounts of additional working capital.
      At December 31, 2000 the Company had available to it unused lines of
credit amounting to $258,000. These lines are available to meet short-term
cash requirements of the Company. Bank borrowings outstanding during 2000 and
1999 varied from a minimum of $304,000 and $14,000 to a maximum of $461,000
and $406,000, respectively.
      In July 1999 the Company entered into a $410,000 Revolving Credit Loan
Agreement with a group of banks at an interest rate based on the London
Interbank Offered Rate (LIBOR). The credit agreement expires in July 2004.
Amounts outstanding under the Revolving Credit Loan Agreement totaled
$180,000 at December 31, 2000.
      The Company entered into an accounts receivable securitization program
in June 2000 which provides for the sale of the Company's trade accounts
receivables to a wholly owned, bankruptcy remote, special purpose subsidiary,
Graybar Commerce Corporation. The trade accounts receivable purchases are
financed through the issuance of commercial paper under a revolving liquidity
facility. Under the securitization program, Graybar Commerce Corporation has
granted a security interest in its trade accounts receivable. Borrowings
outstanding under the securitization program at December 31, 2000 were $200
million, the maximum available under the program. The program expires in June
2003.
      The Revolving Credit Loan Agreement 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 has funded its capital requirements from operations, stock
issuances to its employees and long-term debt. Cash provided by operations
during 2000 amounted to $31,252 compared to $258,944 cash used by operations
in 1999. Cash provided from the sale of common stock and proceeds received on
stock subscriptions amounted to $1,080 and $14,413 in 2000 and 1999,
respectively. Additional cash of approximately $400 will be provided in 2001
as a result of payments to be made for stock subscribed to by employees under
the 1998 Common Stock Purchase Plan.
      Capital expenditures for property were $58,747, $31,322 and $28,977 for
the years ended December 31, 2000, 1999 and 1998, respectively. Purchases of
treasury stock were $5,179, $5,394 and $5,303 for the years ended December
31, 2000, 1999 and 1998, respectively. Dividends paid were $11,498, $10,670
and $9,802 for the years ended December 31, 2000, 1999 and 1998,
respectively.

20


<PAGE>
<PAGE> 23
<TABLE>
                               CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------

                     CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                    (Stated in thousands except for share and per share data)

<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                              2000           1999           1998
---------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>
SALES, NET OF RETURNS AND ALLOWANCES                    $5,227,467     $4,311,405     $3,744,075
   Less--Cash discounts                                    (13,564)       (11,465)       (11,872)
---------------------------------------------------------------------------------------------------
      Net Sales                                          5,213,903      4,299,940      3,732,203
---------------------------------------------------------------------------------------------------
COST OF MERCHANDISE SOLD                                (4,268,764)    (3,514,228)    (3,042,176)
---------------------------------------------------------------------------------------------------
      Gross Margin                                         945,139        785,712        690,027
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES              (724,325)      (593,236)      (513,193)
TAXES, OTHER THAN INCOME TAXES                             (43,021)       (36,301)       (32,415)
DEPRECIATION AND AMORTIZATION                              (29,220)       (27,176)       (25,809)
---------------------------------------------------------------------------------------------------
      Income from operations                               148,573        128,999        118,610
OTHER INCOME, NET                                            7,464          9,930          7,018
INTEREST EXPENSE                                           (46,681)       (30,241)       (23,998)
---------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES                   109,356        108,688        101,630
---------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
   Current                                                 (44,395)       (43,899)       (37,167)
   Deferred                                                  1,196           (130)        (4,919)
---------------------------------------------------------------------------------------------------
      Total provision for income taxes                     (43,199)       (44,029)       (42,086)
---------------------------------------------------------------------------------------------------
NET INCOME                                                  66,157         64,659         59,544
---------------------------------------------------------------------------------------------------
RETAINED EARNINGS, BEGINNING OF YEAR                       241,473        193,838        149,226
   Cash dividends-
      Preferred, $1.00 per share each year                      (3)            (5)            (5)
      Common, $2.00 per share each year                    (11,583)       (11,442)       (10,031)
   Common Stock dividend                                    (5,639)        (5,577)        (4,896)
---------------------------------------------------------------------------------------------------
RETAINED EARNINGS, END OF YEAR                          $  290,405     $  241,473     $  193,838
---------------------------------------------------------------------------------------------------
NET INCOME PER SHARE OF COMMON STOCK                    $    10.84     $    10.30     $    10.18
---------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                                                           21


<PAGE>
<PAGE> 24

<TABLE>
                                       CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                          CONSOLIDATED BALANCE SHEETS                             December 31,
                          (Stated in thousands except for share and per share data)            2000           1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>            <C>
ASSETS
---------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
   Cash                                                                                  $   27,614     $   16,750
   Trade receivables (less allowances of $9,411 and $5,729, respectively)                   765,546        588,631
   Merchandise inventory                                                                    748,754        843,061
   Other current assets                                                                      25,444          7,489
---------------------------------------------------------------------------------------------------------------------
      Total current assets                                                                1,567,358      1,455,931
---------------------------------------------------------------------------------------------------------------------
PROPERTY, AT COST
   Land                                                                                      24,178         21,997
   Buildings                                                                                209,460        184,765
   Furniture and fixtures                                                                   156,245        136,567
   Capital equipment leases                                                                  20,380         31,525
---------------------------------------------------------------------------------------------------------------------
                                                                                            410,263        374,854
   Less--Accumulated depreciation and amortization                                          166,832        161,948
---------------------------------------------------------------------------------------------------------------------
                                                                                            243,431        212,906
---------------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES                                                                           991          1,787
---------------------------------------------------------------------------------------------------------------------
OTHER ASSETS                                                                                 31,658         27,920
---------------------------------------------------------------------------------------------------------------------
                                                                                         $1,843,438     $1,698,544
---------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
   Short-term borrowings                                                                 $  406,199     $  340,604
   Current portion of long-term debt                                                         24,521         20,359
   Trade accounts payable                                                                   533,138        512,623
   Accrued payroll and benefit costs                                                         58,196         50,107
   Other accrued taxes                                                                       15,593         13,552
   Dividends payable                                                                          6,343          6,256
   Other payables and accruals                                                               74,111         61,775
---------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                           1,118,101      1,005,276
---------------------------------------------------------------------------------------------------------------------
POSTRETIREMENT BENEFITS LIABILITY                                                            77,191         77,708
---------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT                                                                              238,349        255,897
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                              Shares at December 31,
                                                                 2000           1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>            <C>           <C>            <C>
SHAREHOLDERS' EQUITY
   Capital stock-
      Preferred, par value $20 per share,
         authorized 300,000 shares--
         Issued to shareholders                                 2,990          3,412
         In treasury, at cost                                    (125)            --
---------------------------------------------------------------------------------------------------------------------
         Outstanding                                            2,865          3,412             57             68
---------------------------------------------------------------------------------------------------------------------
      Common, stated value $20 per share,
         Authorized                                         7,500,000      7,500,000
         Issued to voting trustees                          5,685,490      5,587,485
         Issued to shareholders                               335,340        337,757
         In treasury, at cost                                 (29,440)       (11,729)
---------------------------------------------------------------------------------------------------------------------
         Outstanding                                        5,991,390      5,913,513        119,828        118,270
---------------------------------------------------------------------------------------------------------------------
   Common shares subscribed                                                                     572          1,206
   Retained earnings                                                                        290,405        241,473
   Accumulated other comprehensive income                                                      (542)          (204)
---------------------------------------------------------------------------------------------------------------------
                                                                                            410,320        360,813
         Less--Subscriptions receivable                                                         523          1,150
---------------------------------------------------------------------------------------------------------------------
         TOTAL SHAREHOLDERS' EQUITY                                                         409,797        359,663
---------------------------------------------------------------------------------------------------------------------
                                                                                         $1,843,438     $1,698,544
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements

22


<PAGE>
<PAGE> 25

<TABLE>
                                  CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------------------------------

                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (Stated in thousands)

<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                                    2000          1999           1998
--------------------------------------------------------------------------------------------------------
<S>                                                            <C>            <C>             <C>
CASH FLOWS FROM OPERATIONS
   Net Income                                                    $66,157       $64,659        $59,544
--------------------------------------------------------------------------------------------------------
   Adjustments to reconcile net income
      to cash provided (used) by operations -
      Depreciation and amortization                              29,220         27,176         25,809
      Deferred income taxes                                      (1,196)           130          4,919
      Gain on sale of property                                       --           (540)          (808)
      Changes in assets and liabilities:
         Trade receivables                                     (176,915)      (128,615)       (57,561)
         Merchandise inventory                                   94,307       (402,655)       (51,092)
         Other current assets                                   (17,955)        (3,544)          (972)
         Other assets                                            (6,483)        (2,565)        (6,728)
         Trade accounts payable                                  20,515        167,754         17,900
         Accrued payroll and benefit costs                        8,089          5,641          2,542
         Other accrued liabilities                               15,513         13,615          9,196
--------------------------------------------------------------------------------------------------------
                                                                (34,905)      (323,603)       (56,795)
--------------------------------------------------------------------------------------------------------
   Net cash flow provided (used) by operations                   31,252       (258,944)         2,749
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from sale of property                              2,756          1,519          4,892
      Capital expenditures for property                         (58,747)       (31,322)       (28,977)
      Investment in joint venture                                 2,745          6,690          9,571
--------------------------------------------------------------------------------------------------------
   Net cash flow used by investing activities                   (53,246)       (23,113)       (14,514)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
      Net increase (decrease) in short-term borrowings           65,595        296,656        (92,977)
      Proceeds from long-term debt                                3,524             --        140,000
      Repayment of long-term debt                               (17,499)       (11,864)       (14,664)
      Principal payments under capital equipment leases          (3,165)        (4,586)        (4,060)
      Sale of common stock                                        1,080         14,413            300
      Purchases of treasury stock                                (5,179)        (5,394)        (5,303)
      Dividends paid                                            (11,498)       (10,670)        (9,802)
--------------------------------------------------------------------------------------------------------
   Net cash flow provided by financing activities                32,858        278,555         13,494
--------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                  10,864         (3,502)         1,729
--------------------------------------------------------------------------------------------------------
CASH, BEGINNING OF YEAR                                          16,750         20,252         18,523
--------------------------------------------------------------------------------------------------------
CASH, END OF YEAR                                               $27,614        $16,750        $20,252
--------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                                                           23


<PAGE>
<PAGE> 26

<TABLE>
                                     CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------------------------

                          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                          (Stated in thousands)

<CAPTION>
                                                                  COMMON                    ACCUMULATED
                                                                  STOCK                        OTHER
                                      COMMON        PREFERRED   SUBSCRIBED,    RETAINED    COMPREHENSIVE
                                      STOCK           STOCK      UNISSUED      EARNINGS       INCOME        TOTAL
                                     --------       ---------   -----------   ---------    -------------  --------
<S>                                  <C>             <C>         <C>          <C>           <C>           <C>
December 31, 1997                    $103,749        $   119     $    37      $ 149,226     $             $253,131

Net income                                                                       59,544                     59,544

Currency translation adjustments                                                               (836)          (836)
                                                                                                          --------
Comprehensive income                                                                                        58,708
                                                                                                          --------
Stock issued                              337                                                                  337

Stock redeemed                         (5,292)           (11)                                               (5,303)

Advance payments                                                     (37)                                      (37)

Dividends declared                      4,896                                   (14,932)                   (10,036)
                                     --------        -------     -------      ---------     -------       --------
December 31, 1998                    $103,690        $   108     $     0      $ 193,838     $  (836)      $296,800
                                     ========        =======     =======      =========     =======       ========
Net income                                                                       64,659                     64,659

Currency translation adjustments                                                                632            632
                                                                                                          --------
Comprehensive income                                                                                        65,291
                                                                                                          --------
Stock issued                           14,357                                                               14,357

Stock redeemed                         (5,354)           (40)                                               (5,394)

Advance payments                                                      56                                        56

Dividends declared                      5,577                                   (17,024)                   (11,447)
                                     --------        -------     -------      ---------     -------       --------
December 31, 1999                    $118,270        $    68     $    56      $ 241,473     $  (204)      $359,663
                                     ========        =======     =======      =========     =======       ========
Net income                                                                       66,157                     66,157

Currency translation adjustments                                                               (338)          (338)
                                                                                                          --------
Comprehensive income                                                                                        65,819
                                                                                                          --------
Stock issued                            1,087                                                                1,087

Stock redeemed                         (5,168)           (11)                                               (5,179)

Advance payments                                                      (7)                                       (7)

Dividends declared                      5,639                                   (17,225)                   (11,586)
                                     --------        -------     -------      ---------     -------       --------
DECEMBER 31, 2000                    $119,828        $    57     $    49      $ 290,405     $  (542)      $409,797
                                     ========        =======     =======      =========     =======       ========

</TABLE>

See accompanying Notes to Consolidated Financial Statements

24


<PAGE>
<PAGE> 27

                      CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
         (Stated in thousands except for share and per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
      The consolidated financial statements include the accounts of Graybar
Electric Company, Inc. and its subsidiary companies. All significant
intercompany balances and transactions have been eliminated.

REVENUE RECOGNITION
      Revenue from the sale of the Company's products is recognized upon
shipment to the customer. Costs of the products are recorded as cost of
merchandise sold when the related revenue is recognized.

ESTIMATES
      The preparation of financial statements in conformity with generally
accepted accounting principles 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.

RECLASSIFICATIONS
      Certain reclassifications of prior year presentations have been made to
conform to the 2000 presentation.

MERCHANDISE INVENTORY
      Inventory is stated at the lower of cost (determined using the last-in,
first-out (LIFO) cost method) or market. LIFO accounting is generally a
conservative method of accounting that, compared with other inventory
accounting methods, provides better matching of current costs with current
revenues. Had the first-in, first-out (FIFO) method been used, inventory
would have been approximately $8,912 and $11,457 greater than reported under
the LIFO method at December 31, 2000 and 1999, respectively.

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>
-----------------------------------------------------------------------------
<S>                                                  <C>
Buildings                                                          42 years
-----------------------------------------------------------------------------
Permanent fixtures -                                  Over the lives of the
leased property                                           respective leases
-----------------------------------------------------------------------------
Furniture, fixtures and equipment                             4 to 14 years
-----------------------------------------------------------------------------
Capital equipment                                     Over the lives of the
leases                                                    respective leases
-----------------------------------------------------------------------------
</TABLE>

      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.
      Equipment under capital leases 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 the property are capitalized.
      The Company capitalizes interest expense on major construction and
development projects while in progress.

DESCRIPTION OF BUSINESS AND CREDIT RISK
      Graybar Electric Company, Inc. is engaged internationally in the
distribution of electrical and communications products and integrated supply
services primarily to contractors, industrial plants, telephone companies,
power utilities, and commercial users. All products sold by the Company are
purchased by the Company from others.
      Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The Company's business activity is primarily with customers in the United
States; however, the Company has limited sales activity in several
international locations. The Company performs ongoing credit evaluations of
its customers, and a significant portion of trade receivables is secured by
lien or bond rights. The Company maintains allowances for potential credit
losses, and such losses historically have been within management's
expectations.

PENDING ACCOUNTING PRONOUNCEMENTS
      In June 1998 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 133, as amended by SFAS No. 138,
"Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted by the Company effective January 1, 2001. The
statement requires the Company to recognize all derivatives on the balance
sheet at fair value.
      Based on the Company's derivative positions at January 1, 2001, the
Company recorded a liability for the fair value of existing derivatives of
approximately $2 million and a corresponding decrease in other comprehensive
income.

                                                                           25


<PAGE>
<PAGE> 28

                      CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

2. INCOME TAXES
      The provisions for income taxes recorded in the Consolidated Statements
of Income and Retained Earnings are as follows:

<TABLE>
<CAPTION>
Years Ended December 31:          2000              1999               1998
-----------------------------------------------------------------------------
<S>                            <C>               <C>                <C>
Federal income tax
  Current                      $38,621           $39,126            $32,442
  Deferred                      (1,118)              406              4,212
State income tax
  Current                        5,774             4,773              4,725
  Deferred                         (78)             (276)               707
-----------------------------------------------------------------------------
Financial statement
  income tax provision         $43,199           $44,029            $42,086
-----------------------------------------------------------------------------
</TABLE>

      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)                                2000              1999
-----------------------------------------------------------------------------
<S>                                             <C>               <C>
Postretirement benefits                         $ 30,529          $ 30,734
Payroll accruals                                   7,146             7,443
Bad debt reserves                                  3,417             2,097
Other deferred tax assets                          5,994             3,960
Inventory                                         (3,000)           (1,889)
Prepaid pension                                   (9,469)           (8,558)
Fixed asset depreciation                         (13,193)          (12,992)
Fixed asset gains                                 (6,502)           (6,508)
Accounts receivable                                 (723)           (1,446)
Other deferred tax liabilities                   (10,251)          (10,089)
-----------------------------------------------------------------------------
                                                $  3,948          $  2,752
-----------------------------------------------------------------------------
</TABLE>

      Deferred tax assets included in Other Current Assets were $2,957 and
$965 in 2000 and 1999, respectively.
      A reconciliation between the "statutory" federal income tax rate and
the effective tax rate in the Consolidated Statements of Income and Retained
Earnings is as follows:

<TABLE>
<CAPTION>
Years Ended December 31:                2000           1999           1998
-----------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>
"Statutory" tax rate                    35.0%          35.0%          35.0%
State and local income taxes,
  net of federal benefit                 3.0            3.0            3.4
Other, net                               1.5            2.5            3.0
-----------------------------------------------------------------------------
Effective tax rate                      39.5%          40.5%          41.4%
-----------------------------------------------------------------------------
</TABLE>


<PAGE>
3. CAPITAL STOCK
      The Company's capital stock is owned by its employees and retirees.
Neither common nor preferred stock may be sold by the holder thereof, except
by first offering it to the Company. The Company may buy any common shares so
offered at the price at which they were issued ($20) with appropriate
adjustments for current dividends or may call all or part of the preferred
stock at par plus accrued dividends.
      During 1998 the Company offered to eligible employees the right to
subscribe to 1,000,000 shares of common stock at $20 per share in accordance
with the provisions of the Company's Common Stock Purchase Plan dated October
12, 1998. This resulted in the subscription of 778,202 shares ($15,564).
Subscribers under the Plan elected to make payments under one of the
following options: (i) all shares subscribed for prior to January 22, 1999;
(ii) a portion of such shares prior to January 22, 1999, and the balance in
monthly installments through payroll deductions (or in certain cases where a
subscriber is no longer on the Company's payroll, through pension deductions
or direct monthly payments) over a 34-month period; or (iii) all shares
pursuant to the installment method. Shares were issued and Voting Trust
Certificates were delivered to subscribers as of January 22, 1999, in the
case of shares paid for prior to January 22, 1999. Shares will be issued and
Voting Trust Certificates will be 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 reacquired and retired by the
Company in the three years ended December 31:

<TABLE>
<CAPTION>
                         PREFERRED                      COMMON
                 REACQUIRED        RETIRED     REACQUIRED        RETIRED
-----------------------------------------------------------------------------
<S>                   <C>            <C>          <C>            <C>
2000                    547            422        258,431        240,720
1999                  1,974          1,974        267,736        281,713
1998                    565            623        264,580        257,998
-----------------------------------------------------------------------------
</TABLE>

26


<PAGE>
<PAGE> 29

                      CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
LONG-TERM DEBT WAS COMPOSED OF:                      2000              1999
-----------------------------------------------------------------------------
<S>                                              <C>               <C>
6.59% note, unsecured, due in
   semiannual installments of $3,750
   beginning in October 2003 through
   April 2013                                    $ 75,000          $ 75,000
7.36% note, unsecured, maturing
   May 2011, installments of $3,095
   due semiannually in each of the
   years 2001 through 2010 with
   final payment of $3,094 due in 2011             65,000            65,000
6.65% note, unsecured, due in annual
   installments of $3,636 in each of the
   years 2003 through 2013                         40,000            40,000
6.25% note, unsecured, maturing
   June 2004, installments of $7,000
   due annually in each of the years
   2000 through 2004                               28,000            35,000
6.21% to 8.30% capital equipment
   leases, various maturities                      15,478            14,909
6.44% note, unsecured, due in
   quarterly installments of $893
   through January 2005                            15,178            18,750
9.23% note secured by a first
   mortgage on various properties,
   maturing May 2005, installments
   of $2,725 due annually in each of
   the years 1995 through 2004 with
   final payment of $2,750 due in 2005             13,650            16,375
Variable rate mortgages, secured by
   facilities, various maturities                   4,839             1,743
7.74% note, secured by facility, due
   in quarterly installments through
   August 2006                                      4,025             4,725
7.75% note, secured by facility, due
   in quarterly installments through
   March 2005                                       1,700             2,200
Other notes                                             0             2,554
-----------------------------------------------------------------------------
                                                 $262,870          $276,256
Less current portion                               24,521            20,359
-----------------------------------------------------------------------------
                                                 $238,349          $255,897
</TABLE>

LONG-TERM DEBT MATURES AS FOLLOWS:

<TABLE>
-----------------------------------------------------------------------------
<S>                                                                <C>
2002                                                               $ 24,834
2003                                                                 33,899
2004                                                                 33,898
2005                                                                 25,463
2006-2013                                                           120,255
-----------------------------------------------------------------------------
                                                                   $238,349
-----------------------------------------------------------------------------
</TABLE>

      The net book value of property securing various long-term debt
instruments was $30,829 at December 31, 2000.
      The Company's borrowings under short-term credit agreements consist of
issuances of commercial paper and borrowings under revolving credit
agreements and bank lines of credit.
      In July 1999 the Company entered into a $410,000 Revolving Credit Loan
Agreement with a group of banks at an interest rate based on the London
Interbank Offered Rate (LIBOR). The credit agreement expires in July 2004.
Amounts outstanding under the Revolving Credit Loan Agreement totaled
$180,000 at December 31, 2000.
      The Company entered into an accounts receivable securitization program
in June 2000 which provides for the sale of the Company's trade accounts
receivables to a wholly owned, bankruptcy remote, special purpose subsidiary,
Graybar Commerce Corporation. The trade accounts receivable purchases are
financed through the issuance of commercial paper under a revolving liquidity
facility. Under the securitization program, Graybar Commerce Corporation has
granted a security interest in its trade accounts receivable. Borrowings
outstanding under the securitization program at December 31, 2000 were $200
million, the maximum available under the program. The program expires in June
2003.
      Borrowings under short-term credit agreements varied from a minimum of
$304,000 and $14,000 to a maximum of $461,000 and $406,000 in 2000 and 1999,
respectively. The average amount of borrowings outstanding under short-term
credit agreements during 2000 and 1999 amounted to approximately $389,000 and
$175,000 at weighted average interest rates of 6.92% and 5.81%, respectively.
The averages are based on the daily amounts outstanding during each year. The
weighted average interest rate for amounts outstanding at December 31, 2000
and 1999 was 7.14% and 6.76%, respectively.
      The Company had unused lines of credit of approximately $258,000 as of
December 31, 2000. Certain lines require maintenance of compensating balances
of up to 5% of the available lines of credit or annual fees of up to
twenty-five basis points of the committed lines of credit.
      The Revolving Credit Loan Agreement and certain other note agreements
have various covenants which 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 carrying amounts of the Company's outstanding long-term debt and
short-term borrowings approximate their fair values at December 31, 2000.

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 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
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 and money market funds.
      The Company and its subsidiaries provide certain health care and life
insurance benefits for retired employees through the Retiree Welfare Plan
(the 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.

                                                                           27


<PAGE>
<PAGE> 30

                      CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------------------------------

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 has no assets at December 31, 2000 or 1999.
      The following table sets forth information regarding the Company's
pension and other postretirement benefits as of December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                          Postretirement
                            Pension Benefits                 Benefits
                            -----------------           ------------------
                            2000         1999           2000          1999
                        --------------------------------------------------
<S>                     <C>          <C>            <C>           <C>
Accumulated
   benefit
   obligation           $125,400     $112,100       $103,270      $ 87,070
                        --------     --------       --------      --------
Projected
   benefit
   obligation            176,000      157,700             --            --
Fair value of
   plan assets           143,375      144,015             --            --
                        --------     --------       --------      --------
Funded status            (32,625)     (13,685)      (103,270)      (87,070)
                        --------     --------       --------      --------
Prepaid
   (accrued) benefit
   cost recognized
   in the balance
   sheet                $ 23,760     $ 18,360       $(77,191)     $(77,708)
</TABLE>

      Weighted average assumptions as of December 31 are:

<TABLE>
<CAPTION>
                                                          Postretirement
                            Pension Benefits                 Benefits
                            -----------------           ------------------
                            2000         1999           2000          1999
                           -----------------------------------------------
<S>                         <C>          <C>            <C>           <C>
Discount rate               7.50%        8.00%          7.50%         8.00%
Expected return
   on plan assets           9.50%        9.50%            --            --
Rate of
   compensation
   increase                 4.50%        5.00%            --            --
Health care cost
   trend on
   covered charges            --           --           6.75%         7.25%
</TABLE>

      The following presents information regarding the plans for the years
ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                          Postretirement
                            Pension Benefits                 Benefits
                            -----------------           ------------------
                            2000         1999           2000          1999
                       ---------------------------------------------------
<S>                     <C>          <C>            <C>           <C>
Employer
 contributions          $ 14,932     $  9,629        $ 8,111       $ 7,306
Participant
 contributions                --           --            229           184
Benefits paid           $(15,140)    $(13,531)       $(8,340)      $(7,490)
                        --------     --------       --------      --------
</TABLE>


<PAGE>
      The net periodic cost recognized for the defined benefit pension plan
was $9,532, $8,973 and $6,883 for each of the three years ended December 31,
2000, 1999 and 1998, respectively.
      The net periodic cost recognized for the postretirement benefit plan
was $7,594, $7,252 and $6,811 for each of the three years ended December 31,
2000, 1999 and 1998, respectively.
      For measurement of the net periodic postretirement benefit cost, a
7.25% annual rate of increase in per capita cost of covered health care
benefits was assumed for 2000 with the rate assumed to remain at that level.
      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 computation of net income per share of common stock is based on the
weighted average number of common shares outstanding during each year. The
average numbers of shares used in computing net income per share of common
stock were 6,101,310, 6,276,161 and 5,848,372 in 2000, 1999 and 1998,
respectively, adjusted for the declaration of 5% stock dividends in each of
those years.

7. COMMITMENTS
      Rental expense was $28,576, $24,559 and $16,372 in 2000, 1999 and 1998,
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, 2000 are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-----------------------------------------------------------------------------
<S>                                                                <C>
2001                                                                $32,806
2002                                                                 27,998
2003                                                                 22,052
2004                                                                 15,717
2005                                                                 10,126
Subsequent to 2005                                                   20,398
-----------------------------------------------------------------------------
</TABLE>

      In September 2000 the Company entered into a swap agreement to manage
interest rates on amounts due under certain operating leases. The agreement,
which expires in July 2013, is based on a notional amount of $28.7 million.
The agreement calls for an exchange of interest payments with the Company
receiving payments based on a London Interbank Offered Rate (LIBOR) floating
rate, and making payments based on a fixed rate of 6.92%. There is no
exchange of the notional amount upon which the payments are based. The
differential paid on the swap agreement in 2000 was recorded as interest
expense and was not material to the Company's results of operations. The fair
value of the agreement is not recognized in the financial statements at
December 31, 2000.

8. STATEMENTS OF CASH FLOWS
      During 2000, 1999 and 1998 income taxes paid totaled $55,241, $44,030
and $36,602; interest paid totaled $48,610, $26,976 and $22,349; and
liabilities assumed in connection with capitalized leases totaled $3,754,
$6,661 and $9,962, respectively.

28



<PAGE>
<PAGE> 31
                      REPORT OF INDEPENDENT AUDITORS
------------------------------------------------------------------------------

                        (Letterhead Ernst & Young)


                      Report of Independent Auditors

To the Shareholders and
  the Board of Directors
Graybar Electric Company, Inc.

We have audited the accompanying consolidated balance sheets of Graybar
Electric Company, Inc. as of December 31, 2000 and 1999, and the related
consolidated statements of income and retained earnings, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. 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 auditing standards generally
accepted in the 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
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, 2000 and 1999, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.

                                       /s/ Ernst & Young LLP


February, 20, 2001

                                                                             29



<PAGE>
<PAGE> 32

                DISTRICT MANAGEMENT AS OF DECEMBER 31, 2000
-----------------------------------------------------------------------------
------------------------------------------------
NEW YORK DISTRICT
------------------------------------------------

Ronald P. Segraves
Vice President

   [PHOTO]

Keith E. Davis
Operating Manager

Brian R. Buchholz
Financial Manager

------------------------------------------------
BOSTON DISTRICT
------------------------------------------------

Donald M. Block
Vice President

   [PHOTO]

Gerald G. Pollick
Operating Manager

Joseph P. Peduto
Financial Manager
------------------------------------------------
PITTSBURGH DISTRICT
------------------------------------------------
Steven M. Schooley
Vice President

   [PHOTO]

Wade V. Leidecker
Sales Manager

C. Robert Smith
Operating Manager

Peter M. Wingrove
Financial Manager

------------------------------------------------
CINCINNATI DISTRICT
------------------------------------------------

Kenneth L. Netherton
Vice President

   [PHOTO]

J. William Grindle
Operating Manager

Stephen C. Beckmann
Financial Manager

------------------------------------------------
ATLANTA DISTRICT
------------------------------------------------

D. Steven Smith
Vice President

   [PHOTO]

Bertie M. Wilson
Operating Manager

Darrel D. Schilling
Financial Manager

------------------------------------------------
RICHMOND DISTRICT
------------------------------------------------

Thomas S. Gurganous
Vice President

   [PHOTO]

J. Wayne Andrews
Sales Manager

Wallace H. Hancock
Sales Manager

T. N. (Nick) Fleming
Operating Manager

Ronald J. Grabar
Financial Manager

------------------------------------------------
TAMPA DISTRICT
------------------------------------------------

Robert C. Lyons
Vice President

   [PHOTO]

Jerry D. Nichols
Vice President-Service

Richard C. Hird
Financial Manager

------------------------------------------------
CHICAGO DISTRICT
------------------------------------------------

Richard A. Cole
Vice President

   [PHOTO]

Thomas E. Walsh
Sales Manager

John C. Fischer
Operating Manager

Timothy E. Carpenter
Financial Manager

------------------------------------------------
MINNEAPOLIS DISTRICT
------------------------------------------------

Robert L. Nowak
Vice President

   [PHOTO]

Christopher O. Olsen
Operating Manager

Thomas E. Kinate
Financial Manager

------------------------------------------------
ST. LOUIS DISTRICT
------------------------------------------------

Thomas F. Williams
Vice President

   [PHOTO]

Cindy J. Johnson
Operating Manager

Reiders L. Abel
Financial Manager

30


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                DISTRICT MANAGEMENT AS OF DECEMBER 31, 2000
-----------------------------------------------------------------------------

------------------------------------------------
DALLAS DISTRICT
------------------------------------------------

Lawrence R. Giglio
Vice President

   [PHOTO]

Thomas T. Townsend
Operating Manager

George D. Zackey
Financial Manager

------------------------------------------------
HOUSTON DISTRICT
------------------------------------------------

John H. Hawfield
Vice President

   [PHOTO]

Ted M. Choate
Vice President-Service

Timothy D. Birky
Financial Manager

------------------------------------------------
SEATTLE DISTRICT
------------------------------------------------

John C. Loff
Vice President

   [PHOTO]

Larry T. Christensen
Sales Manager

Kevin L. Moehring
Operating Manager

Randall R. Harwood
Financial Manager

------------------------------------------------
PHOENIX DISTRICT
------------------------------------------------

Gary D. Hodges
Vice President

   [PHOTO]

Richard A. Mitchell
Sales Manager

Michael D. Gaines
Operating Manager

James (Chip) Bateman
Financial Manager

------------------------------------------------
SPN DISTRICT
------------------------------------------------

John C. Mansfield
Vice President

   [PHOTO]

------------------------------------------------
NORTHEASTERN COMM/DATA DISTRICT
------------------------------------------------

Gerard J. McCrea
Vice President

   [PHOTO]

------------------------------------------------
SOUTHEASTERN COMM/DATA DISTRICT
------------------------------------------------

Richard D. Offenbacher
Vice President

   [PHOTO]

------------------------------------------------
NORTH CENTRAL COMM/DATA DISTRICT
------------------------------------------------

Dean A. DeSousa
Vice President

   [PHOTO]

------------------------------------------------
SOUTH CENTRAL COMM/DATA DISTRICT
------------------------------------------------

Rob R. Bezjak
Vice President

   [PHOTO]

------------------------------------------------
WESTERN COMM/DATA DISTRICT AND AURORA DISTRICT
------------------------------------------------

Kenneth B. Sparks
Vice President

   [PHOTO]

                                                                           31


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                LOCATIONS AS OF DECEMBER 31, 2000
-----------------------------------------------------------------------------

CORPORATE OFFICE
34 North Meramec Avenue
St. Louis, Missouri 63105
314 512-9200

------------------------------------------------
NEW YORK DISTRICT
------------------------------------------------

21-15 Queens Plaza North
Long Island City,
New York 11101
718 392-2000

BRANCHES
New York: Rochester, Albany,
 Syracuse, Hauppauge, Buffalo,
 Jericho
New Jersey: Newark,
 North Brunswick, Teterboro,
 Hackettstown, Parsippany,
 Wanamassa, Hamilton

------------------------------------------------
BOSTON DISTRICT
------------------------------------------------

345 Harrison Avenue
Boston, Massachusetts 02118
617 482-9320

BRANCHES
Rhode Island: Cranston
Massachusetts: Worcester,
 Springfield, Somerville
Maine: Portland
New Hampshire: Manchester
Vermont: Rutland, Williston
Connecticut: Hamden, Hartford

------------------------------------------------
PITTSBURGH DISTRICT
------------------------------------------------

900 Ridge Avenue
Pittsburgh, Pennsylvania
15212
412 323-5200

BRANCHES
Ohio: Youngstown, Cleveland,
 Akron, Canton, Mansfield
Pennsylvania: Greensburg,
 Harrisburg, Allentown,
 Philadelphia, Erie, Wilkes-Barre
West Virginia: Wheeling
Delaware: New Castle


INFORMATION SYSTEMS
11828 Lackland Road
St. Louis, Missouri 63146
314 692-5700

------------------------------------------------
CINCINNATI DISTRICT
------------------------------------------------

1022 West Eighth Street
Cincinnati, Ohio 45203
513 621-0600

BRANCHES
West Virginia: Charleston,
 Huntington
Ohio: Columbus, Dayton,
 Lima
Kentucky: Lexington,
 Louisville
Tennessee: Nashville

------------------------------------------------
ATLANTA DISTRICT
------------------------------------------------

2050 Nancy Hanks Drive
Norcross, Georgia 30071
770 441-5580

BRANCHES
Georgia:  Atlanta
 Midtown, Marietta,
 Fayetteville, Savannah,
 Cartersville, Augusta
Alabama: Birmingham,
 Huntsville, Mobile
South Carolina: Columbia,
 Greenville, Spartanburg,
 Hilton Head, Beaufort
Tennessee: Knoxville,
 Chattanooga
Florida: Pensacola
Mississippi: Jackson

------------------------------------------------
RICHMOND  DISTRICT
------------------------------------------------

1510 Tomlynn Street
Richmond, Virginia 23230
804 354-1300

BRANCHES
Virginia: Norfolk, Roanoke,
 Hampton, Chantilly
North Carolina: Asheville,
 Raleigh, Winston-Salem,
 Charlotte, Greensboro,
 Wilmington, Monroe
South Carolina: Rock Hill
Tennessee: Bristol, Johnson City
Maryland: Baltimore, Lanham

------------------------------------------------
TAMPA DISTRICT
------------------------------------------------

801 North Rome Avenue
Tampa, Florida 33606
813 253-8881

BRANCHES
Florida: Sarasota, Lakeland,
 Orlando, Pinellas, Melbourne,
 North Tampa, Tallahassee,
 Jacksonville,
 South Jacksonville,
 Daytona Beach, Perrine,
 Miami, West Palm Beach,
 Florida City, Fort Myers,
 Fort Pierce, Naples,
 Pompano Beach, Gainesville,
 Ocala

------------------------------------------------
CHICAGO DISTRICT
------------------------------------------------

900 Regency Drive
Glendale Heights, Illinois
60139
630 893-3600

BRANCHES
Illinois: Naperville, Chicago
 Downtown, Morton Grove,
 Joliet, Gurnee
Indiana: Fort Wayne,
 South Bend, Hammond,
 Indianapolis
Michigan: Flint, Lansing,
 Grand Rapids, Kalamazoo,
 Auburn Hills, Kentwood,
 Livonia, Belleville,
 Madison Heights,
 Shelby Township
Ohio: Toledo

------------------------------------------------
MINNEAPOLIS DISTRICT
------------------------------------------------

2300 East 25th Street
Minneapolis, Minnesota 55406
612 721-3545

BRANCHES
Minnesota: St. Paul, Duluth,
 Brooklyn Park, Burnsville,
 Plymouth, Rochester, Mankato,
 St. Cloud
Montana: Billings
North Dakota: Fargo
South Dakota: Sioux Falls, Brookings
Wisconsin: Green Bay,
 West Allis, Marinette,
 Manitowoc, Madison
 Neenah, Stevens Point, Racine

------------------------------------------------
ST. LOUIS DISTRICT
------------------------------------------------

8170 Lackland Road
Bel Ridge, Missouri 63114
314 512-0100

BRANCHES
Iowa: Davenport,
 Des Moines,
 Cedar Rapids
Illinois: East Peoria,
 Springfield, Collinsville
Missouri: Jefferson City,
 Kansas City, Springfield,
 St. Louis (Counter)
Indiana: Evansville
Kansas: Olathe, Wichita
Nebraska: Omaha
Tennessee: Memphis, Jackson

------------------------------------------------
DALLAS DISTRICT
------------------------------------------------

4601 Cambridge Road
Ft. Worth, Texas 76155
817 213-1200

BRANCHES
Texas: Fort Worth Counter,
 Amarillo, Austin, Abilene,
 Sherman, Lubbock, Kilgore,
 Dallas (Royal Lane Counter),
 Dallas Major Metro
Oklahoma: Oklahoma City, Tulsa
Arkansas: Little Rock, Conway,
 Springdale
Louisiana: Shreveport

------------------------------------------------
HOUSTON DISTRICT
------------------------------------------------

6161 Bingle Road
Houston, Texas 77092
713 423-3200

BRANCHES
Texas: Cypress, LaMarque,
 Beaumont, San Antonio,
 Corpus Christi
Louisiana: Harahan, Baton Rouge,
 Lake Charles


32


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                LOCATIONS AS OF DECEMBER 31, 2000
-----------------------------------------------------------------------------

------------------------------------------------
SEATTLE DISTRICT
------------------------------------------------

1919 Sixth Avenue South
Seattle, Washington 98134
206 292-4848

BRANCHES
Washington: Spokane,
 Tacoma, Everett, Bellevue
Oregon: Portland, Beaverton,
 Eugene
Idaho: Boise
Alaska: Anchorage, Fairbanks
California: Oakland Counter,
 Fresno, Modesto,
 Sacramento, San Jose,
 Martinez, Hayward,
 San Francisco Downtown,
 Visalia, San Carlos (Counter),
 Roseville
Nevada: Sparks
Hawaii: Honolulu

------------------------------------------------
PHOENIX DISTRICT
------------------------------------------------

3350 West Earll Drive
Phoenix, Arizona 85017
602 269-2131

BRANCHES
Arizona: Mesa, Tucson,
 Scottsdale, Phoenix Midtown
Colorado: Colorado Springs,
 Denver, Englewood
New Mexico: Albuquerque
Texas: El Paso
Nevada: Las Vegas, Henderson
Utah: Salt Lake City, Orem
California: Los Angeles,
 Anaheim, Costa Mesa,
 Long Beach, San Bernardino,
 San Diego, Santa Barbara,
 Van Nuys, Bakersfield,
 San Marcos, Santa Maria,
 San Diego Downtown,
 Los Angeles Warehouse


COMM/DATA DISTRICTS

------------------------------------------------
SOUTH CENTRAL
COMM/DATA DISTRICT
------------------------------------------------

8170 Lackland Road
Bel Ridge, Missouri 63114
314 512-0100

------------------------------------------------
NORTH CENTRAL
COMM/DATA DISTRICT
------------------------------------------------

900 Regency Drive
Glendale Heights, Illinois 60139
630 893-3600

------------------------------------------------
NORTHEASTERN
COMM/DATA DISTRICT
------------------------------------------------

1550 South Warfield Street
Philadelphia, Pennsylvania 19146
215 336-2211

------------------------------------------------
SOUTHEASTERN
COMM/DATA DISTRICT
------------------------------------------------

2050 Nancy Hanks Drive
Norcross, Georgia 30071
770 441-5580

------------------------------------------------
WESTERN
COMM/DATA DISTRICT
------------------------------------------------

1600 132nd Avenue, Northeast
Bellevue, Washington 98005
425 468-5548


REGIONAL ZONES

------------------------------------------------
ATLANTA REGIONAL
AND NATIONAL ZONE
------------------------------------------------

Woodlands Business Park
Building 100
8180 Troon Circle
Austell, Georgia 30168
678 945-9970

------------------------------------------------
CRANBURY REGIONAL ZONE
------------------------------------------------

4 Aurora Drive
Suite 401
Cranbury, New Jersey 08512
609 409-8100

------------------------------------------------
DALLAS REGIONAL ZONE
------------------------------------------------

4601 Cambridge Road
Fort Worth, Texas 76155
817 213-1450

------------------------------------------------
FRESNO REGIONAL
AND NATIONAL ZONE
------------------------------------------------

4401 E. Central Avenue
Fresno, California 93725
559 264-2393

------------------------------------------------
JOLIET REGIONAL
AND NATIONAL ZONE
------------------------------------------------

1700 Crossroad Drive
Joliet, Illinois 60432
815 741-4660

------------------------------------------------
ROGERS REGIONAL ZONE
------------------------------------------------

13251 George Weber Drive
Rogers, Minnesota 55374
612 428-1545

------------------------------------------------
STAFFORD REGIONAL
AND NATIONAL ZONE
------------------------------------------------

13131 North Promenade Boulevard
Stafford, Texas 77477
281 340-5500

------------------------------------------------
TAUNTON REGIONAL ZONE
------------------------------------------------

305 John Hancock Road
Taunton, Massachusetts 02780
508 821-3838

------------------------------------------------
YOUNGSTOWN REGIONAL
AND NATIONAL ZONE
------------------------------------------------

1100 Ohio Works Drive
Youngstown, Ohio 44510
330 799-3220

------------------------------------------------
INTERNATIONAL
------------------------------------------------

34 North Meramec Avenue
St. Louis, Missouri 63105
314 512-9211

Miami International (Sales Office)
10500 Southwest 186th St.
Perrine, Florida 33157
305 252-0400

San Francisco International
(Sales Office)
2368 Lincoln  Avenue
Hayward, California 94545
510 259-0122

International Service Center
6161 Bingle Road
Houston, Texas 77092
713 970-9450

LOCATIONS
San Juan, Puerto Rico
Singapore
Mexico City, Mexico
Kitchener, Ontario
Hamilton, Ontario
Guelph, Ontario
Mississauga, Ontario
Niagara Falls, Ontario
Windsor, Ontario
Halifax, Nova Scotia
Dartmouth, Nova Scotia
Bridgewater, Nova Scotia
Kentville, Nova Scotia
New Glasgow, Nova Scotia
Sydney, Nova Scotia
Truro, Nova Scotia
Yarmouth, Nova Scotia
Charlottetown, Prince
 Edward Island
Bathurst, New Brunswick
Florenceville, New Brunswick
Fredericton, New Brunswick
Moncton, New Brunswick
Saint John, New Brunswick
Corner Brook, Newfoundland
Grand Falls-Windsor,
 Newfoundland
St. John's, Newfoundland
Wabush, Newfoundland



<PAGE>
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                                Graybar Electric Company, Inc.
                                   34 North Meramec Avenue
                                  St. Louis, Missouri 63105
                                       www.graybar.com