UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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



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

Graybar Electric Company, Inc. and Subsidiaries

Quarterly Report on Form 10-Q

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Adjusted for the declaration of a ten percent (10%) stock dividend in 2010, shares related to which were issued in February 2011. Prior to the adjustment, the average common shares outstanding were ~~10,647~~10,585 and 10,615 for the three and six months ended ~~March 31,~~June 30, 2010., respectively.

Cash dividends declared were $3,525 and $3,185 for the three months ended June 30, 2011 and 2010, respectively. Cash dividends declared were $7,053 and $6,369 for the six months ended June 30, 2011 and 2010, respectively.

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

Unrealized loss from

postretirement benefits

liability adjustment

(net of tax of $1,236)

Unrealized loss from

(net of tax of $107)

postretirement benefits

liability adjustment

(net of tax of $2,852)

Unrealized gain from

(net of tax of $186)

postretirement benefits

liability adjustment

(net of tax of $1,303)

Unrealized gain from

(net of tax of $247)

postretirement benefits

liability adjustment

(net of tax of $2,975)

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

Graybar Electric Company, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

The condensed consolidated financial statements included herein have been prepared by Graybar Electric Company, Inc. (“Graybar” or the “Company”), without audit, pursuant to the rules and regulations of the United States (“US”) Securities and Exchange Commission (the “Commission”) applicable to interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the US (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that its disclosures are adequate to make the information presented not misleading. The preparation of financial statements in accordance with US GAAP requires the use of estimates and assumptions that affect reported amounts. The Company’s condensed consolidated financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates. Certain reclassifications were made to prior year amounts to conform to the 2011 presentation. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2010 included in the Company’s latest Annual Report on Form 10-K.

In the opinion of management, this quarterly report includes all adjustments, consisting of normal recurring accruals and adjustments, necessary for the fair presentation of the financial statements presented. Such interim financial information is subject to year-end adjustments. Results for interim periods are not necessarily indicative of results to be expected for the full year.

2. Principles of Consolidation

The condensed consolidated financial statements include the accounts of Graybar Electric Company, Inc. and its subsidiaries. All material intercompany balances and transactions have been eliminated. The ownership interests that are held by owners other than the Company in subsidiaries consolidated by the Company are accounted for and reported as noncontrolling interests.

3. Merchandise Inventory

The Company’s inventory is stated at the lower of cost (determined using the last-in, first-out (“LIFO”) cost method) or market. LIFO accounting is a method of accounting that, compared with other inventory accounting methods, generally provides better matching of current costs with current revenues. An actual valuation of inventory under the LIFO method can be made only at year-end based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation.

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

The Company determines its deferred tax assets and liabilities based upon the difference between the financial statement and tax bases of its assets and liabilities, calculated using enacted applicable tax rates. The Company then assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance, when recorded, are included in the provision for (benefit from) income taxes in the condensed consolidated financial statements.

The Company’s unrecognized tax benefits of $~~3,862~~4,755 and $3,843 at ~~March 31,~~June 30, 2011 and December 31, 2010, respectively, are uncertain tax positions that would impact the Company’s effective tax rate if recognized. The Company is periodically engaged in tax return examinations, reviews of statute of limitations periods, and

settlements surrounding income taxes. The Company does not anticipate a material change in its unrecognized tax benefits during the next twelve months.

The Company classifies interest expense and penalties as part of its provision for income taxes based upon applicable federal and state interest/underpayment percentages. The Company has accrued $~~1,129~~1,195 and $1,107 in interest and penalties on its condensed consolidated balance sheets at ~~March 31,~~June 30, 2011 and December 31, 2010, respectively. Interest was computed on the difference between the provision for income taxes recognized in accordance with US GAAP and the amount of benefit previously taken or expected to be taken in the Company’s federal, state, and local income tax returns.

The Company’s federal income tax returns for the tax years 2007 and forward are available for examination by the US Internal Revenue Service (“IRS”). The Company has not agreed to extend the federal statute of limitations for the 2007 tax year as of ~~March 31,~~June 30, 2011. The federal statute of limitations for the 2007 tax year will expire on September 15, 2011. The Company's 2009 federal income tax return is currently under audit examination by the IRS. This examination commenced during June 2011 and is expected to be completed during 2012. Since the audit process has only recently begun, the audit outcome cannot yet be evaluated. The Company’s state income tax returns for 2006 through 2010 remain subject to examination by various state authorities with the latest period closing on December 31, 2015. The Company has not extended the statutes of limitations for any state jurisdictions with respect to years prior to 2006. Such statutes of limitations will expire on or before November 15, 2011 unless extended.

The Company is one hundred percent (100%) owned by its active and retired employees, and there is no public trading market for its common stock. Since 1928, substantially all of the issued and outstanding shares of common stock have been held of record by voting trustees under successive voting trust agreements. Under applicable state law, a voting trust may not have a term greater than ten years. At ~~March 31,~~June 30, 2011, approximately eighty-two percent (82%) of the common stock was held in a voting trust that expires by its term on March 15, 2017. The participation of shareholders in the voting trust is voluntary at the time the voting trust is created, but is irrevocable during its term. Shareholders who elect not to participate in the voting trust hold their common stock as shareholders of record.

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

6. Revolving Credit Agreement

The Company has a revolving credit agreement with a group of thirteen banks at an interest rate based on the London Interbank Offered Rate (“LIBOR”) that consists of an unsecured $200,000 five-year facility expiring in May 2012. There ~~were no amounts~~was $30,000 in borrowings outstanding under the credit agreement at ~~March 31,~~June 30, 2011 and no borrowings outstanding at December 31, 2010.

7. Trade Receivable Securitization Program

At ~~March 31,~~June 30, 2011 and December 31, 2010, the Company had a $100,000 trade receivable securitization program that expires in October 2011. The trade receivable securitization program provides for the sale of certain of the Company’s trade receivables on a revolving basis to Graybar Commerce Corporation (“GCC”), a wholly-owned, bankruptcy-remote, special-purpose subsidiary. GCC sells an undivided interest in the trade receivables to an unrelated multi-seller commercial paper conduit. In the event that a dislocation in the market for the conduit’s receivables-backed commercial paper develops and the conduit is unable to purchase the undivided interest offered by GCC, the agent bank for the trade receivable securitization program is obligated to purchase the undivided interest in the trade receivables from GCC under the terms of the program.

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

receivable securitization program at ~~March 31,~~June 30, 2011 and December 31, 2010.

The Company plans to replace all or a portion of the debt financing available under the trade receivable securitization program with a new or amended credit facility prior to the expiration of the trade receivable securitization program in October 2011.

8. Defined Benefit Pension Plan

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 average earnings and years of service. Employees become one hundred percent (100%) vested after three years of service regardless of age. The Company’s plan funding policy is to make contributions provided that the total annual contributions will not be less than the Employee Retirement Income Security Act (“ERISA”) and the Pension Protection Act of 2006 minimums or greater than the maximum tax-deductible amount, to review contribution and funding strategy on a regular basis, and to allow discretionary contributions to be made by the Company from time to time. The assets of the defined benefit pension plan are invested primarily in fixed income and equity securities, money market funds, and other investments.

The Company made contributions to its defined benefit pension plan totaling $10,000 during each of the three month periods ended ~~March 31,~~June 30, 2011 and 2010. Contributions made during the six month periods ended June 30, 2011 and 2010 each totaled $20,000. Additional contributions totaling $~~30,800~~20,800 are expected to be paid during the remainder of 2011.

9. Variable Interest Entity

An entity is considered to be a variable interest entity ("VIE") if its total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support or if its equity investors, as a group, lack the characteristics of having a controlling financial interest. A reporting company is required to consolidate a VIE as its primary beneficiary when it has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company has a lease agreement with an independent lessor that is considered to be a VIE. The agreement provides $28,720 of financing for five of the Company’s distribution facilities and carries a five-year term expiring July 2013. The financing structure used with this lease qualifies as a silo of a VIE. Graybar, as lessee, retains the power to direct the operational activities that most significantly impact the economic performance of the VIE and has an obligation to absorb losses and the right to receive benefits from the sale of the real property held by the VIE lessor. Therefore, the Company is the primary beneficiary of this VIE, and in accordance with US GAAP, consolidates the silo in its financial statements.

As of ~~March 31,~~June 30, 2011, the consolidated silo included in the Company’s condensed consolidated financial statements had a net property balance of $~~15,762~~15,607, long-term debt of $27,715, and a noncontrolling interest of $1,005. At December 31, 2010, the consolidated silo included in the Company’s consolidated financial statements had a net property balance of $15,775, long-term debt of $27,715, and a noncontrolling interest of $1,005.

Under the terms of the lease agreement, the amount guaranteed by the Company as the residual fair value of the property subject to the lease arrangement was $28,720 at ~~each of~~ ~~March 31,~~June 30, 2011 and December 31, 2010.

10. Derivative Financial Instruments

The Company is party to an interest rate swap agreement that effectively converts its variable rate interest payments to a fixed rate on amounts due under the lease arrangement discussed in Note 9. The Company’s interest rate swap agreement is designated as a cash flow hedge and is required to be measured at fair value on a recurring basis.

The Company endeavors to utilize the best available information in measuring fair value. The interest rate swap is valued based on quoted data from the counterparty, corroborated with indirectly observable market data, which, combined, are deemed to be a Level 2 input in the fair value hierarchy. At ~~March 31,~~June 30, 2011 and December 31,

2010, the Company recorded a liability of $~~4,227~~4,070 and $4,706, respectively, in other current liabilities on the condensed consolidated balance sheets for the fair value of the swap. The effective portion of the related

gains or losses on the swap is deferred in accumulated other comprehensive loss. No ineffectiveness was recorded in the condensed consolidated statements of income during the three and sixmonths ended ~~March 31,~~June 30, 2011 and 2010. The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest rate swap was $~~212~~371 and $~~214~~583 during the three and sixmonth periods ended ~~March 31,~~June 30, 2011, respectively. The loss, net of tax, reclassified from accumulated other comprehensive loss to interest expense related to the effective portion of the interest swap was $212 and ~~2010~~$425, during the three and six month periods ended June 30, 2010, respectively.

Unrealized gains, ~~(losses),~~ net of tax, of $~~293~~96 and $~~(55)~~389 related to the swap were recorded in accumulated other comprehensive loss during the three and sixmonths ended ~~March 31,~~June 30, 2011, respectively. Unrealized losses, net of tax, of $(112) and $(167) related to the swap were recorded in accumulated other comprehensive loss during the three and six months ended June 30, 2010, respectively. The amount of loss, net of tax, expected to be reclassified from accumulated other comprehensive loss to interest expense over the next twelve months is $~~1,160~~1,168. At ~~March 31,~~June 30, 2011 and December 31, 2010, cumulative unrealized net losses related to the swap of $~~2,583~~2,487 and $2,876 (net of tax) were recorded in accumulated other comprehensive loss. These deferred amounts are recognized in interest expense, net, in the period in which the related interest payments being hedged are recognized in expense.

11. Commitments and Contingencies

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

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

12. Comprehensive Income

Comprehensive income for the three months ended ~~March 31,~~June 30, 2011 and 2010 was $~~15,815~~26,404 and $~~7,074~~10,378, respectively. Comprehensive income for the six months ended June 30, 2011 and 2010 was $42,219 and $17,452, respectively. Comprehensive income is comprised of net income, foreign currency translation adjustments related to the Company’s operations outside of the US, changes in the fair value of the Company’s interest rate swap agreement, and the amortization of gains and losses related to the Company’s pension and postretirement liabilities.

13. The Patient Protection and Affordable Care Act and

the Health Care and Education Reconciliation Act of 2010

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively the "Acts") were enacted by the US Congress in March 2010. The Acts have both short- and long-term implications for benefit plan standards. Implementation of this legislation is planned to occur in phases through 2018.

In the short term, the Company’s healthcare costs are expected to increase due to the Acts’ raising of the maximum eligible age for covered dependents to receive benefits, the elimination of the lifetime dollar limits per covered individual, and restrictions on annual dollar limits on essential benefits per covered individual, among other standard requirements. In the long term, the Company’s healthcare costs may increase due to the enactment of the excise tax on “high cost” healthcare plans.

The Company continues to evaluate the impact, if any, the Acts will have on its financial statements as new regulations under the Acts are issued. The Company expects the general trend in healthcare costs to continue to rise and the effects of the Acts, and any future legislation, could materially impact the cost to provide healthcare benefits for many employers, including the Company.

14. New Accounting Standards Updates

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2011-04, "Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS". The Update amends the guidance on fair value measurements to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with US GAAP and International Financial Reporting Standards ("IFRS"). The Update does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. This guidance is effective during interim and annual periods beginning after December 15, 2011.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, "Comprehensive Income: Presentation of Comprehensive Income". The Update eliminates the option to present the components of comprehensive income as a part of the Statement of Changes in Shareholder's Equity and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The Update does not change the items that are required to be reported in other comprehensive income. This guidance will be adopted by Graybar for all interim and annual periods beginning after December 15, 2011. The adoption of this standards update will not have an impact on the Company's consolidated financial position, results of operations, or cash flows as it only requires a change in the format of the current presentation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and notes thereto, and our audited consolidated financial statements, notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations as of and for the year ended December 31, 2010, included in our Annual Report on Form 10-K for such period as filed with the United States ("US") Securities and Exchange Commission (the “Commission”). The results shown herein are not necessarily indicative of the results to be expected in any future periods.

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). These forward-looking statements generally are identified by the words “believes”, “projects”, “expects”, “anticipates”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “will likely result”, and similar expressions. The Company intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the PSLRA. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse impact on the Company’s operations and future prospects on a consolidated basis include, but are not limited to: general economic conditions, particularly in the residential, commercial, and industrial building construction industries, volatility in the prices of industrial metal commodities, disruptions in the Company’s sources of supply, a sustained interruption in the operation of the Company’s information systems, adverse legal proceedings or other claims, and the inability, or limitations on the Company’s ability, to raise debt or equity capital. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially impact our financial results, is included herein and in our other filings with the Commission. Actual results and the timing of events could differ materially from the forward-looking statements as a result of certain factors, a number of which are outlined in Item 1A., “Risk Factors”, of the Company’s ~~latest~~ Annual Report on Form 10-K for the year ended December 31, 2010.

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

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

The Company’s capital stock is one hundred percent (100%) owned by its active and retired employees, and there is no public trading market for its common stock. No shareholder may sell, transfer, or otherwise dispose of shares of common stock or the voting trust interests issued with respect thereto (“common stock”, “common shares”, or “shares”) without first offering the Company the option to purchase such shares at the price at which shares were issued. The Company also has the option to purchase at the issue price the common stock of any holder who dies or ceases to be an employee of the Company for any cause other than retirement on a Company pension. The Company has always exercised its purchase option and expects to continue to do so. All outstanding shares of the Company have been issued at $20.00 per share.

The North American economy continues to recover, though at a relatively slow rate, from the deep recession of 2008-2009. The high unemployment rate and low level of residential construction activity are expected to continue to weigh on the US economy for the balance of 2011. However, preliminary projections are for capital expenditures

on both business equipment and building construction to increase moderately during the second half of the year.

Graybar's net sales and gross margin ~~grew~~continued to expand at a significantly faster ~~pace during the first quarter of~~ ~~2011~~rate than ~~did~~ the general economy ~~of North America, which is now in its second year of recovery from~~and exceeded Company expectations during the ~~deep recession caused by the collapsing asset bubble and resulting global credit and financial market crisis of 2008. Preliminary economic~~

~~reports indicate that business investment for the three~~six months ended ~~March 31,~~June 30, 2011 ~~was significantly higher than during the same period of~~ ~~2010, though building construction continued its multi-year contraction. Despite this weakness in building construction, the Company’s net~~. Net sales increased ~~18.6%~~20.0%, while gross margin rose 17.4% during the first ~~quarter~~half of 2011, compared to the same period ofin 2010~~, driven, in part, by continued price~~. Price inflation in the markets for copper- and steel-based products ~~sold by the Company. Gross margin increased~~ ~~16.1%~~had a moderately positive impact on net sales during the ~~first quarter of~~ ~~2011, compared to the three~~six months ended ~~March 31, 2010~~June 30, 2011.

~~The Company expects significant growth~~ Rising product costs, coupled with price competition, contributed to a decline in ~~net sales, improved~~ gross margin as a percent of net sales to 18.6% during the first half of 2011 from 19.0% for the same period in 2010.

The Company expects continued growth in net sales and ~~increased~~gross margin during the second half of 2011 to outpace rising expenses and produce significantly higher net income for the full year, compared to ~~2011~~2010.

Consolidated Results of Operations

The following ~~table sets~~tables set forth certain information relating to the operations of the Company stated in thousands of dollars and as a percentage of net sales for the three and sixmonths ended ~~March 31,~~June 30, 2011 and 2010:

Less: Net income attributable to

noncontrolling interests

Net Income attributable to

Graybar Electric Company, Inc.

Less: Net income attributable to

noncontrolling interests

Net Income attributable to

Graybar Electric Company, Inc.

Three Months Ended ~~March 31,~~June 30, 2011 Compared to Three Months Ended ~~March 31,~~June 30, 2010

Net sales totaled $~~1,187,168~~1,370,970 for the quarter ended ~~March 31,~~June 30, 2011, compared to $~~1,001,174~~1,130,771 for the quarter ended ~~March 31,~~June 30, 2010, an increase of $~~185,994~~240,199, or ~~18.6%~~21.2%. Net sales to the electrical and comm/data market sectors for the three months ended ~~March 31,~~June 30, 2011 increased ~~18.7%~~18.8% and ~~18.2%~~26.6%, respectively, compared to the same three month period of 2010.

Gross margin increased $~~31,291~~39,200, or ~~16.1%~~18.7%, to $~~225,950~~248,741 from $~~194,659~~209,541 due to higher net sales in the ~~first~~second quarter of 2011, compared to the same period of 2010. The Company’s gross margin ~~rate on~~as a percent of net sales decreased to ~~19.0%~~18.1% for the three months ended ~~March 31,~~June 30, 2011 from ~~19.4%~~18.5% for the same period of 2010.

Selling, general and administrative expenses increased $~~17,592~~17,313, or ~~9.9%~~9.5%, to $~~195,631~~199,037 in the ~~first~~second quarter of 2011 from $~~178,039~~181,724 in the ~~first~~second quarter of 2010, mainly due to higher employee compensation costs. Selling, general and administrative expenses as a percentage of net sales were ~~16.5%~~14.6% in the ~~first~~second quarter of 2011, down from ~~17.7%~~16.1% of net sales in the ~~first~~second quarter of 2010.

Depreciation and amortization expenses for the three months ended ~~March 31,~~June 30, 2011 decreased $892,602, or ~~0.9%~~26.1%, to $~~9,625~~7,377 from $~~9,714~~9,979 in the ~~first~~second quarter of 2010~~. This decrease was~~, primarily due ~~primarily~~ to ~~a decrease~~reduction in ~~depreciable information technology assets, partially offset by the disposal of property.~~ software amortization. Depreciation and amortization expenses as a percentage of net sales decreased to ~~0.8%~~0.5% for the three months ended ~~March 31,~~June 30, 2011, compared to ~~1.0%~~0.9% of net sales for the same period of 2010.

Other income, net totaled $~~720~~834 for the three months ended ~~March 31,~~June 30, 2011, compared to $~~1,497~~731 for the three months ended ~~March 31,~~June 30, 2010. Other income, net consists primarily of gains on the disposal of property, trade receivable interest charges to customers, and other miscellaneous income items related to the Company’s business activities. The increase in other income, net was mainly due to losses on the disposal of property for the three months ended June 30, 2010, which were not repeated during the same period of 2011.

Income from operations totaled $43,161 for the three months ended June 30, 2011, an increase of $24,592, or 132.4%, from $18,569 for the three months ended June 30, 2010. The increase was due primarily to the gains in gross margin outpacing the increase in selling, general and administrative expenses.

Interest expense, net declined $361, or 16.6%, to $1,812 for the three months ended June 30, 2011 from $2,173 for the three months ended June 30, 2010. This reduction was mainly due to a lower level of outstanding long-term debt in the second quarter of 2011, compared to the same period of 2010. Long-term debt outstanding, including the current portion, was $86,282 at June 30, 2011, compared to $107,260 at June 30, 2010.

The increase in income from operations and lower interest expense, net resulted in income before provision for income taxes of $41,349 for the three months ended June 30, 2011, an increase of $24,953, or 152.2%, compared to $16,396 for the three months ended June 30, 2010.

The Company’s total provision for income taxes increased $10,518, or 154.1%, to $17,345 for the three months ended June 30, 2011, compared to $6,827 for the same period of 2010. The Company’s effective tax rate increased to 41.9% for the three months ended June 30, 2011, up from 41.6% for the same period of 2010. This increase was attributable to adjustments in uncertain tax positions and state income taxes for the three months ended June 30, 2011, compared to the three months ended June 30, 2010.

Net income attributable to Graybar Electric Company, Inc. for the three months ended June 30, 2011 increased $14,413, or 151.6%, to $23,921 from $9,508 for the three months ended June 30, 2010.

Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010

Net sales totaled $2,558,138 for the six month period ended June 30, 2011, compared to $2,131,945 for the six month period ended June 30, 2010, an increase of $426,193, or 20.0%. Net sales to the electrical and comm/data market sectors for the six months ended June 30, 2011 increased 18.7% and 22.8%, respectively, compared to the same six month period of 2010.

Gross margin increased $70,491 or 17.4%, to $474,691 from $404,200, due mainly to higher net sales in the first six months of 2011, compared to the same period of 2010. The Company's gross margin as a percent of net sales decreased to 18.6% for the six month period ended June 30, 2011 from 19.0% for the same period of 2010.

Selling, general and administrative expenses increased $34,905, or 9.7%, to $394,668, for the six month period ended June 30, 2011, compared to $359,763 for the six month period ended June 30, 2010, mainly due to higher employee compensation costs. Selling, general and administrative expenses as a percentage of net sales for the six month period ended June 30, 2011 were 15.5%, down from 16.9% for the same six month period of 2010.

Depreciation and amortization expenses for the six months ended June 30, 2011 decreased $2,691, or 13.7%, to $17,002 from $19,693 for the same six month period in 2010 primarily due to a decrease in software amortization. Depreciation and amortization expenses as a percentage of net sales decreased to 0.7% for the six months ended June 30, 2011, compared to 0.9% the same six month period in 2010.

Other income, net totaled $1,554 for the six month period ended June 30, 2011, compared to $2,228 for the six month period ended June 30, 2010. Other income, net consists primarily of gains on the disposal of property, trade receivable interest charges to customers, and other miscellaneous income items related to the Company’s business activities. The decrease in other income, net was mainly due to lower gains on the disposal of property, which were $2829 for the ~~three~~six months ended ~~March 31,~~June 30, 2011, compared to $~~896~~783 for the ~~three~~six months ended ~~March 31,~~June 30, 2010.

Income from operations totaled $~~21,414~~64,575 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011, an increase of $~~13,011~~37,603, or ~~154.8%~~139.4%, from $~~8,403~~26,972 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2010. The increase was due primarily to the gains in gross margin outpacing the increase in selling, general and administrative expenses.

Interest expense, net declined $~~449~~810, or ~~19.5%~~18.1%, to $~~1,850~~3,662 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011 from $~~2,299~~4,472 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2010. This reduction was mainly due to a lower level of outstanding long-term debt induring the first ~~quarter~~ half of 2011, compared to the same period of 2010. Long-term debt outstanding, including the current portion, was $~~97,045~~86,282 at ~~March 31,~~June 30, 2011, compared to $~~117,441~~107,260 at ~~March 31,~~June 30, 2010.

The increase in income from operations and lower interest expense, net resulted in income before provision for income taxes of $~~19,564~~60,913 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011, an increase of $~~13,460~~38,413, or ~~220.5%~~170.7%, compared to $~~6,104~~22,500 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2010.

The ~~Company’s~~Company's total provision for income taxes increased $~~5,378~~15,896, or ~~211.6%~~169.7%, to $~~7,919~~25,264 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011, compared to $~~2,541~~9,368 for the same six month period ofin 2010. The ~~Company’s~~Company's effective tax rate decreased to ~~40.5%~~41.5% for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011, down from 41.6% for the same six month period ofin 2010. ~~This decrease was attributable to anticipated changes in full year pre-tax income and state income taxes for the three months ended~~ ~~March 31, 2011, compared to the~~ ~~three~~ ~~months ended~~ ~~March 31, 2010~~.

Net income attributable to Graybar Electric Company, Inc. for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2011 increased $~~8,002~~22,415, or ~~226.9%~~172.0%, to $~~11,528~~35,449 from $~~3,526~~13,034 for the ~~three~~six ~~months~~month period ended ~~March 31,~~June 30, 2010.

Financial Condition and Liquidity

The Company has historically funded its working capital requirements using cash flows generated by the collection of trade receivables and trade accounts payable terms with its suppliers, supplemented by short-term bank lines of credit. Capital assets are financed primarily by common stock sales to the Company’s employees and long-term debt.

Operating Activities

Net cash provided by operations was $~~26,079~~30,234 for the ~~three~~six month period ended ~~March 31,~~June 30, 2011, compared to net cash used by operations of $~~3,609~~37,243 for the ~~three~~six months ended ~~March 31,~~June 30, 2010. Positive cash flows from operations for the ~~three~~six months ended ~~March 31,~~June 30, 2011 were primarily due to net income of $~~11,645~~35,649, increases in trade accounts payables of $~~31,766~~131,969, and ~~increases in~~ other current liabilities of $~~14,599~~29,490, partially offset by decreases in accrued payroll and benefit costs of $~~23,315~~28,271 and ~~an increase~~increases in accounts receivable of $117,335 and merchandise inventory of $~~17,638~~30,533.

The average number of days of sales in trade receivables for the three month period ended ~~March 31,~~June 30, 2011 increased ~~modestly,~~moderately, compared to the average number of days for the same three month period ended ~~March 31, 2010, and was moderately lower than the~~ ~~three~~ ~~month period ended~~ ~~December 31,~~June 30, 2010. Merchandise inventory turnover increased ~~moderately~~significantly for the three months ended ~~March 31,~~June 30, 2011, compared to the three month period ended ~~December 31,~~June 30, 2010.

Current assets exceeded current liabilities by $~~429,771~~443,799 at ~~March 31,~~June 30, 2011, an increase of $~~14,047~~28,075, or ~~3.4%~~6.8%, from

$415,724 at December 31, 2010.

Investing Activities

Net cash used by investing activities totaled $~~4,999~~10,733 for the ~~three~~six months ended ~~March 31,~~June 30, 2011, compared to $~~3,696~~11,200 for the same period of 2010. Capital expenditures for property were $~~5,057~~11,096 and $~~4,747~~12,283, and proceeds from the disposal of property were $58363 and $~~1,051~~1,083, for the ~~three~~six months ended ~~March 31,~~June 30, 2011 and 2010, respectively. The proceeds received for the ~~three~~six months ended ~~March 31,~~June 30, 2011 were primarily from the sale of personal property. Proceeds received during the ~~first~~second quarter of 2010 were primarily from the sale of real property.

Financing Activities

Net cash used by financing activities totaled $~~15,325~~113 for the ~~three~~six months ended ~~March 31,~~June 30, 2011, compared to $~~12,689~~27,530 for the three months ended ~~March 31,~~June 30, 2010.

Cash ~~used to reduce~~provided by short-term borrowings was $~~2,429~~28,452 for the ~~three~~six months ended ~~March 31,~~June 30, 2011, compared to ~~cash provided by short-term borrowings of~~ $~~958~~650 for the ~~three~~six months ended ~~March 31,~~June 30, 2010. The Company made payments on long-term debt of $~~221~~10,926 and capital lease obligations of $~~800~~1,652 during the ~~three~~six months ended ~~March 31,~~June 30, 2011. During the ~~three~~six months ended ~~March 31,~~June 30, 2010, the Company made payments on long-term debt of $~~202~~10,783 and capital lease obligations of $~~371~~831.

Cash provided by the sale of common stock amounted to $~~5,143~~7,303 and $~~4,475~~6,397, and purchases of stock to be held in treasury were $~~1,789~~4,488 and $~~3,638~~5,851, for the ~~three~~six months ended ~~March 31,~~June 30, 2011 and 2010, respectively. Cash paid for noncontrolling interest common stock was $1563 and $6783 for the ~~three~~six months ended ~~March 31,~~June 30, 2011 and 2010, respectively. Cash dividends paid were $~~15,214~~18,739 and $~~13,844~~17,029 for the ~~three~~six months ended ~~March 31,~~June 30, 2011 and 2010, respectively.

Cash and cash equivalents were $~~88,111~~101,744 at ~~March 31,~~June 30, 2011, compared to $82,356 at December 31, 2010, an increase of $~~5,755~~19,388, or ~~7.0%~~23.5%.

Liquidity

The Company has a revolving credit agreement with a group of thirteen banks at an interest rate based on the London Interbank Offered Rate (“LIBOR”) that consists of an unsecured $200,000 five-year facility expiring in May 2012. There ~~were no amounts~~was $30,000 in borrowings outstanding under ~~this~~the credit agreement at ~~March 31,~~June 30, 2011 and no borrowings outstanding at December 31, 2010.

The Company plans to renew, extend or replace all or a portion of the debt financing available under the trade receivable securitization program ~~with a new or amended credit facility~~ prior to the expiration of the trade receivable securitization program in October 2011.

At ~~March 31,~~June 30, 2011, the Company had unused lines of credit amounting to $~~310,506~~279,504 available, compared to $307,308 at December 31, 2010. These lines are available to meet the short-term cash requirements of the

Company and certain committed lines of credit had annual fees of up to 67 basis points (0.67%) of the committed lines of credit.

Short-term borrowings outstanding during the ~~three~~six months ended ~~March 31,~~June 30, 2011 and 2010 ranged from a minimum of $~~14,386~~13,800 and $~~12,455~~10,786 to a maximum of $~~23,057~~53,318 and $~~18,571~~18,618, respectively.

The revolving credit agreement, the trade receivable securitization program, and certain other note agreements contain various covenants that limit the Company’s ability to make investments, pay dividends, incur debt, dispose of property, and issue equity securities. The Company is also required to maintain certain financial ratios as defined in the agreements. The Company was in compliance with all covenants under these agreements as of ~~March 31,~~June 30, 2011 and December 31, 2010.

The Company has a lease agreement with an independent lessor, which provides $28,720 of financing for five of the Company’s distribution facilities. The agreement carries a five-year term expiring July 2013. The financing structure used with this lease qualifies as a silo of a variable interest entity. In accordance with accounting principles generally accepted in the US, the Company, as the primary beneficiary, consolidates the silo in its financial statements.

Under the terms of the lease agreement, the amount guaranteed by the Company as the residual fair value of the property subject to the lease arrangement was $28,720 at ~~March 31,~~June 30, 2011 and December 31, 2010.

New Accounting Standards Updates

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the policies, procedures, controls, or risk profile from those provided in Item 7A., “Quantitative and Qualitative Disclosures About Market Risk”, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~March 31,~~June 30, 2011, was performed

under the supervision and with the participation of the Company’s management. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

1518

PART II. - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities And Use Of Proceeds

The Company's capital stock is one hundred percent (100%) owned by its active and retired employees, and there is no public trading market for its common stock. Since 1928, substantially all of the issued and outstanding shares of common stock have been held of record by voting trustees under successive voting trust agreements. Under applicable state law, a voting trust may not have a term greater than ten years. The 2007 Voting Trust Agreement expires by its term on March 15, 2017. At ~~March 31,~~June 30, 2011, approximately eighty-two percent (82%) of the common stock was held in this voting trust. The participation of shareholders in the voting trust is voluntary at the time the voting trust is created, but is irrevocable during its term. Shareholders who elect not to participate in the voting trust hold their common stock as shareholders of record.

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

Issuer Purchases of Equity Securities

Period
Total Number of
Shares Purchased

Average
Price Paid
per Share

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
January 1 to January 31, 2011 36,906 $20.00 N/A
February 1 to February 28, 2011 31,764 $20.00 N/A
March 1 to March 31, 2011 20,772 $20.00 N/A
Total 89,442 $20.00 N/A



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
April 1 to April 30, 2011	46,192	$20.00	N/A
May 1 to May 31, 2011	57,525	$20.00	N/A
June 1 to June 30, 2011	31,241	$20.00	N/A
Total	134,958	$20.00	N/A

Item 5. Other Information

The Company launched its redesigned internet website (www.graybar.com) on May 2, 2011. The "about us" page, which contains the "sec filings" section, now may be found under the heading of "company".

1619

Item 6. ~~Exhibits~~

Exhibit



(a)	Exhibits furnished in accordance with provisions of Item 601 of Regulation S-K.

	(3)	(i)	Articles of Incorporation

			(a)	Restated Certificate of Incorporation, as amended, filed as Exhibit 3.1 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q for the Quarter ended~~8-K dated June ~~30, 2010~~9, 2011 (Commission File No. 000-00255) and incorporated herein by reference.

		(ii)	Bylaws

			(a)	By-laws as amended through ~~December 10, 2009,~~June 9, 2011, filed as Exhibit ~~(3)(ii)~~3.2 to the Company’s Current Report on Form 8-K dated ~~December 16, 2009~~June 9, 2011 (Commission File No. 000-00255) and incorporated herein by reference.

	~~(10)~~	~~Material Contracts~~

		~~(i)~~		Management Incentive Plan, filed as Exhibit 10(i) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (Commission File No. 000-00255) and incorporated herein by reference. *

	(31)	Rule 13a-14(a)/15d-14(a) Certifications

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

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

	(32)	Section 1350 Certifications

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

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

	101.INS*	XBRL Instance Document

	101.SCH*	XBRL Taxonomy Extension Schema Document

	101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

	101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

	101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

		* ~~Compensation arrangement~~In accordance with Rule 406T of Regulation S-T promulgated by the Securities and Exchange Commission, Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under those sections.

1720

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			GRAYBAR ELECTRIC COMPANY, INC.


	~~May 9,~~August 8, 2011		/s/ ROBERT A. REYNOLDS, JR.
	Date		Robert A. Reynolds, Jr.
			Chairman, President and Chief Executive Officer (Principal Executive Officer)

	~~May 9,~~August 8, 2011		/s/ D. BEATTY D’ALESSANDRO
	Date		D. Beatty D’Alessandro
			Senior Vice President and Chief Financial Officer (Principal Financial Officer)

	~~May 9,~~August 8, 2011		/s/ MARTIN J. BEAGEN
	Date		Martin J. Beagen
			Vice President and Controller (Principal Accounting Officer)

1821

EXHIBIT INDEX

Exhibits



(3(i))		Articles of Incorporation

		(a)	Restated Certificate of Incorporation, as amended, filed as Exhibit 3.1 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q for the Quarter ended~~8-K dated June ~~30, 2010~~9, 2011 (Commission File No. 000-00255) and incorporated herein by reference.

(3(ii))		Bylaws

		(a)	By-laws as amended through ~~December 10, 2009,~~June 9, 2011, filed as Exhibit ~~(3)(ii)~~3.2 to the Company’s Current Report on Form 8-K dated ~~December 16, 2009~~June 9, 2011 (Commission File No. 000-00255) and incorporated herein by reference.

~~(10~~	)	~~Material Contracts~~

		~~(i)~~	Management Incentive Plan, filed as Exhibit 10(i) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (Commission File No. 000-00255) and incorporated herein by reference. *

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

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

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

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

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

		* ~~Compensation arrangement~~In accordance with Rule 406T of Regulation S-T promulgated by the Securities and Exchange Commission, Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under those sections.

1922



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

New York	13-0794380
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

34 North Meramec Avenue, St. Louis, Missouri	63105
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YESS NO£

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).
YES£S NO£

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer£ Accelerated filer£
Non-accelerated filerS(Do not check if a smaller reporting company) Smaller reporting company£

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

Common Stock Outstanding at ~~April 30,~~July 31, 2011: ~~11,704,875~~11,698,155
(Number of Shares)


Graybar Electric Company, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	CONDENSED CONSOLIDATED STATEMENTS OF INCOME						CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	(Unaudited)						(Unaudited)
	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
(Stated in thousands except per share data)	2011			2010
(Stated in thousands, except per share data)							2011			2010			2011			2010
Gross Sales	$	1,191,507		$	1,005,099		$	1,375,852		$	1,135,279		$	2,567,359		$	2,140,378
Cash discounts	(4,339		)	(3,925		)	(4,882		)	(4,508		)	(9,221		)	(8,433		)
Net Sales	1,187,168			1,001,174			1,370,970			1,130,771			2,558,138			2,131,945
Cost of merchandise sold	(961,218		)	(806,515		)	(1,122,229		)	(921,230		)	(2,083,447		)	(1,727,745		)
Gross Margin	225,950			194,659			248,741			209,541			474,691			404,200
Selling, general and administrative expenses	(195,631		)	(178,039		)	(199,037		)	(181,724		)	(394,668		)	(359,763		)
Depreciation and amortization	(9,625		)	(9,714		)	(7,377		)	(9,979		)	(17,002		)	(19,693		)
Other income, net	720			1,497			834			731			1,554			2,228
Income from Operations	21,414			8,403			43,161			18,569			64,575			26,972
Interest expense, net	(1,850		)	(2,299		)	(1,812		)	(2,173		)	(3,662		)	(4,472		)
Income before Provision for Income Taxes	19,564			6,104			41,349			16,396			60,913			22,500
Provision for income taxes	(7,919		)	(2,541		)	(17,345		)	(6,827		)	(25,264		)	(9,368		)
Net Income	11,645			3,563			24,004			9,569			35,649			13,132
Less: Net income attributable to noncontrolling interests	(117		)	(37		)	(83		)	(61		)	(200		)	(98		)
Net Income attributable to Graybar Electric Company, Inc.	$	11,528		$	3,526		$	23,921		$	9,508		$	35,449		$	13,034
Net Income per share of Common Stock(A)	$	0.98		$	0.30		$	2.04		$	0.82		$	3.03		$	1.12
Cash Dividends on Common Stock - $0.30 per share	$	3,528		$	3,184
Cash Dividends per share of Common Stock (B)							$	0.30		$	0.30		$	0.60		$	0.60
Average Common Shares Outstanding (A)	11,724			11,712			11,714			11,644			11,716			11,677


Graybar Electric Company, Inc. and Subsidiaries	Graybar Electric Company, Inc. and Subsidiaries										Graybar Electric Company, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS	CONDENSED CONSOLIDATED BALANCE SHEETS										CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in thousands except share and per share data)					March 31, 2011			December 31, 2010
(Stated in thousands, except share and per share data)											(Stated in thousands, except share and per share data)				June 30, 2011			December 31, 2010
ASSETS					(Unaudited)										(Unaudited)
Current Assets
Cash and cash equivalents					$	88,111		$	82,356						$	101,744		$	82,356
Trade receivables (less allowances of $7,116 and $7,299, respectively)					676,508			678,212
Trade receivables (less allowances of $7,149 and $7,299, respectively)											Trade receivables (less allowances of $7,149 and $7,299, respectively)				795,547			678,212
Merchandise inventory					407,988			390,350							420,883			390,350
Other current assets					13,288			15,891							15,711			15,891
Total Current Assets					1,185,895			1,166,809							1,333,885			1,166,809
Property, at cost
Land					50,002			49,890							50,421			49,890
Buildings					351,077			349,781							351,523			349,781
Furniture and fixtures					179,297			176,814							182,674			176,814
Software					76,906			76,906							76,906			76,906
Capital leases					10,785			10,214							11,648			10,214
Total Property, at cost					668,067			663,605							673,172			663,605
Less – accumulated depreciation and amortization	Less – accumulated depreciation and amortization				(370,458		)	(362,793		)	Less – accumulated depreciation and amortization				(376,166		)	(362,793		)
Net Property					297,609			300,812							297,006			300,812
Other Non-current Assets					52,576			51,817							52,929			51,817
Total Assets					$	1,536,080		$	1,519,438						$	1,683,820		$	1,519,438
LIABILITIES
Current Liabilities
Short-term borrowings					$	17,266		$	19,695						$	48,147		$	19,695
Current portion of long-term debt					32,126			32,191							29,068			32,191
Trade accounts payable					552,121			520,355							652,324			520,355
Accrued payroll and benefit costs					72,196			95,511							67,240			95,511
Other accrued taxes					17,993			15,248							17,933			15,248
Dividends payable					—			11,686							—			11,686
Other current liabilities					64,422			56,399							75,374			56,399
Total Current Liabilities					756,124			751,085							890,086			751,085
Postretirement Benefits Liability					72,737			72,462							72,652			72,462
Pension Liability					56,268			62,816							50,009			62,816
Long-term Debt					64,919			64,859							57,214			64,859
Other Non-current Liabilities					11,599			9,409							17,134			9,409
Total Liabilities					961,647			960,631							1,087,095			960,631
SHAREHOLDERS’ EQUITY
	Shares at										Shares at
Capital Stock	March 31, 2011		December 31, 2010								June 30, 2011		December 31, 2010
Common, stated value $20.00 per share
Authorized	20,000,000		20,000,000								20,000,000		20,000,000
Issued to voting trustees	9,697,278		9,498,347								9,808,030		9,498,347
Issued to shareholders	2,169,571		2,148,384								2,185,038		2,148,384
In treasury, at cost	(116,197	)	(26,755	)							(251,155	)	(26,755	)
Outstanding Common Stock	11,750,652		11,619,976		235,013			232,400			11,741,913		11,619,976		234,838			232,400
Advance Payments on Subscriptions to Common Stock	Advance Payments on Subscriptions to Common Stock				741			—			Advance Payments on Subscriptions to Common Stock				377			—
Retained Earnings					431,602			423,602							451,998			423,602
Accumulated Other Comprehensive Loss					(98,272		)	(102,343		)					(95,841		)	(102,343		)
Total Graybar Electric Company, Inc. Shareholders’ Equity	Total Graybar Electric Company, Inc. Shareholders’ Equity				569,084			553,659			Total Graybar Electric Company, Inc. Shareholders’ Equity				591,372			553,659
Noncontrolling Interests					5,349			5,148							5,353			5,148
Total Shareholders’ Equity					574,433			558,807							596,725			558,807
Total Liabilities and Shareholders’ Equity					$	1,536,080		$	1,519,438		Total Liabilities and Shareholders’ Equity				$	1,683,820		$	1,519,438


Graybar Electric Company, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)						(Unaudited)
	Three Months Ended March 31,						Six Months Ended June 30,
(Stated in thousands)	2011			2010			2011			2010
Cash Flows from Operations
Net Income	$	11,645		$	3,563		$	35,649		$	13,132
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	9,625			9,714			17,002			19,693
Deferred income taxes	77			(248		)	(1,684		)	1,170
Net gains on disposal of property	(28		)	(896		)	(29		)	(783		)
Net income attributable to noncontrolling interests	(117		)	(37		)	(200		)	(98		)
Changes in assets and liabilities:
Trade receivables	1,704			14,686			(117,335		)	(43,646		)
Merchandise inventory	(17,638		)	(14,257		)	(30,533		)	(68,989		)
Other current assets	2,603			1,151			180			(721		)
Other non-current assets	(759		)	3,445			(1,112		)	1,909
Trade accounts payable	31,766			1,304			131,969			67,977
Accrued payroll and benefit costs	(23,315		)	(10,105		)	(28,271		)	(11,397		)
Other current liabilities	14,599			(6,574		)	29,490			(14,633		)
Other non-current liabilities	(4,083		)	(5,355		)	(4,892		)	(857		)
Total adjustments to net income	14,434			(7,172		)	(5,415		)	(50,375		)
Net cash provided (used) by operations	26,079			(3,609		)	30,234			(37,243		)
Cash Flows from Investing Activities
Proceeds from disposal of property	58			1,051			363			1,083
Capital expenditures for property	(5,057		)	(4,747		)	(11,096		)	(12,283		)
Net cash used by investing activities	(4,999		)	(3,696		)	(10,733		)	(11,200		)
Cash Flows from Financing Activities
Net (decrease) increase in short-term borrowings	(2,429		)	958
Net increase in short-term borrowings							28,452			650
Repayment of long-term debt	(221		)	(202		)	(10,926		)	(10,783		)
Principal payments under capital leases	(800		)	(371		)	(1,652		)	(831		)
Sale of common stock	5,143			4,475			7,303			6,397
Purchases of common stock	(1,789		)	(3,638		)	(4,488		)	(5,851		)
Purchases of noncontrolling interests’ common stock	(15		)	(67		)	(63		)	(83		)
Dividends paid	(15,214		)	(13,844		)	(18,739		)	(17,029		)
Net cash used by financing activities	(15,325		)	(12,689		)	(113		)	(27,530		)
Net Increase (Decrease) in Cash	5,755			(19,994		)	19,388			(75,973		)
Cash, Beginning of Year	82,356			163,864			82,356			163,864
Cash, End of Period	$	88,111		$	143,870		$	101,744		$	87,891

Non-cash Investing and Financing Activities
Acquisitions of equipment under capital leases	$	571		$	673		$	1,434		$	1,734


Graybar Electric Company, Inc. and Subsidiaries	Graybar Electric Company, Inc. and Subsidiaries																	Graybar Electric Company, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

	(Unaudited, stated in thousands)																	(Unaudited, stated in thousands)

	Graybar Electric Company, Inc. Shareholders’ Equity																	Graybar Electric Company, Inc. Shareholders’ Equity
	Common Stock			Common Stock Subscribed, Unissued		Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders’ Equity			Common Stock			Common Stock Subscribed, Unissued		Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders’ Equity
December 31, 2009	$	211,970		—		$	423,920		$	(102,599	)	$	4,878		$	538,169		$	211,970		$	—	$	423,920		$	(102,599	)	$	4,878		$	538,169
						3,526						37			3,563
Net income																							13,034						98			13,132
Foreign currency translation									1,541			83			1,624											7						7
Unrealized loss from interest rate swap (net of tax of $35)									(55		)				(55		)
Pension and postretirement benefits liability adjustment (net of tax of $1,236)									1,942						1,942
Unrealized loss from interest rate swap (net of tax of $107)																										(167		)				(167		)
Pension and postretirement benefits liability adjustment (net of tax of $2,852)																										4,480						4,480
Comprehensive income															7,074																	17,452
Stock issued	3,801														3,801			6,054														6,054
Stock purchased	(3,638		)									(67		)	(3,705		)	(5,851		)									(83		)	(5,934		)
Advance payments				674											674						343											343
Dividends declared						(3,184		)							(3,184		)						(6,369		)							(6,369		)
March 31, 2010	$	212,133		$	674	$	424,262		$	(99,171	)	$	4,931		$	542,829
June 30, 2010																		$	212,173		$	343	$	430,585		$	(98,279	)	$	4,893		$	549,715

	Graybar Electric Company, Inc. Shareholders’ Equity																	Graybar Electric Company, Inc. Shareholders’ Equity
	Common Stock			Common Stock Subscribed, Unissued		Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders’ Equity			Common Stock			Common Stock Subscribed, Unissued		Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders’ Equity
December 31, 2010	$	232,400		—		$	423,602		$	(102,343	)	$	5,148		$	558,807		$	232,400		$	—	$	423,602		$	(102,343	)	$	5,148		$	558,807
Net income						11,528						117			11,645								35,449						200			35,649
Foreign currency translation									1,731			99			1,830											1,440			68			1,508
Unrealized gain from interest rate swap (net of tax of $186)									293						293
Pension and postretirement benefits liability adjustment (net of tax of $1,303)									2,047						2,047
Unrealized gain from interest rate swap (net of tax of $247)																										389						389
Pension and postretirement benefits liability adjustment (net of tax of $2,975)																										4,673						4,673
Comprehensive income															15,815																	42,219
Stock issued	4,402														4,402			6,926														6,926
Stock purchased	(1,789		)									(15		)	(1,804		)	(4,488		)									(63		)	(4,551		)
Advance payments				741											741						377											377
Dividends declared						(3,528		)							(3,528		)						(7,053		)							(7,053		)
March 31, 2011	$	235,013		$	741	$	431,602		$	(98,272	)	$	5,349		$	574,433
June 30, 2011																		$	234,838		$	377	$	451,998		$	(95,841	)	$	5,353		$	596,725



PART I.	FINANCIAL INFORMATION			Page(s)

	Item 1.	Financial Statements
			Condensed Consolidated Statements of Income	3
			Condensed Consolidated Balance Sheets	4
			Condensed Consolidated Statements of Cash Flows	5
			Condensed Consolidated Statements of Changes in Shareholders’ Equity	6
			Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1112

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		1517

	Item 4.	Controls and Procedures		1517

PART II.	OTHER INFORMATION

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		1619

	Item 5.	Other Information		1619

	Item 6.	Exhibits		1720

	Signatures			1821

	Exhibit Index			1922


											Three Months Ended					Three Months Ended
	2011					2010					June 30, 2011					June 30, 2010
	Dollars			Percent		Dollars			Percent		Dollars			Percent		Dollars			Percent
Net Sales	$	1,187,168		100.0	%	$	1,001,174		100.0	%	$	1,370,970		100.0	%	$	1,130,771		100.0	%
Cost of merchandise sold	(961,218		)	(81.0	)	(806,515		)	(80.6	)	(1,122,229		)	(81.9	)	(921,230		)	(81.5	)
Gross Margin	225,950			19.0		194,659			19.4		248,741			18.1		209,541			18.5
Selling, general and administrative expenses	(195,631		)	(16.5	)	(178,039		)	(17.7	)	(199,037		)	(14.6	)	(181,724		)	(16.1	)
Depreciation and amortization	(9,625		)	(0.8	)	(9,714		)	(1.0	)	(7,377		)	(0.5	)	(9,979		)	(0.9	)
Other income, net	720			0.1		1,497			0.1		834			0.1		731			0.1
Income from Operations	21,414			1.8		8,403			0.8		43,161			3.1		18,569			1.6
Interest expense, net	(1,850		)	(0.2	)	(2,299		)	(0.2	)	(1,812		)	(0.1	)	(2,173		)	(0.2	)
Income before Provision for Income Taxes	19,564			1.6		6,104			0.6		41,349			3.0		16,396			1.4
Provision for income taxes	(7,919		)	(0.6	)	(2,541		)	(0.2	)	(17,345		)	(1.3	)	(6,827		)	(0.6	)
Net Income	11,645			1.0		3,563			0.4		24,004			1.7		9,569			0.8
Less: Net income attributable to noncontrolling interests	(117		)	—		(37		)	—		(83		)	—		(61		)	—
Net Income attributable to Graybar Electric Company, Inc.	$	11,528		1.0	%	$	3,526		0.4	%	$	23,921		1.7	%	$	9,508		0.8	%

											Six Months Ended					Six Months Ended
											June 30, 2011					June 30, 2010
											Dollars			Percent		Dollars			Percent
Net Sales											$	2,558,138		100.0	%	$	2,131,945		100.0	%
Cost of merchandise sold											(2,083,447		)	(81.4	)	(1,727,745		)	(81.0	)
Gross Margin											474,691			18.6		404,200			19.0
Selling, general and administrative expenses											(394,668		)	(15.5	)	(359,763		)	(16.9	)
Depreciation and amortization											(17,002		)	(0.7	)	(19,693		)	(0.9	)
Other income, net											1,554			0.1		2,228			0.1
Income from Operations											64,575			2.5		26,972			1.3
Interest expense, net											(3,662		)	(0.1	)	(4,472		)	(0.2	)
Income before Provision for Income Taxes											60,913			2.4		22,500			1.1
Provision for income taxes											(25,264		)	(1.0	)	(9,368		)	(0.5	)
Net Income											35,649			1.4		13,132			0.6
Less: Net income attributable to noncontrolling interests											(200		)	—		(98		)	—
Net Income attributable to Graybar Electric Company, Inc.											$	35,449		1.4	%	$	13,034		0.6	%


1.	Basis of Presentation