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                                                                    EXHIBIT 13



                       ANNUAL REPORT TO SHAREHOLDERS
                                  FOR 2002




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[Graybar Logo]

ANNUAL REPORT

2002


                                  [PHOTOS]


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[PHOTO]

BOARD OF DIRECTORS

Standing, left to right:
ROBERT A. REYNOLDS, JR.
Chairman, President and Chief Executive Officer

JUANITA H. HINSHAW
Senior Vice President and Chief Financial Officer

Seated, left to right:
DENNIS E. DeSOUSA
Senior Vice President-Sales and Marketing

LAWRENCE R. GIGLIO
Senior Vice President-Operations

CHARLES R. UDELL
Senior Vice President-Business Management

[PHOTO]

Standing:
RICHARD A. COLE
Group Vice President-Minneapolis, Cincinnati and Chicago Districts

Seated, left to right:
GARY D. HODGES
Group Vice President-California District

THOMAS F. DOWD
Vice President, Secretary and General Counsel

JACK F. VAN PELT
Vice President-Human Resources

[PHOTO]

Standing:
KENNETH B. SPARKS
Group Vice President-Seattle and Phoenix Districts

Seated, left to right:
JOHN C. LOFF
Group Vice President-St. Louis, Dallas and Houston Districts

THOMAS S. GURGANOUS
Group Vice President-Pittsburgh and Richmond Districts

RICHARD D. OFFENBACHER
Group Vice President-Atlanta and Tampa Districts


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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.


CLASSES OF CUSTOMERS SERVED

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

CAPITAL STOCK DATA

Number of Equity Security Holders as of
December 31, 2002:
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Title of Class                            Number of Security Holders
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Preferred Stock                                                   57
Common Stock                                                     141
Voting Trust Certificates for Common Stock                     6,203
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DIVIDEND DATA

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

Dividends declared for year:               2002      2001      2000
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First Quarter                             $ .30     $ .30     $ .30
Second Quarter                              .30       .30       .30
Third Quarter                               .30       .30       .30
Fourth Quarter                            $1.10     $1.10     $1.10
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CONTENTS

Board of Directors . . . . . . . . . . . . . . . .Inside Front Cover

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . 2

Market Review. . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Operations Review. . . . . . . . . . . . . . . . . . . . . . . . .11

Financial Review . . . . . . . . . . . . . . . . . . . . . . . . .15

Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . .17

Consolidated Financial Statements. . . . . . . . . . . . . . . . .20

Report of Independent Auditors . . . . . . . . . . . . . . . . . .30

Group and District Management. . . . . . . . . . . . . . . . . . .31

Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32


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LETTER TO SHAREHOLDERS
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This past year can best be summarized by one central theme: building for
the future.  It was a challenging, yet productive year for our company.
Despite being tested by the most brutal economy in decades, we remained
focused on putting in place the building blocks that will propel Graybar
to greater heights in the years ahead.

Graybar continues to be financially sound.  Despite lower overall sales
and profitability, we were able to maintain  positive cash flow, which
allowed us to pay down debt and continue making important investments
that will position us for future growth regardless of external economic
pressures.

It was a year of change, in which we defined and communicated the vision
for our company -- where we want to go, how we plan to get there, and
the role each of us plays in making it happen.  We also began to carry
out several strategic initiatives designed to support that vision.
These initiatives focused primarily on our corporate culture and our
people -- on understanding how our organizational structure can more
effectively serve our markets and on the investments needed to continue
developing and training our people who are so key to attaining Graybar's
financial and business objectives.

The business boom of the late 1990s has given way to a difficult period.
Entire industries have collapsed, large companies have filed for
bankruptcy, customers have gone out of business, and corporate
credibility has been called into question.  Turbulence clearly
challenges a company's character.

We have proven that we are built to deliver in even the most difficult
environment.  While many companies within and outside our industry have
been forced to take cover, we have not.  In fact, we moved forward in
2002.  We continued to look for ways to bring innovation to the
marketplace and maintained our leadership as the number one electrical
and comm/data distributor in North America.

We made significant progress in 2002 toward achieving our goal of firmly
positioning our company as more than just a distribution company, but as
one of the nation's leading supply chain experts.  What follows is a
summary of our accomplishments and a brief look ahead at where we go
from here.

MAINTAINING FINANCIAL STABILITY
Market conditions continued to deteriorate in 2002, not only in the
telecommunications sector -- which was hardest hit -- but also in the
electrical business.  Because distribution companies serve markets
rather than create markets, our results are dependent upon the success
of our customers.

To ensure our business remained aligned with changing general economic
and market conditions, we had to make some difficult decisions.  We
instituted layoffs, imposed restrictions on new hiring and did not make
a profit sharing contribution.  In addition, we continued to review
operating costs and capital expenditures carefully to ensure investments
were being made in areas that would have the greatest impact on improved
business results down the road.  Despite the economic downturn, we
continued our unbroken record of paying dividends to shareholders.

During the year, we generated more than $213 million of operating cash
flow.  We used this money to fund investments in our business and pay
down more than $98 million in short-term debt and over $51 million in
long-term debt.

Like most businesses nationwide, we continued to experience sharp rises
in health care costs.  As these costs continue escalating at an alarming
rate, it is clear that changes are necessary.  Consider this: just three
years ago, Graybar spent approximately $16 million on health care for
our employees and retirees.  In 2002, we spent over $37 million -- an
increase of more than 127%.

Graybar absorbed the majority of this huge increase in 2002, maintaining
our commitment to cover 75 percent of overall costs, while employees and
covered retirees pay 25 percent.  Due to the poor performance of the
stock market and the impact of low interest rates, we also had
substantial increases in the cost of funding our defined benefit pension
plan.  Our responsibility and our challenge are to balance the need to
manage a successful business with our dedication to continuing to
provide valuable and competitive benefits to employees and retirees.


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DEFINING OUR VISION
We started 2002 by bringing clarity to Graybar's mission --
to be the vital link in the supply chain, adding value with efficient
and cost-effective service and solutions for our customers and our
suppliers.  We then defined the vision we have for bringing value to our
customers, our suppliers, our employees, our shareholders and our
community.

INVESTING IN INFRASTRUCTURE
To deliver on that vision, we remained committed to our Enterprise
Resource Planning (ERP) project, which when fully deployed will help us
enhance our supply chain management services and ultimately improve
customer service.  Following through with our ERP plans amid an economic
downturn offered us some unexpected advantages; it saved significantly
on cost and gave us more undivided attention from senior management and
the top experts at SAP and Deloitte Consulting.  Most important, ERP is
an investment in the future management of our business.  Information
technology is the backbone of modern distribution, impacting the
performance and profitability of our company.  Our ERP will raise the
bar on performance and value for our customers and suppliers.

At the end of 2002, following signs that business conditions might
improve, we invested in additional inventories, bringing products closer
to our customers by enhancing our zone warehouse strategy and preparing
ourselves to benefit from a revived economy.

INVESTING IN PEOPLE
During 2002, we took time to speak with customers and suppliers to get
their perceptions of our company.  We wanted them to tell us, in their
own words, what differentiates us from our competitors.  The response
was unanimous: our employees.

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                              VISION STATEMENT

FOR OUR CUSTOMERS
We will add value for our customers by anticipating and identifying
their needs and providing cost-effective solutions.  Through excellent
and efficient service we will meet our customers' expectations.  They
will see us as a leader in the industry.


FOR OUR SUPPLIERS
We will be the channel of choice for our suppliers by providing cost-
effective and efficient ways to bring their products, services and
solutions to our mutual customers.  They will see us as a leader in the
industry.

FOR OUR EMPLOYEES
We will provide an environment for our employees that challenges them to
learn, grow and prosper in an atmosphere of respect and recognition.
Our employees will be proud to work for a profitable and thriving
employee-owned company.

FOR OUR SHAREHOLDERS
We will be the industry leader in the products and services we offer
while providing increased shareholder value at optimal risk.

FOR OUR COMMUNITY
Graybar will be a solid corporate citizen and will encourage community
involvement among its employees and retirees.

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"GRAYBAR'S MISSION -- TO BE THE VITAL LINK IN THE SUPPLY CHAIN, ADDING
VALUE WITH EFFICIENT AND COST-EFFECTIVE SERVICE AND SOLUTIONS FOR OUR
CUSTOMERS AND OUR SUPPLIERS."

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Customers described Graybar's dedicated employees as the driver behind
our company's ability to deliver superior service, and said, without
question, employees were our company's most valuable competitive
advantage.  Customers and suppliers offered comments like these:  "Their
corporate culture is enviable.  A lot of companies try to emulate them,
but can't."  "They know the products and have the technical expertise."
"They have integrity."  "They are always trying to be innovative and
bring value to their customers."  While this came as no surprise, the
comments underscored the importance of investing in our employees so
they are equipped to continue delivering the difference.

We made a concerted effort to improve the dialogue with employees this
past year.  I had the pleasure of meeting with hundreds of employees
throughout the year to discuss our business and answer questions
regarding the future direction of the company.  And for the first time
in more than a decade, we surveyed employees to find out where we were
doing well and where we were falling short.  The results confirmed the
need to continue communicating frequently and with clarity up and down
the organization.

There also was recognition that, at times, we have become complacent.
We need to embrace the idea that we are all, individually, responsible
for Graybar's success.

We also made investments in training.  More than 700 representatives
from various sectors of the electrical industry gathered in Dallas at
Graybar's National Electrical Training Conference.  Dedicated to
heightening employees' and customers' understanding of existing and
emerging products and services, the conference marked the first time
Graybar had held such an event focused on the electrical industry.  This
was a successful and significant event that built on our existing
comm/data conference, which was held again in 2002 for the 10th
consecutive year.  These conferences provided a hands-on opportunity for
employees and customers to learn about new products, as well as
reintroduce themselves to existing products.

We have an enviable culture, which contributes to the pride employees
feel in working for Graybar.  While cost controls slowed the
implementation of some employee-driven programs, we made progress and
will continue to invest in our greatest asset in the years ahead.

CULTIVATING LEADERSHIP
For the first time in our history, Graybar was named to Fortune's list
of America's Most Admired Companies in 2002.  In addition, we continued
to rise in Forbes' ranking of America's Largest Private Companies, were
named to Business Week's ranking of the Top Private Info-Tech Companies,
and finished first on Electrical Wholesaling's list of Top 250
Electrical Distributors.  All are signs of a company on the move and a
leader in its industry.

Our company has great leaders at every level of the organization.  We
placed a greater emphasis in 2002 on identifying and developing our
future leaders.  I am convinced that leadership is what will take us to
the next level.  We need to continue developing our people with the
skills, dedication and determination to ensure we maintain and build on
our well-earned reputation as the leading distributor.

I challenged our people to embrace three key leadership values: The
passion to want to get the job done, the commitment to make it happen,
and the discipline to make it happen within the structure of our
company.

"WE ARE IN THE BUSINESS OF HELPING OUR CUSTOMERS POWER AND NETWORK
INDUSTRIAL FACILITIES, OFFICES AND HOUSING WITH SPEED, INTELLIGENCE AND
EFFICIENCY."


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We need an organization that will lead and drive corporate strategy.  We
operate in an increasingly competitive environment, one in which we must
remain focused on delivering value, consistently and without compromise
across our organization.

LIMITLESS OPPORTUNITIES
This past year has been a time of investment -- investment in our
systems, our infrastructure and our people -- to prepare us for a strong
2003 and beyond.  As we look ahead at the balance of 2003, it is clear
we must increase our attention to delivering to our customers the value-
added services they need.  When we do, the result will be increased
sales, profits and market share.

We are no longer just in the pick, pack, and ship business.  We are in
the business of helping our customers power and network industrial
facilities, offices and housing with speed, intelligence and efficiency.
Tomorrow's success will depend on our ability to engage customers,
listen to their needs and then help them accomplish their goals.  This
will require a sharper customer focus.  We need to expand the dialogue
we began internally this past year to our customers, so we can find out
more about their expectations and how Graybar can meet or exceed those
expectations.

Graybar is a company with a strong tradition.  We have a solid base from
which to draw.  Like any business, we must deal with market conditions
and changing customer demands.  To build on our strong heritage, we must
remain profitable, which means being nimble enough to adjust to changing
market dynamics.

This past year has shown that we have the fortitude and commitment to
continue leading the charge as America's largest electrical and comm/data
distributor. And, as one of North America's largest employee-owned
companies, we benefit from having both the power and stability of a big
company and the integrity and drive of an employee-owned business. But, it
is clear that we must continue to find ways to build relationships that work
for...

OUR EMPLOYEES, by identifying ways to inspire and motivate individuals
and teams to achieve operational excellence.

OUR CUSTOMERS, by understanding, anticipating and fulfilling their
needs, which have gone far beyond just "distributing" products.

OUR SUPPLIERS, by helping drive strong brand and  product loyalty,
which allows us to consistently deliver the breadth and depth of
products that sets us apart as America's leading distributor of
electrical and comm/data products.

We have established the foundation to get us where we need to be
operationally.  Now it is time to turn our attention outward -- to focus
on the customer -- with the goal of fueling growth and profitability.

Great people delivering on great ideas to build relationships that work --
with our customers and with our suppliers -- is what will ensure we continue
to deliver positive results in the future. And because Graybar is owned by
its employees and retirees and not publicly traded, we control our own
destiny. This is why I am so confident that our best years lie ahead.

The leadership of this company has a plan for the future.  I believe --
thanks to the combined efforts of our more than 8,000 employees -- it is
working.


/s/ Robert A. Reynolds, Jr.

Robert A. Reynolds, Jr.
Chairman, President and CEO

St. Louis, Missouri
March 2003


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                                  MARKET REVIEW


The Electrical and Comm/Data Markets served by the Company continued to struggle
with a difficult economy for the second consecutive year. As companies reduced
non-essential expenditures to improve profitability, capital spending decreased
dramatically. Concurrently, investment in telecommunications infrastructure went
from boom to bust early in 2001 and is not expected to approach previous
spending levels for several years.

Even in the tough economy of 2002, Graybar continued to secure new national
strategic alliance agreements with industry leading companies due to our
ability to deliver cost-effective services and solutions nationally. Our
corporate accounts group plays a leadership role in defining Graybar's value
proposition for our customers. Directors of corporate accounts are
responsible for strategic customers within targeted industries, which
include automotive, food and beverage, health care, petrochemical,
microelectronics and national contractors/resellers. In addition, senior
management has identified specific customer sectors -- comm/data service
providers, engineering and construction contractors, government, and utility
companies -- that are served by the corporate accounts team.

The expanded focus by our corporate accounts group on sales to federal, state
and local governments has resulted in significant growth with these customers.
The Company currently has six regional contracts with the Defense Logistics
Agency (DLA). In 2002, Graybar was awarded General Services Administration (GSA)
contracts covering both electrical and comm/data products. Additionally,
contracts with U. S. Communities (USC) continue to give us the opportunity to
offer any product Graybar sells to any state, county or municipal government.

Collaboration within our Electrical and Comm/Data product groups supported the
growing convergence within our customer base. In 2002, we expanded upon our
successful supplier selectivity and category management programs of earlier
years by initiating the Strategic Sourcing process, an element of supply chain
management. This process develops objective criteria and tools for evaluating
and selecting suppliers within specified product categories. Strategic sourcing,
coupled with marketplace analyses, led Graybar to reduce the number of suppliers
and products in several categories, while adding appropriate new ones. By
narrowing the number of suppliers within a category, we can drive operational
efficiencies and economies of scale. This process has enabled us to make better
decisions with regard to Graybar's strategic plans while also prioritizing
countless tactical decisions.

The tools we now use help Graybar focus -- along with our strategic
suppliers -- on the primary components of supply chain management, formally
integrating our operations and financial groups into the process. By
comparing brand preference, service capabilities and other applicable data,
Graybar is now able to compare performance within and among our primary
product categories. We make better decisions as to which products to stock
and how to deploy them. We reviewed several product groups in 2002 and saw
improvements across the board in supplier programs.

Through these efforts, Graybar upholds its position as the industry leader in
the products and services we offer. In all markets, our goals are to improve
penetration and create specific marketing programs to support the needs of our
customers. Although some sectors are struggling, opportunities exist across the
country in both the Electrical and Comm/Data Markets.

                                ELECTRICAL MARKET

Graybar's sales in the Electrical Market experienced a slight year-over-year
decrease, reflecting the projected revenue decrease in the Electrical Market
overall in 2002.

We continued our emphasis on specialization in our sales and customer service
teams. Through specialization we can address the unique needs of our customers
in the various sectors within the electrical marketplace.

Our Project Management Services Teams are a prime example of the added value
specialization provides. By developing centers of competence, with specialized
training for team members in lighting and switchgear, Graybar provides the
assistance required to design and manage complicated projects. In 2002, these
teams, using our proprietary material tracking, reporting and services package,
helped manage major projects with the largest contractors in the country.

The ePoint program, a Graybar exclusive customer loyalty program, was expanded
to include electrical

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contractors nationally, with excellent results. Our sales to customers in this
program grew beyond 2001 levels, bucking the industry trend. The ePoint program
has been recognized as a premier customer loyalty program in the industry.

Graybar's industrial customers continued to be affected by the reduction in
capital expenditures across the country. Manufacturing levels remain below the
thresholds that will require an expansion of plant capacity, which reduces the
potential spending in the sector. We have expanded our focus on industrial OEM
(original equipment manufacturing) customers, and as the economic factors
improve, we anticipate additional sales opportunities due to these efforts.

Bundling of services and products from our best-in-class suppliers helps Graybar
industrial sales representatives earn project business and MRO (maintenance and
repair operations) servicing opportunities every day. Also, existing and
emerging corporate account agreements across the country make Graybar a
distributor of choice for customers requiring national service capabilities.

The convergence of electrical and communications products in manufacturing
processes provides an

                                  [PHOTO]

CHARLIE SEWELL, Senior Sales Representative, Orlando, Florida

"Understanding my customers and discovering their needs allows me to put forth
long-lasting solutions that solidify our relationship. I'm constantly thinking
of ways I can raise the bar on my performance and be better than my competition.
I always ask my customers if the solution I have provided is performing as
promised. My customers know I have their best interest at heart, because our
long-term relationship is my key goal."

"GRAYBAR CONTINUED TO SECURE NEW NATIONAL STRATEGIC ALLIANCE AGREEMENTS
WITH INDUSTRY LEADING COMPANIES DUE TO OUR ABILITY TO DELIVER COST-
EFFECTIVE SERVICES AND SOLUTIONS NATIONALLY."

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increasing market opportunity for Graybar. Capitalizing on our expertise in
servicing factory floor automation and networking requirements, we have
positioned automation specialists strategically across the country to assist our
customers in developing improved manufacturing processes.

Graybar fared well with utilities customers in 2002 due to our participation in
the utility online marketplaces and our ongoing commitment to the rural and
municipal utilities. We have expanded our utility offering with several new
major MRO contracts initiated in 2002 while continuing to pursue and maintain
the traditional business. As we enter 2003, Graybar is positioned to be a more
significant participant in both the traditional and the emerging portions of the
utility industry.

                                COMM/DATA MARKET

The telecommunication sector in 2002 was a disappointment worldwide, and
Graybar's business with our comm/data customers was no exception. For the second
consecutive year, spending by our communications customers was down
significantly. The market for sales of structured wiring products such as copper
data cabling, indoor fiber optic cable, data outlets and patch panels was down
substantially. A reduction in spending on infrastructure development, combined
with price deterioration and a cutback in construction, contributed to the
decline.

The reduction in available market potential made our sales growth in areas like
wireless and VoIP (Voice over Internet Protocol) technologies even more
significant. Key relationships with 3Com and Mitel have fueled this continuing
growth opportunity. We expect continued success with these two technologies in
2003.

The long-awaited ratification of the Category 6 cabling standard, which occurred
in June 2002, is expected to raise the performance expectations of customers
installing cabling projects. The VIP 2000 program, Graybar's independently
verified cabling system benchmark, has seen significant usage as the performance
level for customers that want more than the minimum performance. When products
meet the stringent requirements of VIP, customers are assured that their cabling
systems will support the technology requirements of their businesses.

As for comm/data resellers, Graybar's ePoint program was expanded to include
products from structured cabling system suppliers. Our increased sales to
participants enrolled in this customer loyalty program helped soften the impact
of the Comm/Data Market contraction.

The Service Provider sales potential continues to adjust to the current
requirements for voice and data grade connections in the marketplace. The
survivors emerging from the difficult market conditions appear to be the
regional holding companies and the independent telephone companies (ITCO) that
dominate the rural areas. Sales and marketing strategies focused on both of
these customer sectors were implemented in 2002.

As many comm/data manufacturers struggle with sales that are significantly lower
than previous market peak levels, an opportunity is developing for Graybar.

As a recognized leader in serving ITCO customers, we are becoming the
distribution channel of choice for many companies that had previously employed
direct sales strategies to these customers. Our commitment to the Service
Provider business is expected to pay dividends as this beleaguered sector turns
around in the coming years.

                              INTERNATIONAL MARKETS

While sales for the first six months were lower than the same period the
previous year, Graybar Canada had another profitable year in 2002. Both Canadian
operations, Harris and Roome Supply in the Atlantic Provinces and Graybar
Ontario, were affected by a weaker industrial market in 2002. By focusing more
resources on the commercial project business, we capitalized on opportunities in
that sector. Improved sales performance during the last half of the year
produced results that exceeded industry averages.

Although sales were flat compared to 2001, profits increased. We remain focused
on controlling operational costs, improving service levels and monitoring the
quality of inventory.

In 2003, Graybar Canada expects continuation of the growth experienced in the
last six months of 2002 with the anticipated resurgence of the traditional
industrial base and inflation predicted at a manageable rate.

Graybar de Mexico continued to be affected by a soft overall Mexican economy,
and it responded by remaining focused on trimming expenses and monitoring
inventory investments and accounts receivable.

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A successful reorganization and change in business plans with a strong emphasis
on the Comm/Data Market brought about profitable bottom line results.

Graybar Puerto Rico had another strong year in 2002. Serving primarily
contractor and industrial customers with heavy emphasis in the pharmaceutical
industry, Graybar Puerto Rico utilizes the team approach to sales and service to
produce results. Teams consisting of a sales representative, an inside sales
person, and a customer service representative now support each customer's
service needs. We expect continued growth in 2003 with this solution selling
approach.

                                MARKETING SUPPORT

                        GRAYBAR FINANCIAL SERVICES (GFS)
In addition to providing access to an alternative form of financing for
customers purchasing equipment, Graybar's leasing and financing subsidiary also
arranges project financing for customers selling communication and data systems
as well as entire modernization projects. This value-added service clearly
differentiates Graybar from other distributors.

State-of-the-art technology allows GFS to provide a high level of customer
service, and it enables our lease

                                  [PHOTO]

CAROL ANDREWS, Manager Customer Service, Nashville, Tennessee

"I have a great team here in Nashville -- great people who are dedicated to
doing things right the first time. When customers or suppliers tour our
facility, they are always impressed by our capabilities and our bright and
friendly people. Every employee here is empowered to do what it takes to
serve our customers. Whether we ship from local stock or from our vast zone
warehouse inventory, our customers can be confident their material will
arrive when they need it."

"AS A RECOGNIZED LEADER IN SERVING ITCO CUSTOMERS, WE ARE BECOMING THE
DISTRIBUTION CHANNEL OF CHOICE FOR MANY COMPANIES THAT HAD PREVIOUSLY EMPLOYED
DIRECT SALES STRATEGIES TO THESE CUSTOMERS."

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administrators to provide real time information to customers during the
lease process.

Our online services were further enhanced in 2002 with the added capability for
resellers and contractors to input their customers' lease applications directly
into the GFS credit system, generate proposals and check the status on pending
transactions. Resellers and contractors can now track their existing customers'
leases and proactively market to these customers prior to lease termination.

                                COUNTER MARKETING
Counters at more than 200 locations across the country received a makeover in
2002. Our merchandising strategy was simplified, with a focus on displaying
impulse items. The emphasis on tools, test equipment and on-the-job consumables
has been well received by walk-in customers. Renewed focus on will-call service
helps move our customers in and out quickly and with the right material. A new
banner and poster program for the counters delivers standardized marketing
messages focusing on our value-added services and the products of key suppliers.

                                   E-BUSINESS
Graybar customers continue to request e-business solutions to reduce their
procurement costs. More than 15 of Graybar's largest industrial, utility, and
commercial customers use Graybar's e-catalog, which continues to mature and now
includes 73% of the items sold more than 100 times annually.

During 2002, the e-catalog became a valuable business tool for many of our key
customers. In 2003, we will create e-catalogs specific to customer sectors to
drive additional sales and new customer acquisition.

Our contractor customers focused on the bid request process to decrease their
purchasing costs. Graybar participates with Electricsmarts, a service that
provides contractors an electronic means of responding to requests for product
price estimates. Once Graybar provides a list of customer-specific products and
prices to Electricsmarts, the contractor's estimating software can pull pricing
from Graybar's database to develop web-based price quotes. Eliminating the time
needed to quote standard material prices allows the customer service
representative or quotations specialist to focus on the non-traditional items on
the bid request. With turn around in hours rather than days, Graybar can be the
first to provide the bid back to the contractor.

Graybar is also working with TradePower, a company that provides contractors
with integrated solutions for estimating, purchasing and accounting, to
facilitate the bid request process with contractors that subscribe to their
service.

In 2002, in addition to expanding our electronic data interchange (EDI) program
for supplier purchase orders and invoices, we began utilizing EDI for processing
cost recoveries with three key manufacturers. Using EDI has provided improved
accuracy as well as increased productivity for these processes.

The value-added services provided by manufacturers include Graybar-specific web
sites for checking item availability, order status and detailed product
specifications. As a complement to Hot Key and EDI, these sites assist Graybar
personnel in providing excellent customer service.

To support our inventory initiatives, Graybar created a store on eBay(R)
focused on selling discontinued, obsolete and excess inventory. We also
created an employee store on Infolink, our employee intranet, that gives our
employees a single place to look for discounted Graybar merchandise as well
as discount offers from our vendors and suppliers.

                              MINORITY/WOMEN OWNED
                           BUSINESS ENTERPRISE (MWBE)
Our minority, women and small business vendor base continues to expand. During
2002, we continued to invest in data and resources to more accurately identify
new services and products provided by minority and women-owned businesses. Our
database indicates we are transacting with over 10,000 companies with
socioeconomic classifications.

Innov8 Solutions USA, LLC is a minority owned and operated business that
provides creative and value-added services not normally provided by
distribution. The reduced activity in the telecommunications Service Provider
Market in 2002 impacted Innov8 as well, and financial results were disappointing
from our one-third-ownership interest in Innov8.

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                                OPERATIONS REVIEW

                                 INVESTMENT AND
                              INVENTORY MANAGEMENT

The Company's inventory management efforts focused on monitoring our product
offering to serve the available business, while more closely aligning our
inventory investment with our sales. The overall investment was reduced from the
prior year, and the product mix was improved as our fastest moving merchandise
comprised a greater percentage of the total inventory. Non-moving and distressed
merchandise was reduced significantly.

Corporate Purchasing initiated numerous actions with our purchasing software
-- adjusting control factors for lead times, service levels, forecast and
order cycles -- to achieve results needed to serve our customers. Inventory
expansion orders placed with many strategic suppliers enhanced our product
offerings and provided commercial incentives.

A computer application enabling mass changes to customer price
authorizations (CPAs) was developed to replace a time-consuming manual
procedure. Now price changes can be accomplished electronically, eliminating
the computing and inputting of hundreds of thousands of CPA entries.

                                  [PHOTO]

CHRIS MEINDERS, Senior Counter Sales Representative, Bel Ridge, Missouri

"My customers rely on me for product knowledge and prompt turnaround on their
counter and will call orders. The hands-on experience and training I've received
at Graybar make me even more valuable to our customers. One question that is
always foremost in my mind is 'how can I help my customer find solutions that
will help him perform his job better or more efficiently?' My job is to be here
to help."

"THE OVERALL INVESTMENT WAS REDUCED FROM THE PRIOR YEAR, AND THE PRODUCT MIX
WAS IMPROVED AS OUR FASTEST MOVING MERCHANDISE COMPRISED A GREATER PERCENTAGE
OF THE TOTAL INVENTORY."

                                                                            11



<PAGE>
<PAGE>

A procedural change in the branch cluster reviews by the Inventory Planning
group now allows for the retention of slower moving products in the branch
inventories when needed to serve customers. To reduce unnecessary cross-dock
shipments, a process was implemented to increase the product breadth at branch
locations.

Supplier Assisted Inventory Management (SAIM) relationships with two suppliers
were expanded to include all domestic locations. We now have three national SAIM
suppliers and expect the use of this process to grow.

At mid-year, the Company implemented an electronic data interchange cost
recovery process (ECRP) with three suppliers. Similar to the electronic cost
recovery process that we have had in place with GE Lighting for many years, this
process benefits both Graybar and our suppliers by streamlining the request for
credits, the receipt of credits and the identification and investigation of any
discrepancies.

Transportation carrier reviews with our dedicated carrier and LTL companies have
been successful and will be continued. The practice of shipping bulk items to
branches using our dedicated carrier routes was changed to take advantage of the
more economical LTL carrier routes. In addition, we were able to reduce
supplementary charges from UPS, our primary small package carrier.

                                CUSTOMER SERVICE
Customer Service focused on core processes that impact both customers and
Company cash flow. In the warehouse, extra attention was devoted to locator
maintenance and cycle counting to ensure greater order accuracy to our customers
and more efficient inventory control.

In the office, we emphasized prompt handling of direct billings, especially for
job projects. The districts were challenged to process all directs same day,
with a zero balance over five days old. Improvement was dramatic, assuring
customers they could collect their project draws and helping Graybar improve
collection of open receivables.

New quarterly pre-inventory closes now require all districts to explain or
resolve all outstanding returns, hold items and cancelled reships by the end of
each quarter. The result is fewer dollars tied up in this type of inventory and
a smoother year-end accounting close. To facilitate this new approach, an online
operational dashboard report was created, providing a quick monthly update to
the districts on several external and internal performance metrics.

                                 ZONE OPERATIONS
In February, our state-of-the-art zone distribution center in Tampa opened for
shipments to customers, bringing the Company's total zone facilities to 14.

The Taunton Zone was converted to the Warehouse Management System (WMS). WMS
uses bar code and radio frequency technology to track product as it flows into
and out of the warehouse. Thirteen zones are now utilizing WMS. WMS technology
improves our accuracy on both inbound shipments from our suppliers and outbound
orders to our customers.

We continued the process of registering our zone facilities to the ISO 9002
standard. The Joliet, Tampa, Cincinnati, and Springfield zones were successfully
registered during the year, and we expect to have all zones registered by June
2003.

                                     SAFETY
We continue to make improvements in the Company's safety performance. Our OSHA
recordable injury rate was reduced significantly in 2002. The Company's vehicle
accident rate decreased slightly. Our emphasis on safety precautions and
training in 2003 will have special focus on reducing vehicle accidents.

                             BUILDINGS & PROPERTIES
During 2002, a major remodel/expansion project was completed at our location in
Corpus Christi, Texas. Three branches -- Chattanooga, Tennessee; Buffalo, New
York; and Cartersville, Georgia -- moved to new locations. We successfully
negotiated several national vendor programs to provide cost savings for our
building and property maintenance.

                                EMPLOYEE TRAINING
During 2002, the Company transitioned to its third generation of learning
management systems software. This conversion provides state-of-the-art learning
management functions for our online Graybar Virtual Campus, while producing
significant cost savings.

We continue to leverage our twelve years of investment and experience in online
learning. Changes to the Virtual Campus allow managers and employees

12



<PAGE>
<PAGE>

more flexibility to create specific training and development plans with goal
setting functionality. Graybar eClasses continue to reduce educational costs and
the related travel expenses. eClasses are delivered in multiple short sessions
to allow the use of group and individual research assignments between sessions.
This serves to enhance the overall learning experience and allows direct
application of new skills in one's current job assignment.

                                EMPLOYEE BENEFITS
The Company successfully converted the recordkeeping and trustee services for
the Profit Sharing and Savings Plan to The Vanguard Group in August 2002. The
Employees' Benefit Committee recommended this change to streamline
administrative processes, eliminate participant transaction fees and offer
online improvements via one source to all participants. In addition, five
investment funds were added to provide greater asset diversification
opportunities for participants.


                              INFORMATION SYSTEMS

In 2002, the Information Systems Department began preparing the Company's
infrastructure to support the Enterprise Resource Planning (ERP) project and the
subsequent implementation and deployment of the SAP system. New UNIX and

                                  [PHOTO]

RICK TURNER, Director of Systems and Process Development, St. Louis,
Missouri

"My 23 years in Graybar operations and inventory planning gave me the experience
I needed to be a part of the Advanced Planning and Optimization (APO) team for
the ERP implementation. With the new ERP processes and tools and our dedicated
team of people, Graybar's inventory planning and logistics will be state of the
art. Our forecasts will be more accurate, and we'll have greater ability to
gather and use input from our customers and suppliers to help us have the right
products in the right place to serve their needs."

"WE CONTINUE TO LEVERAGE OUR TWELVE YEARS OF INVESTMENT AND EXPERIENCE IN
ONLINE LEARNING."

                                                                            13



<PAGE>
<PAGE>

Windows(R) 2000 servers were installed in the St. Louis and Kansas City data
centers, and a major upgrade to the core local area networks was required.

In addition, the operating system on all personal computers was updated from
Windows(R) 95 to Windows(R) 2000 in preparation for the new SAP system.

In May, the Company moved its entire computer infrastructure to a new data
center with no interruption of service.

A new telecommunications contract significantly reduced our telecommunications
cost and allowed the flexibility to increase the data network without exceeding
2001 expense levels. The data network has been expanded in all district offices
as well as the branches in the Minneapolis district, the first rollout district,
in preparation for SAP.

Web-based access to mainframe functions (Glink) was made available for the first
time. From any Internet connected personal computer with a web browser, Graybar
users can now perform Glink transactions from home or a customer's office.

Quality of Service (QOS) functionality implemented in the Minneapolis district
allows the prioritization of different types of data traffic over our network.
Glink and SAP functions receive priority over web traffic, and web traffic
receives priority over e-mail. This priority scheme makes better use of our
networking resources. QOS will be installed by June 2003 in all Graybar
locations.

                                  [PHOTO]

MARTY JOYCE, Director of Technical Systems Implementation, St. Louis,
Missouri

"With our new SAP system, Graybar is raising the bar on performance and value
for our customers. The ERP system will integrate our business processes and give
us real time access to data for better decision making throughout the
organization. With ERP, our trained and knowledgeable people will be able to
serve our customers faster and more efficiently, reducing cost throughout the
supply chain. I'm proud to be on the team developing and implementing this
project. It's been hard work, but the payoff for Graybar and our customers and
suppliers will be tremendous."

14


<PAGE>
<PAGE>

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

                                TABLE OF CONTENTS


Selected Consolidated Financial Data                                 16

Management's Discussion and Analysis
of Financial Condition and Results of Operations                     17

Consolidated Financial Statements                                    20

Report of Independent Auditors                                       30




                                                                            15


<PAGE>
<PAGE>


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

<TABLE>
<CAPTION>
                                             SELECTED CONSOLIDATED FINANCIAL DATA
                                        (Stated in thousands except for per share data)

                                                        2002             2001              2000            1999           1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>              <C>               <C>             <C>            <C>
SALES                                            $ 3,986,954      $ 4,829,862       $ 5,231,901     $ 4,311,405    $ 3,744,075
   Less -- Cash discounts                            (12,062)         (13,380)          (13,564)        (11,465)       (11,872)
--------------------------------------------------------------------------------------------------------------------------------
NET SALES                                          3,974,892        4,816,482         5,218,337       4,299,940      3,732,203
--------------------------------------------------------------------------------------------------------------------------------
COST OF MERCHANDISE SOLD                          (3,229,791)      (3,934,719)       (4,271,745)     (3,514,228)    (3,042,176)
--------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE                                     (26,301)         (39,073)          (46,681)        (30,241)       (23,998)
--------------------------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
  Current                                             (7,233)         (22,915)          (44,395)        (43,899)       (37,167)
  Deferred                                                14            3,302             1,196            (130)        (4,919)
--------------------------------------------------------------------------------------------------------------------------------
    Total provision for income taxes                  (7,219)         (19,613)          (43,199)        (44,029)       (42,086)
--------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                            11,401           31,688            66,157          64,659         59,544
--------------------------------------------------------------------------------------------------------------------------------
INCOME APPLICABLE TO
  COMMON STOCK                                        11,399           31,685            66,154          64,654         59,539
--------------------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES
  OUTSTANDING (A)                                      6,245            5,846             6,101           6,276          5,848
--------------------------------------------------------------------------------------------------------------------------------
INCOME PER SHARE OF
  COMMON STOCK (A)                                      1.83             5.42             10.84           10.30          10.18
--------------------------------------------------------------------------------------------------------------------------------
  Cash dividends per share                              2.00             2.00              2.00            2.00           2.00
--------------------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
  Balance, beginning of year                         310,521          290,405           241,473         193,838        149,226
  Add -- Net income                                   11,401           31,688            66,157          64,659         59,544
--------------------------------------------------------------------------------------------------------------------------------
                                                     321,922          322,093           307,630         258,497        208,770
--------------------------------------------------------------------------------------------------------------------------------
  Less dividends
    Preferred ($1.00 per share)                           (2)              (3)               (3)             (5)            (5)
    Common (in cash)                                 (12,486)         (11,569)          (11,583)        (11,442)       (10,031)
    Common (in stock)                                     --               --            (5,639)         (5,577)        (4,896)
--------------------------------------------------------------------------------------------------------------------------------
                                                     (12,488)         (11,572)          (17,225)        (17,024)       (14,932)
--------------------------------------------------------------------------------------------------------------------------------
  Balance, end of year                               309,434          310,521           290,405         241,473        193,838
  Proceeds on stock subscriptions,
    shares unissued                                       50               --                49              56             --
STOCK OUTSTANDING
  Preferred                                               45               51                57              68            108
  Common                                             123,272          114,424           119,828         118,270        103,690
--------------------------------------------------------------------------------------------------------------------------------
                                                 $   432,801      $   424,996       $   410,339     $   359,867    $   297,636
--------------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income (loss)        (44,958)         (17,504)             (542)           (204)          (836)
--------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                       $   387,843      $   407,492       $   409,797     $   359,663    $   296,800
--------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                       1,400,171        1,535,998         1,843,438       1,698,544      1,167,847
LONG-TERM DEBT                                   $   266,710      $   315,549       $   238,349     $   255,897    $   269,570
--------------------------------------------------------------------------------------------------------------------------------

<FN>
(A) Adjusted for the declaration of 5% stock dividends in 2000, 1999 and 1998.
Prior to adjusting for the stock dividends, the average common shares
outstanding for 1999 and 1998 were 5,692 and 5,052, respectively.
</TABLE>


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


16


<PAGE>
<PAGE>
                                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

OPERATING RESULTS AS A PERCENTAGE OF NET SALES
     The following table sets forth certain information relating to the
operations of the Company expressed as a percentage of net sales:

<TABLE>
<CAPTION>
Years Ended December 31:                       2002       2001       2000
----------------------------------------------------------------------------
<S>                                           <C>        <C>        <C>
Net Sales                                     100.0%     100.0%     100.0%
Cost of Merchandise Sold                      (81.3)     (81.7)     (81.9)
----------------------------------------------------------------------------
Gross Margin                                   18.7       18.3       18.1
Selling, General and
 Administrative Expenses                      (15.8)     (14.9)     (13.8)
Taxes, other than income
 taxes                                         (1.0)      (1.0)       (.8)
Depreciation and
 amortization                                   (.8)       (.7)       (.6)
----------------------------------------------------------------------------
   Income from operations                       1.1        1.7        2.9
Other Income, net                                .1         .2         .1
Interest Expense                                (.7)       (.8)       (.9)
Loss on debt extinguishment                      --         --         --
----------------------------------------------------------------------------
Income Before Provision
 for Income Taxes                                .5        1.1        2.1
----------------------------------------------------------------------------
Provision for Income Taxes                      (.2)       (.4)       (.8)
----------------------------------------------------------------------------
Net Income                                       .3%        .7%       1.3%
----------------------------------------------------------------------------
</TABLE>

2002 COMPARED TO 2001
     Net sales in 2002 decreased $841,590, or 17.5%, to $3,974,892 compared to
$4,816,482 in 2001. The lower net sales resulted from the generally depressed
economic conditions that continue to be prevalent on an industry-wide basis in
the electrical and communications market sectors in which the Company operates.
The reduction in capital spending by commercial and industrial customers and the
general slowdown in new construction projects that began in 2001 continued
during 2002. Activity in the communications market remained severely depressed,
leading to continued and substantial contraction in the Company's business in
that market. Electrical market sales decreased 6.4% and communications market
sales decreased 32.1% when comparing 2002 to 2001.
     Gross margin decreased $136,662, or 15.5%, from $881,763 in 2001 to
$745,101 in 2002 primarily due to the lower sales in the electrical and
communications markets.
     Selling, general and administrative expenses decreased $91,366, or
12.7%, when comparing 2002 to 2001, due largely to current year and prior
year reductions in the Company's employment levels which resulted in
decreases in related employee compensation costs of approximately $60,000 in
2002. The decrease in these expenses was partially offset by increases in
pension plan expense and health care plan costs of approximately $4,600. The
Company expects that the decrease in employment levels will be sustainable
until such time as there is a significant growth in sales. The balance of
the reduction in selling, general and administrative expenses in 2002
compared to 2001 resulted from decreases in transportation, warehousing and
other general operating expenses due to decreased sales and lower
transaction volumes. As a percentage of sales, selling, general and
administrative expenses increased to 15.8% in 2002 compared to 14.9% in
2001, primarily because the rate at which expenses were reduced lagged the
rate at which sales volume decreased.
     The reduction in taxes, other than income taxes of $5,653 in 2002 compared
to 2001 resulted primarily from lower payroll tax expenses due to the reduction
in the Company's employment levels and lower incentive plan payments with
respect to 2001 paid in the first quarter of 2002.
     Depreciation and amortization increased $1,214 from $33,422 in 2001 to
$34,636 in 2002 due to purchases of equipment and facilities improvements.
     Other income, net includes gains on sale of property of $0 and $2,677 and
accounts receivable interest charges to customers of $1,552 and $2,433 in 2002
and 2001, respectively.
     Interest expense decreased $12,772, or 32.7%, when comparing 2002 to 2001
primarily due to lower interest rates on short-term borrowings and decreased
levels of short-term borrowings required to finance lower levels of inventory
and receivables. The average amount of short-term borrowings outstanding during
2002 and 2001 amounted to approximately $101,000 and $305,000 at weighted
average interest rates of 2.11% and 4.86%, respectively.
     Loss on debt extinguishment consists of a $545 make-whole premium paid to a
lender for early retirement of long-term debt.
     The combined effect of the decreases in gross margin and other income,
together with the increase in depreciation and amortization and decreases in
selling, general and administrative expenses and interest expense, resulted in a
decrease in pretax earnings of $32,681 in 2002 compared to 2001.

2001 COMPARED TO 2000
     Net sales in 2001 decreased $401,855, or 7.7%, to $4,816,482 compared to
$5,218,337 in 2000. The lower net sales resulted from a generally depressed
economy in the electrical and communications market sectors in which the Company
operates. The market for the electrical products sold by the Company was
affected in 2001 by a general slowdown in new construction projects and in
maintenance, repair and operations by manufacturing and commercial customers as
capital spending budgets were cut as a result of the downturn in the U.S.
economy. The economic downturn was even more pronounced in the communications
industry, which experienced severe contraction of expansion plans following the
period of aggressive growth in the late 1990s through 2000 that led to excess
infrastructure and plant and network capacity. Electrical market sales decreased
2.2% and communications market sales decreased 15.3% when comparing 2001 to
2000.

                                                                            17

<PAGE>
<PAGE>
                                FINANCIAL REVIEW
------------------------------------------------------------------------------

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

     Gross margin decreased $64,829, or 6.8%, from $946,592 in 2000 to $881,763
in 2001 primarily due to lower sales in the electrical and communications
markets.
     Selling, general and administrative expenses decreased $2,963, or .4%, when
comparing 2001 to 2000 due largely to a decrease in overall compensation
expenses of approximately $23,000, including lower incentive plan expenses and
profit sharing expenses as a result of the Company's performance in 2001.
Reductions in employment levels over the course of 2001 had a corresponding
impact on salary expenses and employee benefit costs. The decrease in these
expenses was partially offset by the continued implementation of a company-wide
customer service and logistics project, which resulted in increased selling,
general and administrative expenses of approximately $13,000 in 2001 compared to
2000 due to increases in the Company's number of facilities and related staffing
and start-up expenses. The objective of the project, which began in 1998, is to
redeploy inventory into a system of national zone warehouses, regional zone
warehouses and branch locations for the purpose of providing better customer
service, reducing overall warehousing and distribution costs and improving
inventory turnover. The increased expenses related to the logistics project
implementation were anticipated by management and are expected to provide future
benefits to the Company's results of operations. Health care plan costs and
pension plan expense were also higher in 2001 compared to 2000. Selling, general
and administrative expenses as a percentage of sales increased from 13.8% in
2000 to 14.9% in 2001 primarily because the rate at which expenses were reduced
lagged the rate at which sales volume decreased.
     The increase in taxes, other than income of $3,929 in 2001 compared to 2000
resulted primarily from higher payroll tax expenses due to higher taxable wage
payments made in 2001 compared to 2000, including year 2000 incentive plan
payments made in the first quarter of 2001.
     Depreciation and amortization increased $4,202, or 14.4%, from $29,220 in
2000 to $33,422 in 2001. The increase resulted primarily from capital
expenditures for facilities and equipment made in 2000 and 2001, due largely to
the implementation of the Company's customer service and logistics project.
     Other income, net includes gains on sale of property of $2,677 and $0 and
accounts receivable interest charges to customers of $2,433 and $1,805 in 2001
and 2000, respectively.
     Interest expense decreased $7,608, or 16.3%, when comparing 2001 to 2000
primarily due to lower interest rates on short-term borrowings and decreased
levels of short-term borrowings required to finance lower levels of inventory
and receivables.
     The combined effect of the decrease in gross margin and the increase in
other income, together with the increase in depreciation and amortization and
decreases in selling, general and administrative expenses and interest expense,
resulted in a decrease in pretax earnings of $58,055 in 2001 compared to 2000.

FINANCIAL CONDITION AND LIQUIDITY
     At December 31, 2002 current assets exceeded current liabilities by
$445,633, down $68,313 from December 31, 2001. The reduction in accounts
receivable from December 31, 2002 to December 31, 2001 resulted primarily from
the decrease in sales experienced by the Company. The average number of days of
sales in accounts receivable decreased approximately three days during 2002.
Merchandise inventory levels were lower at December 31, 2002 when compared to
December 31, 2001 inventory levels due largely to continuing reductions in
specific inventory carried to support customer contract agreements and slightly
improved inventory turnover.
     The Company is converting its existing computer systems to an Enterprise
Resource Planning (ERP) system. The project is currently in the application
design and development stage, and the Company expects to begin implementation of
the new system in the second quarter of 2003. The total project costs are
expected to be approximately $90,000. The Company is funding the project through
a combination of equipment leases and working capital. Project costs through
December 31, 2002 are approximately $61,000, of which $50,236 has been
capitalized. The Company expects that conversion to the new ERP system will
provide future benefits to its results of operations. The Company does not have
any other plans or commitments that would require significant amounts of
additional working capital.
     At December 31, 2002 the Company had available to it unused lines of credit
amounting to $506,226. These lines are available to meet short-term cash
requirements of the Company. Included in the Company's lines of credit is a
Revolving Credit Loan Agreement with a group of banks at an interest rate based
on the London Interbank Offered Rate (LIBOR) which had previously consisted of a
$140,000, 364-day facility and a $205,000, five-year facility. In July 2002 the
Company elected to decline renewal of the $140,000, 364-day facility. The
$205,000, five-year facility agreement expires in July 2004. There were no
amounts outstanding under the Revolving Credit Loan Agreement at December 31,
2002. Short-term borrowings outstanding during 2002 and 2001 varied from a
minimum of $0 and $86,000 to a maximum of $216,779 and $479,000, respectively.
     At December 31, 2002 the Company had a $275 million accounts receivable
securitization program that expires in October 2003. The securitization program
provides for the sale of certain of the Company's trade receivables on a
revolving basis to Graybar Commerce Corporation (GCC), a wholly owned,
bankruptcy remote, special purpose subsidiary. GCC sells an undivided interest
in the receivables to an unrelated multi-seller commercial paper conduit. The
Company accounts for the securitization as an on-balance sheet financing
arrangement because the Company has maintained effective control of the accounts
receivable through a call option that gives GCC the unilateral right to
repurchase the undivided interests. Accordingly, the accounts receivable and
related
                                                                            18

<PAGE>
<PAGE>
                                FINANCIAL REVIEW
------------------------------------------------------------------------------

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

debt are included in the accompanying consolidated balance sheets. GCC has
granted a security interest in its trade receivables to the commercial paper
conduit. There were no borrowings outstanding under the securitization
program at December 31, 2002. The Company elected to reduce the total
amount available for borrowing under the program from $275 million to $200
million in January 2003.
        The Company has two off-balance sheet operating lease arrangements
with an independent lessor to fund up to $73,720 for the financing of nine
of the Company's zone distribution facilities. Each of the agreements carries
a five-year term. The Company has the option, with the consent of the lenders
to the lessor, to renew the leases for up to two additional five-year terms
or to purchase the property for a price including the outstanding lease
balance. If the Company elects not to renew the lease or purchase the
property, or such lenders refuse to consent to a renewal, the Company may
elect to remarket the property and arrange for its sale to a third party.
Under the remarketing option, at December 31, 2002, the Company has
guaranteed $60,881 as the residual fair value of the property.
        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. During 2002, cash
provided by operations amounted to $213,379 compared to $280,913 cash
provided by operations in 2001. Cash provided from the sale of common stock
and proceeds received on stock subscriptions amounted to $15,191 and $402 in
2002 and 2001, respectively.
        Capital expenditures for property were $55,532, $53,985 and $58,747
for the years ended December 31, 2002, 2001 and 2000, respectively. Purchases
of treasury stock were $6,299, $5,861 and $5,179 for the years ended
December 31, 2002, 2001 and 2000, respectively. Dividends paid were $11,984,
$11,616 and $11,498 for the years ended December 31, 2002, 2001 and 2000,
respectively.

CRITICAL ACCOUNTING POLICIES
        The consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States, which
require the Company to make estimates and assumptions (see Note 1 to the
consolidated financial statements). The Company believes the following
accounting policies have the potential to have a more significant impact
on the financial statements either because of the significance of the
financial statement item to which they relate or because they involve a
higher degree of judgment and complexity.

ALLOWANCE FOR DOUBTFUL ACCOUNTS
        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 to reflect the expected uncollectibility of
accounts receivable based on past collection history, the economic environment
and specific risks identified in the receivables portfolio. Although actual
credit losses have historically been within management's expectations,
additional allowances may be required if the financial condition of the
Company's customers were to deteriorate.

INVENTORY
        The Company values its inventories at the lower of cost or market. In
assessing the ultimate realization of inventories, the Company makes judgments
as to rights of return to suppliers and future demand requirements. If actual
future demand, market conditions or supplier return provisions are less
favorable than those projected by management, additional inventory write-downs
may be required.

PENSION PLAN
        The Company's pension plan expense and obligations are determined
based on the selection of certain assumptions, the most significant of which
are the expected long-term rate of return on plan assets and the discount
rate used to discount plan liabilities. While management believes that the
assumptions selected by the Company are appropriate, differences in actual
experience or changes in assumptions may affect the Company's pension plan
obligation and future pension expense. In 2002, the Company reduced the
expected long-term rate of return on plan assets to 9.00%, down from 9.50%
in 2001. The discount rate used to discount plan liabilities was changed
from 7.25% at December 31, 2001 to 6.75% at December 31, 2002. The Company
reduced the expected long-term rate of return on plan assets from 9.00% in
2002 to 8.75% for 2003. The change in assumptions and poor return on assets
experienced by the plan in recent years are expected to result in additional
2003 pension expense of approximately $2,800.

SUPPLIER VOLUME INCENTIVES
        The Company's agreements with many of its suppliers provide for the
Company to earn incentives based on purchases during the agreement period.
These agreements typically provide for the incentives to be paid in arrears,
and the Company estimates amounts to be received from suppliers at the end
of each reporting period based on the earnout level that the Company
estimates is probable of being achieved. Amounts received have historically
been within management's estimates. In the event that the operating
performance of the Company's suppliers should decline, however, there can be
no assurance that amounts earned will be paid or that the incentives will be
included in future agreements.

                                                                           19

<PAGE>
<PAGE>


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

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

<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                                     2002               2001               2000
---------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>                <C>
SALES, NET OF RETURNS AND ALLOWANCES                          $ 3,986,954        $ 4,829,862        $ 5,231,901
  Less -- Cash discounts                                          (12,062)           (13,380)           (13,564)
---------------------------------------------------------------------------------------------------------------
    Net Sales                                                   3,974,892          4,816,482          5,218,337
---------------------------------------------------------------------------------------------------------------
COST OF MERCHANDISE SOLD                                       (3,229,791)        (3,934,719)        (4,271,745)
---------------------------------------------------------------------------------------------------------------
    Gross Margin                                                  745,101            881,763            946,592
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                     (627,015)          (718,381)          (721,344)
TAXES, OTHER THAN INCOME TAXES                                    (41,297)           (46,950)           (43,021)
DEPRECIATION AND AMORTIZATION                                     (34,636)           (33,422)           (29,220)
---------------------------------------------------------------------------------------------------------------
    Income from operations                                         42,153             83,010            153,007
OTHER INCOME, NET                                                   3,313              7,364              3,030
INTEREST EXPENSE                                                  (26,301)           (39,073)           (46,681)
LOSS ON DEBT EXTINGUISHMENT                                          (545)                --                 --
---------------------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES                           18,620             51,301            109,356
---------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
  Current                                                          (7,233)           (22,915)           (44,395)
  Deferred                                                             14              3,302              1,196
---------------------------------------------------------------------------------------------------------------
    Total provision for income taxes                               (7,219)           (19,613)           (43,199)
---------------------------------------------------------------------------------------------------------------
NET INCOME                                                         11,401             31,688             66,157
---------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS, BEGINNING OF YEAR                              310,521            290,405            241,473
  Cash dividends-
    Preferred, $1.00 per share each year                               (2)                (3)                (3)
    Common, $2.00 per share each year                             (12,486)           (11,569)           (11,583)
  Common Stock dividend                                                --                 --             (5,639)
---------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS, END OF YEAR                                $   309,434        $   310,521        $   290,405
---------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE OF COMMON STOCK                          $      1.83        $      5.42        $     10.84
---------------------------------------------------------------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements
</TABLE>

20

<PAGE>
<PAGE>
                        CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                      CONSOLIDATED BALANCE SHEETS                                             December 31,
        (Stated in thousands except for share and per share data)                       2002               2001

<S>                                                                               <C>                <C>
-----------------------------------------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
  Cash                                                                            $   20,826         $   10,079
  Trade receivables (less allowances of $6,307 and $8,634, respectively)             504,102            592,752
  Merchandise inventory                                                              515,691            612,976
  Other current assets                                                                17,270             14,442
-----------------------------------------------------------------------------------------------------------------
    Total current assets                                                           1,057,889          1,230,249
-----------------------------------------------------------------------------------------------------------------
PROPERTY, AT COST
  Land                                                                                25,601             25,402
  Buildings                                                                          235,205            233,979
  Furniture and fixtures                                                             167,371            168,918
  Computer software                                                                   50,236              1,510
  Capital equipment leases                                                            24,159             24,159
-----------------------------------------------------------------------------------------------------------------
                                                                                     502,572            453,968
  Less -- Accumulated depreciation and amortization                                  209,189            187,492
-----------------------------------------------------------------------------------------------------------------
                                                                                     293,383            266,476
-----------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES                                                                 24,294             10,653
-----------------------------------------------------------------------------------------------------------------
OTHER ASSETS                                                                          24,605             28,620
-----------------------------------------------------------------------------------------------------------------
                                                                                  $1,400,171         $1,535,998
-----------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
  Short-term borrowings                                                           $       --         $   98,737
  Current portion of long-term debt                                                   23,314             25,795
  Trade accounts payable                                                             498,855            495,143
  Accrued payroll and benefit costs                                                   22,667             26,816
  Other accrued taxes                                                                 12,036             11,760
  Dividends payable                                                                    6,802              6,299
  Other payables and accruals                                                         48,582             51,753
-----------------------------------------------------------------------------------------------------------------
    Total current liabilities                                                        612,256            716,303
-----------------------------------------------------------------------------------------------------------------
POSTRETIREMENT BENEFITS LIABILITY                                                     77,586             77,431
-----------------------------------------------------------------------------------------------------------------
PENSION LIABILITY                                                                     55,776             19,223
-----------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT                                                                       266,710            315,549
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                        Shares at December 31,
                                                           2002          2001
-------------------------------------------------------------------------------
<S>                                                   <C>           <C>           <C>                <C>
SHAREHOLDERS' EQUITY
  Capital stock-
    Preferred, par value $20 per share,
     authorized 300,000 shares --
      Issued to shareholders                              2,337         2,593
      In treasury, at cost                                  (87)          (27)
-----------------------------------------------------------------------------------------------------------------
      Outstanding                                         2,250         2,566             45                 51
-----------------------------------------------------------------------------------------------------------------
    Common, stated value $20 per share,
      Authorized                                      7,500,000     7,500,000
      Issued to voting trustees                       5,879,436     5,427,152
      Issued to shareholders                            311,549       305,754
      In treasury, at cost                              (27,380)      (11,700)
-----------------------------------------------------------------------------------------------------------------
      Outstanding                                     6,163,605     5,721,206        123,272            114,424
-----------------------------------------------------------------------------------------------------------------
  Common shares subscribed                                                             1,124             16,265
  Retained earnings                                                                  309,434            310,521
    Accumulated other comprehensive income (loss)                                    (44,958)           (17,504)
-----------------------------------------------------------------------------------------------------------------
                                                                                     388,917            423,757
           Less -- Subscriptions receivable                                            1,074             16,265
-----------------------------------------------------------------------------------------------------------------
           TOTAL SHAREHOLDERS' EQUITY                                                387,843            407,492
-----------------------------------------------------------------------------------------------------------------
                                                                                  $1,400,171         $1,535,998
-----------------------------------------------------------------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements
</TABLE>
                                                                            21

<PAGE>
<PAGE>
                       CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Stated in thousands)

FOR THE YEARS ENDED DECEMBER 31,                                      2002              2001               2000
-----------------------------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>                <C>
CASH FLOWS FROM OPERATIONS
  Net Income                                                     $  11,401         $  31,688          $  66,157
-----------------------------------------------------------------------------------------------------------------
  Adjustments to reconcile net income to cash
   provided by operations -
    Depreciation and amortization                                   34,636            33,422             29,220
    Deferred income taxes                                              (14)           (3,302)            (1,196)
    Gain on sale of property                                            --            (2,677)                --
    Changes in assets and liabilities:
      Trade receivables                                             88,650           172,794           (176,915)
      Merchandise inventory                                         97,285           135,778             94,307
      Other current assets                                          (2,828)           11,002            (17,955)
      Other assets                                                   3,655             1,633             (6,483)
      Trade accounts payable                                        (7,988)          (37,995)            20,515
      Accrued payroll and benefit costs                             (4,149)          (31,380)             8,089
      Other accrued liabilities                                     (7,269)          (30,050)            15,513
-----------------------------------------------------------------------------------------------------------------
                                                                   201,978           249,225            (34,905)
-----------------------------------------------------------------------------------------------------------------
  Net cash flow provided by operations                             213,379           280,913             31,252
-----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from sale of property                                   5,689             3,974              2,756
    Capital expenditures for property                              (55,532)          (53,985)           (58,747)
    Investment in joint venture                                        360             1,405              2,745
-----------------------------------------------------------------------------------------------------------------
  Net cash flow used by investing activities                       (49,483)          (48,606)           (53,246)
-----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Net increase (decrease) in short-term borrowings               (98,737)         (307,462)            65,595
    Proceeds from long-term debt                                        --           100,000              3,524
    Repayment of long-term debt                                    (46,430)          (21,439)           (17,499)
    Principal payments under capital equipment leases               (4,890)           (3,866)            (3,165)
    Sale of common stock                                            15,191               402              1,080
    Purchases of treasury stock                                     (6,299)           (5,861)            (5,179)
    Dividends paid                                                 (11,984)          (11,616)           (11,498)
-----------------------------------------------------------------------------------------------------------------
  Net cash flow provided (used) by financing activities           (153,149)         (249,842)            32,858
-----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                     10,747           (17,535)            10,864
-----------------------------------------------------------------------------------------------------------------
CASH, BEGINNING OF YEAR                                             10,079            27,614             16,750
-----------------------------------------------------------------------------------------------------------------
CASH, END OF YEAR                                                $  20,826         $  10,079          $  27,614
-----------------------------------------------------------------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements
</TABLE>

22

<PAGE>
<PAGE>
                       CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

<TABLE>
                                 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                    FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 and 2000
                                                    (Stated in thousands)
<CAPTION>
                                                                           COMMON                   ACCUMULATED
                                                                           STOCK                       OTHER
                                              COMMON       PREFERRED     SUBSCRIBED,   RETAINED    COMPREHENSIVE
                                              STOCK          STOCK        UNISSUED     EARNINGS    INCOME (LOSS)     TOTAL
                                             --------      ---------     -----------   --------    -------------   --------
<S>                                          <C>           <C>            <C>          <C>           <C>           <C>
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
                                             ========      ========       ========     ========      =========     ========
Net income                                                                               31,688                      31,688

Currency translation adjustments                                                                          (267)        (267)

Cumulative impact of adoption of
   SFAS 133 (net of tax of $877)                                                                        (1,342)      (1,342)

Unrealized gain/(loss) from interest
   rate swap (net of tax of $317)                                                                         (590)        (590)

Minimum pension liability (net
   of tax of $9,125)                                                                                   (14,763)     (14,763)
                                                                                                                   --------
Comprehensive income                                                                                                 14,726
                                                                                                                   --------
Stock issued                                      451                                                                   451

Stock redeemed                                 (5,855)           (6)                                                 (5,861)

Advance payments                                                               (49)                                     (49)

Dividends declared                                                                      (11,572)                    (11,572)
                                             --------      --------       --------     --------      ---------     --------
December 31, 2001                            $114,424      $     51       $      0     $310,521      $ (17,504)    $407,492
                                             ========      ========       ========     ========      =========     ========
Net income                                                                               11,401                      11,401

Currency translation adjustments                                                                          (441)        (441)

Unrealized gain/(loss) from interest
   rate swap (net of tax of $1,536)                                                                     (2,374)      (2,374)

Minimum pension liability (net
   of tax of $15,621)                                                                                  (24,639)     (24,639)
                                                                                                                   --------
Comprehensive income                                                                                                (16,053)
                                                                                                                   --------
Stock issued                                   15,141                                                                15,141

Stock redeemed                                 (6,293)           (6)                                                 (6,299)

Advance payments                                                                50                                       50

Dividends declared                                                                      (12,488)                    (12,488)
                                             --------      --------       --------     --------      ---------     --------
DECEMBER 31, 2002                            $123,272      $     45       $     50     $309,434      $ (44,958)    $387,843
                                             ========      ========       ========     ========      =========     ========

See accompanying Notes to Consolidated Financial Statements
</TABLE>

23

<PAGE>
<PAGE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
            (Stated in thousands except for share and per share data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF 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. The Company's business activity is primarily with
customers in the United States; however, the Company has limited sales activity
in several international locations.

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 is recognized when products are shipped and title transfers to the
customer.

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 2002 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 a method of
accounting that, compared with other inventory accounting methods, generally
provides better matching of current costs with current revenues. At December 31,
2002 and 2001 FIFO (first-in, first-out) inventory approximated LIFO inventory.
The Company liquidated a portion of a previously created LIFO layer in 2002,
resulting in an increase in cost of goods sold of $5,446.

SUPPLIER VOLUME INCENTIVES
     The Company's agreements with many of its suppliers provide for the Company
to earn incentives based on purchases during the agreement period. The Company
estimates the amount to be received from suppliers at the end of each reporting
period based on the earnout level that the Company estimates is probable of
being achieved. The Company records the incentive ratably over the year as a
reduction of cost of sales. Changes in the estimated amount of incentives are
treated as changes in estimate and are recognized using a cumulative catch-up
adjustment.

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

--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------

     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. Interest capitalized in 2002 was $1,505.
     The Company capitalizes qualifying internal and external costs incurred to
develop or obtain software for internal use during the application development
stage. Costs incurred during the pre-application development stage are expensed
as incurred. During 2002 and 2001, the Company capitalized $48,726 and $1,510,
respectively.

24

<PAGE>
<PAGE>
                        CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

CREDIT RISK
     Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
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.

DERIVATIVE FINANCIAL INSTRUMENTS
     On January 1, 2001 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, as amended by SFAS No. 138, "Accounting for Derivative
Instruments and Hedging Activities." The statement requires the Company to
recognize all derivative instruments on the balance sheet at fair value. The
adoption of SFAS No. 133 impacts the accounting for the Company's interest rate
swap agreement that effectively converts its floating rate payments to a
fixed-rate basis. The Company manages interest rates on amounts due under
certain operating leases through its swap agreement. The Company's interest rate
swap agreement is designated as a cash flow hedge.
     Upon adoption of SFAS No. 133, the Company recorded a liability for the
fair value of the interest rate swap of $2,219 in its consolidated balance
sheet. On an ongoing basis, the Company reflects the current fair value of the
interest rate swap on its balance sheet. The effective portion of the related
gains or losses on the swap are deferred in accumulated other comprehensive
income. Because the swap is completely effective, no ineffectiveness was
recorded in the consolidated statements of income during 2002 or 2001. At
January 1, 2001 the Company included unrealized net losses of $1,342 (net of
tax) in accumulated other comprehensive income to record the cumulative
transition adjustment as a result of adopting SFAS No. 133. Unrealized net
losses of $2,374 (net of tax) and $590 (net of tax) related to the swap were
recorded in accumulated other comprehensive income during the twelve month
periods ended December 31, 2002 and 2001, respectively. These deferred gains and
losses are recognized in income in the period in which the related interest
payments being hedged are recognized in expense.

GOODWILL
     On January 1, 2002 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." Under SFAS
142, goodwill and indefinite-lived intangible assets will no longer be amortized
but rather will be tested annually for impairment. The effect of amortization
expense related to goodwill on net income in prior periods was not material. As
of December 31, 2002 the company has completed its initial and annual impairment
tests and concluded that there is no impairment of the Company's goodwill. At
December 31, 2002 the Company has $6,680 of goodwill included in Other Assets in
the balance sheet.

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:                      2002          2001          2000
--------------------------------------------------------------------------------
<S>                                         <C>          <C>           <C>
Federal income tax
     Current                                $6,724       $21,804       $38,621
     Deferred                                  693        (3,087)       (1,118)
State income tax
     Current                                   509         1,111         5,774
     Deferred                                 (707)         (215)          (78)
--------------------------------------------------------------------------------
Financial statement
     income tax provision                   $7,219       $19,613       $43,199
--------------------------------------------------------------------------------
</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)                                        2002          2001
--------------------------------------------------------------------------------
<S>                                                     <C>           <C>
Postretirement benefits                                 $ 30,181      $ 30,121
Payroll accruals                                           3,419         4,590
Bad debt reserves                                          2,238         3,257
Other deferred tax assets                                 11,444         8,480
Inventory                                                  4,474           645
Accrued (prepaid) pension                                 17,213         1,319
Fixed asset depreciation                                 (14,264)      (11,631)
Fixed asset gains                                         (7,392)       (7,442)
Computer software                                         (1,945)           --
Other deferred tax liabilities                           (10,628)      (11,769)
--------------------------------------------------------------------------------
                                                        $ 34,740      $ 17,570
--------------------------------------------------------------------------------
</TABLE>

                                                                            25

<PAGE>
<PAGE>

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

     Deferred tax assets included in Other Current Assets were $10,446 and
$6,917 in 2002 and 2001, respectively. The Company's deferred tax assets
include state net operating loss carryforwards of $2,690 as of December 31,
2002 that expire from 2006 to 2022. A valuation allowance of $529 has been
established for a portion of these deferred tax assets.
     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:                      2002          2001          2000
--------------------------------------------------------------------------------
<S>                                           <C>           <C>           <C>
"Statutory" tax rate                          35.0%         35.0%         35.0%
State and local income taxes,
  net of federal benefit                      (3.2)         (0.2)          3.0
Other, net                                     7.0           3.4           1.5
--------------------------------------------------------------------------------
Effective tax rate                            38.8%         38.2%         39.5%
--------------------------------------------------------------------------------
</TABLE>

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 2001 the Company offered to eligible employees the right to
subscribe to 1,300,000 shares of common stock at $20 per share in accordance
with the provisions of the Company's Common Stock Purchase Plan dated October 8,
2001. This resulted in the subscription of 813,251 shares $(16,265). Subscribers
under the Plan elected to make payments under one of the following options: (i)
all shares subscribed for prior to January 18, 2002; (ii) a portion of such
shares prior to January 18, 2002, 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 18, 2002, in the case of shares paid for prior to
January 18, 2002. 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
--------------------------------------------------------------------------------
<C>                             <C>            <C>       <C>           <C>
2002                            316            256       314,647       298,967
2001                            299            397       292,732       310,472
2000                            547            422       258,431       240,720
--------------------------------------------------------------------------------
</TABLE>


26


<PAGE>
<PAGE>

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


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

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
LONG-TERM DEBT WAS COMPOSED OF:                             2002          2001
------------------------------------------------------------------------------
<S>                                                     <C>           <C>
7.49% note, unsecured, due in
    annual installments of $14,286
    in each of the years 2005
    through 2011                                        $100,000      $100,000
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                   52,619        58,809
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                                            0        21,000
6.21% to 8.80% capital equipment
  leases, various maturities                              10,434        15,346
6.44% note, unsecured, due in
    quarterly installments of $893
    through January 2005                                       0        11,607
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                      8,200        10,925
Variable rate mortgages, secured by
   facilities, various maturities                          3,771         4,032
7.74% note, secured by facility, due
   in quarterly installments through
   August 2006                                                 0         3,325
7.75% note, secured by facility, due
   in quarterly installments through
   March 2005                                                  0         1,300
------------------------------------------------------------------------------
                                                        $290,024      $341,344
Less current portion                                      23,314        25,795
------------------------------------------------------------------------------
                                                        $266,710      $315,549
------------------------------------------------------------------------------

<CAPTION>
LONG-TERM DEBT MATURES AS FOLLOWS:
------------------------------------------------------------------------------
<C>                                                                   <C>
2004                                                                  $ 22,807
2005                                                                    38,364
2006                                                                    31,754
2007                                                                    31,705
2008-2013                                                              142,080
------------------------------------------------------------------------------
                                                                      $266,710
------------------------------------------------------------------------------
</TABLE>

     The net book value of property securing various long-term debt instruments
was $14,990 at December 31, 2002.
     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.
     Included in the Company's lines of credit is a Revolving Credit Loan
Agreement with a group of banks at an interest rate based on the London
Interbank Offered Rate (LIBOR) which had previously consisted of a $140,000,
364-day facility and a $205,000, five-year facility. In July 2002 the Company
elected to decline renewal of the $140,000, 364-day facility. The $205,000,
five-year facility agreement expires in July 2004. There were no amounts
outstanding under the Revolving Credit Loan Agreement at December 31, 2002.
     The Company has a $275 million accounts receivable securitization program
that expires in October 2003. The securitization program provides for the sale
of certain of the Company's trade receivables on a revolving basis to Graybar
Commerce Corporation (GCC), a wholly owned, bankruptcy remote, special purpose
subsidiary. GCC sells an undivided interest in the receivables to an unrelated
multi-seller commercial paper conduit. The Company accounts for the
securitization as an on-balance sheet financing arrangement because the Company
has maintained effective control of the accounts receivable through a call
option that gives GCC the unilateral right to repurchase the undivided
interests. Accordingly, the accounts receivable and related debt are included in
the accompanying consolidated balance sheets. GCC has granted a security
interest in its trade receivables to the commercial paper conduit. There were no
borrowings outstanding under the securitization program at December 31, 2002.
     Borrowings under short-term credit agreements varied from a minimum of
$0 and $86,000 to a maximum of $216,779 and $479,000 in 2002 and 2001,
respectively. The average amount of borrowings outstanding under short-term
credit agreements during 2002 and 2001 amounted to approximately $101,000
and $305,000 at weighted average interest rates of 2.11% and 4.86%,
respectively. The averages are based on the daily amounts outstanding during
each year. The weighted average interest rate for amounts outstanding at
December 31, 2002 and 2001 was 0% and 2.47%, respectively.
     The Company had unused lines of credit of approximately $506,226 as of
December 31, 2002. Certain committed lines of credit have annual fees of up to
twenty-seven 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, 2002.

                                                                            27

<PAGE>
<PAGE>

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

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. 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,
2002 or 2001.
     The following table sets forth information regarding the Company's pension
and other postretirement benefits as of December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                           Postretirement
                               Pension Benefits               Benefits
                           -----------------------     -----------------------
                                2002          2001          2002          2001
                           -----------------------     -----------------------
<S>                        <C>            <C>          <C>            <C>
Accumulated
  benefit
  obligation               $ 157,065      $148,696     $ 118,500      $ 96,070
                           ---------      --------     ---------      --------
Projected
  benefit
  obligation                 203,100       201,600            --            --

Fair value of
  plan assets                101,132       129,473            --            --
                           ---------      --------     ---------      --------

Funded status              $(101,968)     $(72,127)    $(118,500)     $(96,070)
                           ---------      --------     ---------      --------
</TABLE>

     Amounts recognized in the balance sheet at December 31, 2002 consist of
the following:
<TABLE>
<CAPTION>
                                                           Postretirement
                               Pension Benefits               Benefits
                           -----------------------     -----------------------
                                2002          2001          2002          2001
                           -----------------------     -----------------------
<S>                        <C>            <C>          <C>            <C>
Prepaid (accrued)
  benefit cost              $(55,776)     $(19,223)     $(77,586)     $(77,431)
Intangible
  asset                       13,673        17,380            --            --
Accumulated other
  comprehensive loss          39,402        14,763            --            --
                           ---------      --------     ---------      --------
Net amount
  recognized               $  (2,701)     $ 12,920     $ (77,586)     $(77,431)
                           ---------      --------     ---------      --------
</TABLE>

     Weighted average assumptions as of December 31 are:
<TABLE>
<CAPTION>
                                                           Postretirement
                               Pension Benefits               Benefits
                           -----------------------     -----------------------
                                2002          2001          2002          2001
                           -----------------------     -----------------------
<S>                        <C>            <C>          <C>            <C>
Discount rate                   6.75%         7.25%         6.75%         7.25%
Expected return
  on plan assets                9.00%         9.50%           --            --
Rate of
  compensation
  increase                      3.75%         4.25%           --            --
Health care cost
  trend on
  covered charges                 --            --         10%/6%         6.75%
</TABLE>

     The following presents information regarding the plans for the years ended
December 31, 2002 and 2001:
<TABLE>
<CAPTION>
                                                           Postretirement
                               Pension Benefits               Benefits
                           -----------------------     -----------------------
                                2002          2001          2002          2001
                           -----------------------     -----------------------
<S>                        <C>            <C>          <C>            <C>
Employer
  contributions             $ 14,074      $  9,852       $ 9,148       $ 8,494
Participant
  contributions                   --            --           300           245

Benefits paid               $(25,556)     $(12,855)      $(9,448)      $(8,739)
                            --------      --------       -------       -------
</TABLE>

     The net periodic cost recognized for the defined benefit pension plan was
$14,231, $11,707 and $9,532 for each of the three years ended December 31, 2002,
2001 and 2000, respectively.
     The net periodic cost recognized for the postretirement benefit plan was
$9,533, $8,719 and $7,594 for each of the three years ended December 31, 2002,
2001 and 2000, respectively.
     For measurement of the net periodic postretirement benefit obligation, a
10.0% annual rate of increase in per capita cost of covered health care benefits
was assumed for 2003. The rate was assumed to gradually decrease to 6.0% for
2012 and to remain at that level thereafter.

28



<PAGE>
<PAGE>
                        CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------

     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 6,245,008, 5,845,840 and 6,101,310 in 2002, 2001 and 2000, respectively,
adjusted for the declaration of a 5% stock dividend in 2000.

7. COMMITMENTS
     The Company has two off-balance sheet operating lease arrangements with an
independent lessor to fund the financing of nine of the Company's zone
distribution facilities. Each of the agreements carries a five-year term. The
Company has the option, with the consent of the lenders to the lessor, to renew
the leases for up to two additional five-year terms or to purchase the property
for a price including the outstanding lease balance. If the Company elects not
to renew the lease or purchase the property, or such lenders refuse to consent
to a renewal, the Company may elect to remarket the property and arrange for its
sale to a third party. Under the remarketing option, at December 31, 2002, the
Company has guaranteed $60,881 as the residual fair value of the property. In
addition, the Company leases various other property under noncancellable
long-term leases. Certain of these leases include renewal options. Rental
expense was $43,936, $34,989 and $28,576 in 2002, 2001 and 2000, 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, 2002 are as follows:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
------------------------------------------------------------------------------
<C>                                                                    <C>
2003                                                                   $41,409
2004                                                                    33,379
2005                                                                    21,573
2006                                                                    12,997
2007                                                                     9,456
Subsequent to 2007                                                      42,663
------------------------------------------------------------------------------
</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 fair value of the swap
was $(7,036) at December 31, 2002 and is recorded in Other Payables and Accruals
in the balance sheet.

8. STATEMENTS OF CASH FLOWS
     During 2002, 2001 and 2000 income taxes paid totaled $12,484, $8,526 and
$55,241; interest paid totaled $26,976, $38,764 and $48,610; and liabilities
assumed in connection with capitalized leases totaled $0, $3,779 and $3,754,
respectively. In addition, the Company has $11,700 of trade payables at December
31, 2002 related to the purchase of computer software licenses.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
     The components of accumulated other comprehensive income (loss) as of
December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                            2002          2001
------------------------------------------------------------------------------
<S>                                                     <C>           <C>
Currency translation adjustments                        $ (1,250)     $   (809)
Unrealized gain/(loss) from
  interest rate swap                                      (4,306)       (1,932)
Minimum pension liability                                (39,402)      (14,763)
------------------------------------------------------------------------------
                                                        $(44,958)     $(17,504)
------------------------------------------------------------------------------
</TABLE>

10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
     Quarterly financial data for 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                    FOR THE QUARTERS ENDED,
  2002                          3/31          6/30          9/30         12/31
------------------------------------------------------------------------------
<S>                         <C>         <C>           <C>            <C>
Net sales                   $967,910    $1,046,092    $1,013,783     $ 947,107
Gross margin                 181,742       190,238       188,820       184,301
Net income (loss)             (1,456)        3,396         5,554         3,907
Net income (loss)
  per share of
  common stock              $   (.23)   $      .54    $      .89     $     .63
------------------------------------------------------------------------------

<CAPTION>
                                    FOR THE QUARTERS ENDED,
  2001                          3/31          6/30          9/30         12/31
------------------------------------------------------------------------------
<S>                       <C>           <C>           <C>           <C>
Net sales                 $1,263,068    $1,284,667    $1,195,318    $1,073,429
Gross margin                 229,300       227,331       211,095       214,037
Net income                     5,988         7,430        10,654         7,616
Net income per share
  of common stock         $     1.01    $     1.26    $     1.83    $     1.33
------------------------------------------------------------------------------
</TABLE>

                                                                            29

<PAGE>
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS
------------------------------------------------------------------------------

                           [Ernst & Young letterhead]


                         Report of Independent Auditors

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, 2002 and 2001, 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, 2002. 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, 2002 and 2001, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for goodwill effective January 1, 2002 and its
method of accounting for derivatives and hedging activities effective
January 1, 2001.


                                        /s/ Ernst & Young LLP

St. Louis, Missouri
February 21, 2003

30

<PAGE>
<PAGE>

             GROUP AND DISTRICT MANAGEMENT AS OF DECEMBER 31, 2002
------------------------------------------------------------------------------

------------------------------------------------------------------------------
NEW YORK, BOSTON AND
NORTHEASTERN COMM/DATA DISTRICTS
------------------------------------------------------------------------------
Donald M. Block Group Vice President
Joseph M. Sabatino Vice President-Service
Joseph P. Peduto Director of Accounting and Finance
------------------------------------------------------------------------------
NEW YORK DISTRICT
  Ronald P. Segraves Vice President-Electrical Sales
  John N. DeRosa Operating Manager
  Brian R. Buchholz Financial Manager
------------------------------------------------------------------------------
BOSTON DISTRICT
  Peter R. Elkas Vice President-Electrical Sales
  Gerald G. Pollick Operating Manager
  Paul E. Smith Financial Manager
------------------------------------------------------------------------------
NORTHEASTERN COMM/DATA DISTRICT
  Stephen E. Thomas Vice President-Comm/Data Sales

------------------------------------------------------------------------------
PITTSBURGH, RICHMOND AND
MID-ATLANTIC COMM/DATA DISTRICTS
------------------------------------------------------------------------------
Thomas S. Gurganous Group Vice President
T. N. (Nick) Fleming Vice President-Service
Sharon L. Enman Director of Accounting and Finance
------------------------------------------------------------------------------
PITTSBURGH DISTRICT
  Steven M. Schooley Vice President-Electrical Sales
  C. Robert Smith Operating Manager
  Peter M. Wingrove Financial Manager
------------------------------------------------------------------------------
RICHMOND DISTRICT
  Wallace H. Hancock Vice President-Electrical Sales
  David K. Ange Operating Manager
  Ronald J. Grabar Financial Manager
------------------------------------------------------------------------------
MID-ATLANTIC COMM/DATA DISTRICT
  Thomas R. Moore Vice President-Comm/Data Sales

------------------------------------------------------------------------------
ATLANTA, TAMPA AND SOUTHEASTERN
COMM/DATA DISTRICTS
------------------------------------------------------------------------------
Richard D. Offenbacher Group Vice President
Keith E. (Kip) Davis Vice President-Service
Richard C. Hird Director of Accounting and Finance
------------------------------------------------------------------------------
ATLANTA DISTRICT
  Donald W. Heitmeier Vice President-Electrical Sales
  Bertie M. Wilson Operating Manager
  Stephen C. Beckmann Financial Manager
------------------------------------------------------------------------------
TAMPA DISTRICT
  Robert C. Lyons Vice President-Electrical Sales
  Dale J. Thayer, Jr. Operating Manager
------------------------------------------------------------------------------
SOUTHEASTERN COMM/DATA DISTRICT
  Jeffrey W. Craig Vice President-Comm/Data Sales

------------------------------------------------------------------------------
CALIFORNIA ELECTRICAL AND
CALIFORNIA COMM/DATA DISTRICTS
------------------------------------------------------------------------------
Gary D. Hodges Group Vice President
Christopher O. Olsen Vice President-Service
------------------------------------------------------------------------------
CALIFORNIA ELECTRICAL DISTRICT
  Scott A. Stromberg Vice President-Electrical Sales
  Kathy L. Edwards Operating Manager
  Richard T. Birkett Financial Manager
------------------------------------------------------------------------------
CALIFORNIA COMM/DATA DISTRICT
  Jon D. Umene Vice President-Comm/Data Sales

------------------------------------------------------------------------------
MINNEAPOLIS, CINCINNATI, CHICAGO AND
NORTH CENTRAL COMM/DATA DISTRICTS
------------------------------------------------------------------------------
Richard A. Cole Group Vice President
John T. Roney Vice President-Service
Timothy E. Carpenter Director of Accounting and Finance
------------------------------------------------------------------------------
MINNEAPOLIS DISTRICT
  Robert L. Nowak Vice President-Electrical Sales
  Paul D. Wise Operating Manager
  Ellen S. Rebne Financial Manager
------------------------------------------------------------------------------
CINCINNATI DISTRICT
  Joseph F. LaMotte  Vice President-Electrical Sales
  J. William Grindle Operating Manager
  Thomas G. Karrenbauer Financial Manager
------------------------------------------------------------------------------
CHICAGO DISTRICT
  Michael N. Wall Vice President-Electrical Sales
  Martin A. Aske Operating Manager
  Steven R. Bourbeau Financial Manager
------------------------------------------------------------------------------
NORTH CENTRAL COMM/DATA DISTRICT
  Richard H. Harvey Vice President-Comm/Data Sales

------------------------------------------------------------------------------
ST. LOUIS, DALLAS, HOUSTON
AND MIDWEST COMM/DATA DISTRICTS
------------------------------------------------------------------------------
John C. Loff Group Vice President
Thomas T. Townsend Vice President-Service
Thomas E. Kinate Director of Accounting and Finance
------------------------------------------------------------------------------
ST. LOUIS DISTRICT
  Michael C. Dumas Vice President-Electrical Sales
  Cindy J. Johnson Operating Manager
  Reiders L. Abel Financial Manager
------------------------------------------------------------------------------
DALLAS DISTRICT
  Lindsey G. Darnell Vice President-Electrical Sales
  Scott B. Neubauer Operating Manager
  Darryl B. Bain Financial Manager
------------------------------------------------------------------------------
HOUSTON DISTRICT
  John H. Hawfield Vice President-Electrical Sales
  Dennis P. Brown Operating Manager
  Timothy D. Birky Financial Manager
------------------------------------------------------------------------------
MIDWEST COMM/DATA DISTRICT
  William P. Mansfield Vice President-Comm/Data Sales

------------------------------------------------------------------------------
SEATTLE, PHOENIX, WESTERN COMM/DATA
AND AURORA DISTRICTS
------------------------------------------------------------------------------
Kenneth B. Sparks Group Vice President
John C. Fischer Vice President-Service
Randall R. Harwood Director of Accounting and Finance
------------------------------------------------------------------------------
SEATTLE DISTRICT
  Kirk A. Snure Vice President-Electrical Sales
  Peter L. Johnson Operating Manager
  Paul A. Hansen Financial Manager
------------------------------------------------------------------------------
PHOENIX DISTRICT
  Mick K. Upchurch Vice President-Electrical Sales
  Shayne P. Jones Operating Manager
  James (Chip) Bateman Financial Manager
------------------------------------------------------------------------------
WESTERN COMM/DATA DISTRICT
  David G. Maxwell Vice President-Comm/Data Sales
------------------------------------------------------------------------------
AURORA DISTRICT
  James A. Grimshaw Vice President-Sales

------------------------------------------------------------------------------
SPN DISTRICT
------------------------------------------------------------------------------
John C. Mansfield Group Vice President

                                                                            31


<PAGE>
<PAGE>


                       LOCATIONS AS OF DECEMBER 31, 2002
------------------------------------------------------------------------------

CORPORATE OFFICE
34 North Meramec Avenue
St. Louis, Missouri 63105
314 573-9200

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

1300 Livingston Avenue
North Brunswick, New Jersey  08902
732 568-2500

BRANCHES
New York: Albany, Hauppauge,
  Jericho, Long Island City
New Jersey: Newark,
 North Brunswick, Teterboro,
 Hackettstown, Parsippany,
 Wanamassa, Hamilton
Pennsylvania: Philadelphia,
 Harrisburg, Allentown,
 Wilkes-Barre
Delaware: New Castle

------------------------------------------------------------------------------
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, Erie
West Virginia: Wheeling
New York: Buffalo, Rochester,
 Syracuse

INFORMATION SYSTEMS
11885 Lackland Road
St. Louis, Missouri 63146
314 573-5700

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

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

BRANCHES
West Virginia: Charleston
Ohio: Columbus, Dayton,
 Lima, Toledo
Kentucky: Lexington,
 Louisville
Indiana: Evansville, Fort Wayne,
 Indianapolis
Michigan: Belleville, Auburn Hills,
 Livonia, Flint

------------------------------------------------------------------------------
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, Nashville
Florida: Pensacola
Mississippi: Jackson

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

1510 Tomlynn Street
Richmond, Virginia 23230
804 354-1300

BRANCHES
Virginia: Norfolk, Roanoke,
 Hampton, Chantilly,
 Commonwealth Controls-Richmond
North Carolina: Asheville,
 Raleigh, Winston-Salem, Charlotte,
 Greensboro, Wilmington, Monroe
South Carolina: Rock Hill
Tennessee: Bristol
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, Daytona Beach, Perrine,
 Miami, West Palm Beach,
 Florida City, Fort Myers,
 Fort Pierce, Naples,
 Pompano Beach,
 Gainesville

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

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

BRANCHES
Illinois: Naperville, Chicago
 Downtown, Joliet, Peoria,
 Springfield
Indiana: South Bend, Hammond
Michigan: Lansing, Grand Rapids
Iowa: Davenport, Cedar Rapids
Wisconsin: West Allis, Racine,
 Madison

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

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

BRANCHES
Minnesota: St. Paul, Duluth,
 Burnsville, Plymouth, Rochester,
 Mankato, St. Cloud
North Dakota: Fargo
South Dakota: Sioux Falls, Brookings
Wisconsin: Green Bay, Marinette,
 Manitowoc, Neenah,
 Stevens Point, Eau Claire
Iowa: Des Moines

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

8170 Lackland Road
Bel Ridge, Missouri 63114
314 573-2000

BRANCHES
Missouri: Jefferson City,
 Kansas City, Springfield
Kansas: Wichita
Nebraska: Omaha
Tennessee: Memphis, Jackson
Arkansas: Little Rock, Springdale,
 Conway

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

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

BRANCHES
Texas: Amarillo, Austin, Abilene,
 Dallas (Royal Lane Counter)
Oklahoma: Oklahoma City, Tulsa
Louisiana: Shreveport

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

6161 Bingle Road
Houston, Texas 77092
713 423-3200

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

32


<PAGE>
<PAGE>

                       LOCATIONS AS OF DECEMBER 31, 2002
------------------------------------------------------------------------------


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

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

BRANCHES
Washington: Spokane,
 Tacoma, Everett
Oregon: Portland, Eugene
Idaho: Boise
Alaska: Anchorage, Fairbanks
Montana: Billings

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

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

BRANCHES
Arizona: Mesa, Tucson,
 Scottsdale
Colorado: Colorado Springs,
 Denver
New Mexico: Albuquerque
Texas: El Paso
Nevada: Las Vegas
Utah: Salt Lake City

------------------------------------------------------------------------------
CALIFORNIA DISTRICT
------------------------------------------------------------------------------

383 South Cheryl Lane
City of Industry, California 91789
909 451-4000

BRANCHES
California: Anaheim, Long Beach,
 Van Nuys, Costa Mesa,
 Los Angeles (Counter),
 San Bernardino, Hayward,
 San Francisco (Downtown), Martinez,
 San Jose, Sacramento, Roseville,
 San Diego, San Marcos,
 Santa Barbara, Santa Maria,
 Bakersfield, Fresno, Modesto
Nevada: Sparks
Hawaii: Honolulu

COMM/DATA DISTRICTS
------------------------------------------------------------------------------
MIDWEST
COMM/DATA DISTRICT
------------------------------------------------------------------------------
8170 Lackland Road
Bel Ridge, Missouri 63114
314 573-2000

------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
20 Diablo View Court
Danville, California 94506
925 980-4863

------------------------------------------------------------------------------
MID-ATLANTIC
COMM/DATA DISTRICT
------------------------------------------------------------------------------
2500 Wilkinson Blvd.
Charlotte, North Carolina 28208
704 392-1804

------------------------------------------------------------------------------
CALIFORNIA
COMM/DATA DISTRICT
------------------------------------------------------------------------------
2368 Lincoln Avenue
Hayward, California 94545
510 259-0122

REGIONAL ZONES
------------------------------------------------------------------------------
ATLANTA REGIONAL
AND NATIONAL ZONE
------------------------------------------------------------------------------
Woodlands Business Park
Building 100
8180 Troon Circle
Austell, Georgia 30168
678 945-9970

------------------------------------------------------------------------------
CHARLOTTE REGIONAL ZONE
------------------------------------------------------------------------------
1700 West Pointe Drive, Suite A
Charlotte, North Carolina 28214
704 602-7000

------------------------------------------------------------------------------
CINCINNATI REGIONAL ZONE
------------------------------------------------------------------------------
8814 Trade Port Drive
Hamilton, Ohio 45011
513 874-8814

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

------------------------------------------------------------------------------
DALLAS REGIONAL ZONE
------------------------------------------------------------------------------
1991 Lakepointe Drive
Lewisville, Texas 75057
972 459-5575

------------------------------------------------------------------------------
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 60431
815 741-4660

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

------------------------------------------------------------------------------
SEATTLE REGIONAL ZONE
------------------------------------------------------------------------------
1101 North Levee Road
Puyallup, Washington 98371
253 848-3305

------------------------------------------------------------------------------
SPRINGFIELD REGIONAL ZONE
------------------------------------------------------------------------------
1904 N. LeCompte, Building #12
Springfield, Missouri 65802
417 864-4955

------------------------------------------------------------------------------
STAFFORD REGIONAL
AND NATIONAL ZONE
------------------------------------------------------------------------------
13131 North Promenade Boulevard
Stafford, Texas 77477
281 340-5500

------------------------------------------------------------------------------
TAMPA REGIONAL ZONE
------------------------------------------------------------------------------
8520 Eagle Palm Drive
Riverview, Florida 33569
813 739-4100

------------------------------------------------------------------------------
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
314 573-9211

LOCATIONS
Carolina, Puerto Rico
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

                                                                            33


<PAGE>
<PAGE>


                                  [PHOTOS]

                               [Graybar Logo]
                       Graybar Electric Company, Inc.
                          34 North Meramec Avenue
                         St. Louis, Missouri 63105
                              www.graybar.com