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  1. 1. WESCO DELIVERS… WESCO International, Inc. 2000 Annual Report & Form 10-K
  2. 2. corporate profile WESCO International, Inc. (NYSE: WCC) is a leading distributor of electrical products and other maintenance, repair and operating (MRO) supplies, and is the nation’s largest provider of integrated supply services. Headquartered in Pittsburgh, Pennsylvania, the company employs approximately 6,000 people, maintains relationships with some 23,000 vendors, and serves more than 130,000 customers worldwide. Major markets include commercial and industrial firms, contractors, governmental agencies, educational institutions, telecom- munications businesses and utilities. WESCO operates five fully automated distribution centers and 350 full-service branches in North America and selected international markets, providing a local presence for area customers, and also supporting a global network designed to serve multi-location businesses and multi-national corporations. Net sales in 2000 were $3.9 billion. For the seventh consecutive year, WESCO International set new records in sales and earnings, with sales growth of 13.4% and a 36% increase in net income. Return on invested capital and return on equity were 14.8% and 27.6%, respectively. financial highlights 2000 1999 1998 (In millions) Net sales $ 3,423.9 $ 3,025.4 $ 3,881.1 Gross profit 616.6 537.7 684.1 Income from operations 125.0 107.8 2 125.4 Interest & other expenses 66.5 55.2 68.7 Income before income taxes and extraordinary item 58.5 52.6 2 56.7 EBITDA 1 145.3 122.6 159.8 Working capital 199.0 115.6 240.4 Long-term debt (including current portion) 426.4 595.8 483.3 Stockholders’ equity 117.3 (142.6) 125.0 1 Income from operations plus depreciation, amortization, restructuring charge and recapitalization costs 2 Excludes recapitalization costs of $51.8 million Copies of Forms 10-K and 10-Q may be requested through our web site (www.wescodist.com) or by contacting Investor Relations.
  3. 3. 10.8% $79 $2,275 96 96 96 10.7% $91 $2,595 97 97 97 (In millions) EBITDA 1 (In millions) 14.7% $123 $3,025 98 98 98 NET SALES RETURN ON 15.1% $145 $3,424 99 99 99 14.8% $160 $3,881 00 00 00 INVESTED CAPITAL Corporate Profile/2000 Financial Highlights
  4. 4. WESCO’s growth in 2000 was fueled by our ongoing commitment to the markets and customers we serve. We are a sales driven company, and our strong customer focus has led to continuous improvement in product offerings, processes and bottom-line results. Being responsive to customer needs makes WESCO the partner of choice to a growing and diverse group of some of the world’s best companies. WESCO is helping customers reach their sourcing, procurement and materials management goals through extra effort personal service, coordinated local and national logistical capabilities, access to our large and diversified supplier network and cost-effective e-Commerce solutions. For customers in a wide range of industry segments, WESCO delivers…
  5. 5. pr ducts. solutions. service. results.
  6. 6. WESCO markets more than 200,000 products, including: • Equipment to distribute and control electrical power • Control and automation equipment to monitor manufacturing processes • Wiring systems for all power ranges and connection types • Lighting products and cost-saving, energy-control solutions • Data communications products and systems • Contractor tools and supplies • Industrial production support materials pr d Currently offering more than 200,000 high-quality construction and maintenance products, WESCO is continuously expanding its product line well beyond its traditional base. We provide easy access to products and information that help customers improve operations and reduce operating costs.
  7. 7. WESCO is working to wire the new economy infrastructure by providing state-of-the-art products and services to support construction of high-tech datacenters that lease space and Internet processing capacity. Every year our product portfolio changes to capitalize on current needs and development trends. ucts. As procurement specialists, we maintain extensive supplier relationships to provide the best and broadest range of products and services in the industry. Our access to a large number of suppliers allows us to be very competitive on product costs while providing technical training and sales and marketing support to our customers.
  8. 8. During the past year, WESCO expanded its Internet catalog < wescodirect.com > to include more than 60,000 industry- standard items. We also accelerated our development of customized and personalized electronic catalogs for specific companies and departments, designed to enhance procurement with speed and security, while reducing paper flow. solut To create new efficiencies in the procurement process — and continuously reduce supply-chain costs — WESCO has invested wisely in e-Commerce initiatives. As these initiatives develop, they are rapidly becoming an important component of the total service package provided to our national accounts and local market, branch- based customers.
  9. 9. integrated supply programs Through national accounts and integrated supply programs, WESCO provides large, multi-site customers with immediate benefits of aggregated volume discounts and uniform pricing. Equally important are simplified procurement processes and increased operating efficiencies, including integration with corporate information systems and e-Commerce programs. ions. WESLink Efficient linkage between WESCO and its customers climbed to a new level in 2000 with the introduction of our personalized, portable electronic catalog. WESLink, a wireless e-Commerce ordering system, uses a “Palm Pilot” as its logic platform. WESCO customers can source and order needed products directly from the job site. Leading electrical contractors have been the first customers to utilize the WESLink system, a major advance in mobile commerce.
  10. 10. technical support customer serv 24-hour delivery With National Account managers “on both sides of the border,” WESCO is meeting the electrical supply needs of companies like Rohm and Haas and American Standard at locations in the United States, Canada and Mexico. Because of our extensive branch network, WESCO can provide consistent local service and support while adapting to localized plant operating characteristics and company-specific product standardization and inventory optimization efforts. local branch
  11. 11. More than 300 electricians are on the job at Detroit Metropolitan Airport, where one of North America’s largest electrical contractors is constructing a new terminal for Northwest Airlines. WESCO is supplying thousands of electrical and data communication products, and our Major Projects group is providing a host of solutions to address the challenges of large, complex construction projects. These include product staging, local branch inventory, just-in-time delivery, on-site customer training and technical support, as well as special purpose documentation software that records the mapping of the communications system, paving the way for more efficient maintenance, future changes, add-ons and troubleshooting. training product staging ice. With a focus on the productivity and cost-reduction goals of our customers, WESCO continues to deliver bottom-line improvements and profitability gains. Verifiable results and consistent performance have led to a growing customer base and an enviable track record in customer retention — the best indicator of overall customer satisfaction. national accounts inventory
  12. 12. Skilled and experienced in materials management programs and process improvement initiatives for companies of all sizes, WESCO has a proven track record in total cost reductions, with bottom-line customer savings in a wide range of industries. resu Q- Award 1 FORD In recognition of outstanding performance, WESCO received numerous customer awards during the past year, including the Ford Q-1 Quality award. WESCO is able to achieve results and meet high service and value expectations by focusing our quality process on customer satisfaction. WESCO branches in the United States and Canada, along with WESCO International’s headquarters, are registered ISO 9002 quality assured sites.
  13. 13. 9% COST SAVINGS AND MORE… “Excellent” supplier ratings and proven success on previous systems contracts has led to an expanded relationship with one of the largest public utilities in the U.S. Objectives include a dramatic consolidation of separate supply contracts, product cost reductions, lts. systems improvements and a 9% annual reduction in overall transaction costs. Included among our major new multi-year agreements is a large Canadian natural resources firm that selected WESCO to help meet its supply chain productivity and cost-savings targets, including unit cost savings on new 20-40% purchases, a 40% reduction in inventory and elimination of hundreds of hours from transaction processing activities. DOCUMENTED RESULTS Seeing proven, documented results of implemented agreements and strategies is the bottom line for most WESCO customers. We have the capability to provide our customers with customized feedback on demand. Bruckner Supply, a WESCO division dedicated solely to integrated supply programs, is unique in its ability to give customers continuous access to key measurement data such as fill rate, productivity per employee, cost savings and order transaction performance metrics. Our key account program managers work closely with the customer in monitoring and analyzing this information to identify areas for operational effectiveness, process refinements and improvement or corrective action — a valuable service, focused on delivering results.
  14. 14. To Our Shareholders, Employees and Friends The year 2000 was both a rewarding and challenging year for WESCO. Throughout the year we were faced with new competitors and new procurement paradigms. We encountered dozens, if not hundreds, of new well-funded competitors in the form of “dot.com” Internet start-ups, procurement specialty firms, auction operators and buying groups. It seemed that most of these entities were targeting WESCO’s key market segments and our strategic model of coordinated multi-site procurement. By year’s end, however, we could confidently say that WESCO’s leadership positions in integrated supply and national accounts programs for large, multi-site customers were strengthened, and our market share in these important product and service arenas had improved. And, with what we’ve learned and accomplished, we’ll be even stronger in the years ahead.
  15. 15. Equally as challenging as the onslaught of new competitors have been the shifts occurring in the general economy. A significant amount of WESCO’s business is associated with new construction or capital projects, new machinery or equipment installations and the subsequent operation and on-going maintenance of facilities and equipment. WESCO’s best customers and best opportunities are often found in large, production-driven “old economy” industries and the capital-intensive segments of the “new economy.” Since the 1998 Asian financial crisis, it seems that one major industry after another, from mining to petroleum to steel, then autos and now semicon- ductors has been in a retrenchment phase. As a result, we’ve had to cope with spending cuts, plant closings, consolidations, downsizing and capital project deferrals. But because a large part of WESCO’s strength results from our broad scope of industry coverage, geographical diversification and national marketing initiatives, we’ve been able to add customers and shift resources into growing markets. We were well positioned in major construc- tion markets, and our sales efforts with large companies seeking improved or re-engineered procurement capabilities continued to be successful. We’ve also experienced significant growth in technology-driven industries and in a wide range of commercial operations that have had to expand power and wiring systems to support their data- driven, 24 hours-per-day operations. Through it all, WESCO has been able to deliver. Our marketing strategies are working. Our organizational breadth has provided stability. And, we continue to grow and prosper. FINANCIAL RESULTS Sales for 2000 increased 13% over the prior year to $3.9 billion. Net income before extraordinary items and restructuring charges increased from $35.1 million in 1999 to $39.4 million in 2000. While net income improved, it was below our objectives due to restructuring and other non-recurring charges taken in the fourth quarter in response to the weaker economic environment. We know that the economy has weakened, but the Company is anticipating that sales will continue to grow in 2001 as a result of new customer programs initiated late in 2000. Perhaps more importantly, we expect to see meaning- ful improvements in operating margins. Cost reduction and working capital management initiatives begun during the fourth quarter will continue to receive attention. I expect that our biggest gains will come from personnel productivity, which is our number one priority for 2001. While we have a very effective sales and service organization today, we expect new training and information systems capabilities to drive further gains in the very important performance measures of sales and margin per employee. Recognizing the value to our shareholders, we continued our share repurchase program throughout 2000, purchasing 3.3 million shares. Toward the end of 2000, the opportunity to make strategic and financially attractive acquisitions of distribution companies began to improve. Accordingly, we’ve shifted resources away from the share repurchase program to be better positioned to complete additional acquisitions. ACQUISITIONS During 2000 WESCO completed three acquisitions that added sales coverage in selected local markets and added significantly to our product and service offerings. Control Corporation of America (CCA), based in Richmond, Virginia, has eight sales and service locations in the Southeast. CCA is a specialist in industrial automation applications, with particular expertise in the marine, food processing and textile industries. KVA Supply Company is a utility products distributor with unique product and technical support capabilities. This four-location distributor operating primarily in the Western states, provides high performance and high quality splicing and termination products for electrical power and telecommunications cables. Orton Utility Supply added needed local distribution capabilities for utility products in the Southeast. On a combined basis, these three acquisitions generate annual sales of approximately $90 million. In March of 2001, we strengthened our premier position in the utility products distribution market by acquiring Herning Enterprises, Inc. With sales of $110 million and 10 branch locations, Herning serves utility and tele- communications contractors in key urban areas of California, Washington, Arizona, and Utah. PRODUCTS AND SERVICES WESCO is fundamentally a sales driven company, specializing in electrical equipment and a broad range of maintenance related products. We maintain inventories of hundreds of thousands of items used in the daily work of contractors, maintenance personnel and service technicians. When electrical equipment and other maintenance or production materials are needed, WESCO delivers. WESCO International, Inc. 2000 Annual Report & Form 10-K 11
  16. 16. In response to customer requests, we have evolved into a services company as well. Customers of all types rely on WESCO personnel to perform a variety of purchasing-related functions on their behalf. It is routine for us to identify, locate and procure hard-to-find replacement or spare parts. Similarly, when critical equipment fails we are called on for troubleshooting advice, technical support or emergency repairs. The most extensive and comprehensive service package available from WESCO is called Integrated Supply. Customers utilize this service to outsource some or all of their procurement, inventory control and logistics coordination activities to WESCO. We handle the paperwork, the purchasing and receiving, the storerooms and in-plant logistics and the continuous improvement cost reduction programs. We become the single source for assuring that needed products and services get delivered. E-COMMERCE The extraordinary hype surrounding e-Commerce and purchasing via Internet applications has died down. This is a good thing, because far too many start-up companies were making bold promises, and they simply could not deliver. Nevertheless, in spite of the demise of many purchasing-oriented “dot.com” companies, e-Commerce initiatives are strong and growing at WESCO and at many of the industrial, contractor and commercial firms that we transact business with today. The extraordinary growth expectations for e-business transactions have not yet materialized, but nothing can stop the progressive advance of technologies so significant and pervasive as tele- communications and the Internet. We currently have the technology in place to deliver operational efficiencies via e-Commerce solutions, and our investment program continues at a pace comparable to 2000. Our e-Commerce and Information Systems teams are highly organized and very proficient at getting customers connected and set up to use WESCO’s electronic catalogs and Internet procurement capabilities. We have demonstrated good ROI for customers who have millions of dollars invested in the underlying technologies required for e-Commerce. Over the past year we’ve deployed our comprehensive electronic catalogs at many customers. We also have prominent positions with the leading industry trade exchanges and e-procurement portals. We have outstanding technology, refined customer implementation processes and experienced staff, and we will continue to invest in this important part of our business. Our commitment in e-Commerce is that we will deliver what our customers want, how they want it, with a good return in the process. BOARD OF DIRECTORS George L. Miles, Jr., Chief Executive Officer of WQED Pittsburgh, a public broadcasting network, joined our Board of Directors in April. George has both a financial and operating background and brings a variety of technology, regulatory and community relations experience to our organization. With this addition, our Board of Directors now consists of eight members. LOOKING AHEAD Without a doubt, we are a stronger company today than we were a year ago. In both the “old” and the “new” economies, we have succeeded through quick response to customer needs and an ongoing flexibility in adapting to new sales and service models. One of the most positive aspects of our business is that we operate in a large and fundamentally strong industry that provides multiple channels for growth — and we intend to take full advantage of the possibilities. With the proven success of our business strategies, a long-standing focus and cultural commitment to customer service and our continuing selection as preferred supplier by some of the largest and most sophisticated companies in the world, we look forward to another good year in 2001. Roy W. Haley Chairman and Chief Executive Officer March 20, 2001 12 WESCO International, Inc. 2000 Annual Report & Form 10-K
  17. 17. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-14989 WESCO INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 25-1723342 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Commerce Court 15219 Four Station Square, Suite 700 (Zip Code) Pittsburgh, Pennsylvania (Address of principal executive offices) (412) 454-2200 (Registrant’s telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of Class Name of Exchange on which registered Common Stock, par value $.01 per share New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None 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 at least the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not con- tained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of February 22, 2001, 40,158,973 shares of Common Stock, par value $.01 per share (“Common Stock”) and 4,653,131 shares of Class B Common Stock, par value $.01 per share (“Class B Common Stock”) of the registrant were outstanding. The registrant estimates that as of February 22, 2001, the aggregate market value of the voting shares held by non-affiliates of the registrant was approximately $154.1 million based on the closing price on the New York Stock Exchange for such stock. DOCUMENTS INCORPORATED BY REFERENCE: Part III of this Form 10-K incorporates by reference portions of the registrant’s Proxy Statement. WESCO International, Inc. 2000 Annual Report & Form 10-K 13
  18. 18. table of contents WESCO International, Inc. December 31, 2000 part i Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 part ii Item 5 Market for Registrant’s Common Stock and Related Stockholder Matters . . . . . . . 24 Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Item 7A Quantitative and Qualitative Disclosures About Market Risks . . . . . . . . . . . . . . . . . . 31 Item 8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 part iii Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . 32 Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 part iv Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 33 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Index to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 14 WESCO International, Inc. 2000 Annual Report & Form 10-K
  19. 19. part i Item 1. Business INDUSTRY OVERVIEW Electrical Distribution In this Annual Report on Form 10-K, “WESCO” With 2000 sales estimated at $79 billion, the U.S. refers to WESCO International, Inc., and its sub- industry is large and growing. The industry is also sidiaries and its predecessors unless the context stable with compounded annual growth of 7% otherwise requires. References to “we,” “us,” since 1985, and it is projected to grow another 7% “our” and the “Company” refer to WESCO and in 2001. The U.S. electrical distribution industry is its subsidiaries. Our subsidiaries include WESCO also highly fragmented. In 1999, the latest year for Distribution, Inc. (“WESCO Distribution”) which data is available, the four national distributors, and WESCO Distribution — Canada, Inc. including WESCO, accounted for less than 16% of (“WESCO Canada”), both of which are estimated total industry sales. wholly-owned by WESCO. Integrated Supply OVERVIEW Demand for Integrated Supply services is growing With sales of almost $3.9 billion in 2000, we are rapidly, as more companies realize they can lower a leading provider of electrical products and other costs by outsourcing their MRO procurement and industrial MRO supplies and services in North related services. Since the customer’s costs of procur- America. We are the second largest distributor in ing high volumes of low dollar value MRO supplies the $79 billion U.S. electrical distribution industry, can be over 50% of the cost of the products, such which has grown at a compounded annual rate of improvements can be significant. The total market for approximately 7% over the last 15 years. We are MRO industrial supplies is approximately $260 billion. also a provider of Integrated Supply services. Our Within that market, Integrated Supply has more than Integrated Supply solutions and outsourcing services doubled from $5 billion in 1997 to over $10 billion fulfill all of a customer’s industrial MRO procurement in 2000 or 27% per year. Recent projections estimate needs through a highly automated, proprietary that the Integrated Supply market will reach $18.4 bil- electronic procurement and inventory replenishment lion by 2004. system. Demand for Integrated Supply services has increased approximately 56% annually since 1994, OUR BUSINESS STRATEGY and the total U.S. market potential, measured as all Our objective is to be the leading provider of electrical purchases of industrial MRO supplies and services, products and other MRO supplies and services to is estimated to be $260 billion. companies in North America and selected internation- We have over 350 branches and five distribution al markets. In achieving this leadership position, our centers located in 48 states, nine Canadian provinces, goal is to grow earnings at a faster rate than sales by Puerto Rico, Mexico, Guam, the United Kingdom and focusing on margin enhancement and continuous pro- Singapore. We serve over 130,000 customers world- ductivity improvement. Our growth strategy leverages wide, offering over 1,000,000 products from over our existing strengths and focuses on developing new 23,000 suppliers. Our diverse customer base includes initiatives and programs. a wide variety of industrial companies; contractors Enhance Our Leadership Position in Electrical for industrial, commercial and residential projects; Distribution. We intend to leverage our extensive utility companies; and commercial, institutional and market presence and brand equity in the WESCO governmental customers. name to further our leadership position in electrical We have acquired 24 companies since August 1995, distribution. We are the second largest electrical representing annual sales of approximately distributor in the U.S. and, through our value-added $1.3 billion. Combining strong internal growth with products and services, we believe we have become acquisitions, our net sales and earnings before inter- the industry leader in serving several important and est, taxes, depreciation and amortization (“EBITDA”) growing markets including: (as defined in Item 6 “Selected Financial Data”) have industrial customers with large, complex plant s increased at a compounded annual growth rate of maintenance operations, many of which require approximately 16% and 31%, respectively, since 1994. a national multi-site service solution for their electrical distribution product needs; WESCO International, Inc. 2000 Annual Report & Form 10-K 15
  20. 20. large contractors for major industrial and commercial Extend Our Leadership Position in Integrated s construction projects; Supply. We are the largest provider of Integrated Supply services for MRO goods and services in the the electric utility industry; and s United States. We provide a full complement of out- manufacturers of factory-built homes, recreational s sourcing solutions, focusing on improving the supply vehicles and other modular structures. chain management process for our customers’ indirect Grow National Programs. Since 1994, revenue purchases. Our Integrated Supply programs replace from our National Accounts program has increased in the traditional multi-vendor, resource-intensive excess of 15% annually. We will continue to invest in procurement process with a single, outsourced, fully the expansion of this program. Through our National automated process capable of managing all MRO Accounts program, we coordinate electrical MRO and related service requirements. Our solutions range procurement and purchasing activities primarily for from timely product delivery to assuming full respon- large industrial and commercial companies across sibility for the entire procurement function. Our multiple locations. We have well established relation- customers include some of the largest industrial com- ships with over 300 companies, providing us with panies in the United States. Competitive strengths of a recurring base of revenue through multi-year our Integrated Supply business include: agreements. Our objective is to continue to increase a proven and profitable business model highly s revenue generated through our National Accounts adaptable to the scale of our customers’ operations; program by: low operating costs; s increasing sales to existing National Account s highly automated proprietary information systems; s customers through new products, more services and and additional locations; established relationships with a large industrial s extending established National Account relationships s customer base. to include Integrated Supply; We intend to utilize these competitive strengths to expanding our customer base by leveraging our s increase our Integrated Supply sales to both new and existing expertise and presence within the auto- existing customers, including our existing National motive, petrochemical, pulp and paper, metals Account customers. and mining industries and food processing; and building strong positions in additional industry s Gain Share in Key Local Markets. Significant segments such as multi-site retail, financial, opportunities exist to gain local market share, since commercial and telecommunications. many local markets are highly fragmented. We intend In addition, through our Major Projects Group, we to increase our market share in key geographic markets are increasing our focus on large projects such as through a combination of increased sales and market- industrial sites, water treatment plants, airport expan- ing efforts at existing branches, acquisitions to expand sions, healthcare facilities, correctional institutions our product and customer base and new branch open- and new sports stadiums. We intend to secure new ings. Furthermore, we intend to leverage our existing Major Projects contracts through: relationships with preferred suppliers to increase sales of their products in local markets through various aggressive national marketing of our demonstrated s initiatives, including sales promotions, cooperative project management capabilities; marketing efforts, direct participation by suppliers in further development of relationships with leading s National Accounts implementation, dedicated sales contractors and engineering firms; forces and product exclusivity. To promote growth, close coordination with National Accounts s we have instituted a compensation system for branch customers on their renovation and new plant managers based on sales and profit increases and improvement projects; and efficient working capital management at the branch comprehensive materials management services, level. Our compensation system encourages our s involving a multi-commodity Integrated Supply branch managers to increase sales and optimize approach to contractor materials for large projects. business activities in their local markets, including managing the sales force, configuring inventories, targeting potential customers for marketing efforts and tailoring local service options. 16 WESCO International, Inc. 2000 Annual Report & Form 10-K
  21. 21. Pursue Strategic Acquisitions. We have completed providing low cost, highly functional processing s 24 acquisitions since August 1995, which represent of a full-range of our business operations such annual sales of approximately $1.3 billion. We believe as customer service, inventory, logistics manage- that the highly fragmented nature of the electrical and ment, accounting and administrative support; and industrial MRO distribution industry will provide us analyzing market potential, sales performance and s with a number of acquisition opportunities. We utilize cost of doing business by branch, customer, product, a disciplined approach toward acquisitions which sales representative and shipment type enabling us includes well-defined strategic criteria and established to work with customers to streamline activities and targets for return on investment and earnings accretion. reduce costs. Expand Our International Operations. Our inter- Expand Product and Service Offerings. We contin- national sales, the majority of which are in Canada, ue to build on our demonstrated ability to introduce accounted for 10% of sales in 2000. We believe that new products and services to meet customer demands there is significant additional demand for our products and capitalize on market opportunities. WESCO is and services outside the U.S. and Canada. Many of committed to developing new customers in the educa- our multinational domestic customers are seeking dis- tion, retail, healthcare, financial services, government tribution, Integrated Supply and project management and telecommunications market segments. As the solutions globally. Our approach to international oper- market for data and electrical products converge, ations is consistent with our domestic philosophy. WESCO has integrated our Data Communications We follow our established customers and pursue efforts into our core electrical business. Our existing business that we believe utilizes and extends our electrical sales force has been trained to sell data existing capabilities. This strategy of working through communications products resulting in significant new well-developed customer and supplier relationships data and electrical projects with large commercial reduces risks and provides the opportunity to establish banks, schools and telecommunications service a profitable business. We continue to pursue growth providers. In addition, through our WR Controls opportunities in existing locations such as Aberdeen, Division, we now have the platform to sell integrated Scotland; London, England and Mexico as well as lighting control and power distribution equipment take advantage of various export opportunities in in a single package for multi-site specialty retailers, Latin America and Africa. To take advantage of these restaurant chains and department stores. This is growth opportunities, WESCO is working toward another attractive growth market where our National forming strategic alliances in critical markets. Accounts strategies and logistics infrastructure provides measurable benefits for renovation, new ACQUISITION AND construction and ongoing maintenance activities. INTEGRATION PROGRAM Leverage our e-Commerce and Information Our strategic acquisition program has been an impor- System Capabilities. We conduct a significant amount tant element in our objective to be the leader in the of business electronically and continue to invest in markets we serve. Our philosophy toward growth information technology to create tighter linkages with includes a continuous evaluation to determine whether both customers and suppliers. Our electronic transac- a particular opportunity, capability or customer need tion management capabilities lower costs and shorten is best developed internally or purchased through a cycle time in the supply chain process for our cus- strategic acquisition. We believe that the highly frag- tomers and for us by: mented nature of the electrical distribution industry will continue to provide us with a significant number routinely processing customer orders, shipping s of acquisition opportunities. We continue to evaluate notices, supplier purchase orders and funds transfer potential acquisitions, including those in the electrical electronically with our trading partners; distribution industry, the Integrated Supply market creating tighter linkages to both customers and s and other non-electrical distributors that would suppliers through the use of technological complement our customers’ overall supply needs. advances, including an ability to check product However, as we continue to improve our internal availability, receive pricing information, and order capabilities, the strategic and financial benefits from product real-time directly from branches or over acquisitions will be evaluated more critically. We the Internet; have completed 24 acquisitions since August 1995, representing total annual sales of approximately $1.3 billion. WESCO International, Inc. 2000 Annual Report & Form 10-K 17
  22. 22. WESCO Acquisition History Representative products that we sell include: (Dollars in millions) Supplies: Fuses, terminals, connectors, boxes, s Branch fittings, tools, lugs, tape and other MRO supplies Year Acquisitions Locations Annual Sales 1 1995 2 2 $ 47 Distribution Equipment: Circuit breakers, trans- s 1996 7 67 418 formers, switchboards, panelboards and busway 1997 2 9 52 Lighting: Lamps (light bulbs), fixtures and ballasts s 1998 6 21 608 Wire and Conduit: Wire, cable, metallic and s 1999 4 5 70 non-metallic conduit 2000 3 17 92 Control, Automation and Motors: Motor control s Total 24 121 $ 1,287 devices, drives, programmable logic controllers, 1 Represents our estimate of annual sales of acquired businesses at the time of pushbuttons and operator interfaces acquisition, based on our review of internal and/or audited statements of the acquired business. Data Communications: Premise wiring, patch s panels, terminals, connectors In March 2001, WESCO completed its acquisition of all of the outstanding common stock of Herning We purchase products from a diverse group of over Underground Supply, Inc. and Alliance Utility 23,000 suppliers. In 2000, our ten largest suppliers Products, Inc. (collectively “Herning”) headquartered accounted for approximately 32% of our purchases. in Hayward, California. Herning, a distributor of gas, The largest of these was Eaton Corporation, through lighting and communication utility products, reported its Cutler-Hammer division, accounting for approxi- net sales of approximately $112 million in 2000. This mately 13% of total purchases. No other supplier acquisition will be accounted for under the purchase accounted for more than 5%. method of accounting. Our supplier relationships are important to us, provid- Our business development department consists of a ing access to a wide range of products, technical small team of professionals who locate, evaluate and training and sales and marketing support. We have negotiate all aspects of any acquisition, with particular preferred supplier agreements with approximately emphasis on compatibility of management philosophy 150 of our suppliers and purchase approximately and strategic fit. Since 1995, we have considered 65% of our stock inventory pursuant to these agree- over 300 potential acquisitions. We initially evaluate ments. Consistent with industry practice, most of our potential acquisitions based on their ability to: agreements with suppliers, including both distribution agreements and preferred supplier agreements, better serve our existing customers; s are terminable by either party on no more than offer expansion into key growth markets; s 60 days’ notice. add new product or service capabilities; s Services. In conjunction with product sales, we offer support new National Account customers; and s customers a wide range of services and procurement strengthen relationships with important s solutions that draw on our product and supply manufacturers. management expertise and systems capabilities. These services include National Accounts programs, PRODUCTS AND SERVICES Integrated Supply programs and Major Project Products. Our network of branches and distribution programs. We are responding to the needs of our centers stock over 215,000 product stock keeping customers, particularly those in processing and manu- units (“SKUs”). Each branch tailors its inventory to facturing industries. To more efficiently manage the meet the needs of the customers in its local market, MRO process on behalf of our customers, we offer typically stocking approximately 4,000 to 8,000 SKUs. a range of supply management services, including: Our Integrated Supply business allows our customers to access over 1,000,000 products for direct shipment. outsourcing of the entire MRO purchasing process; s providing manufacturing process improvements s using state-of-the-art automated solutions; implementing inventory optimization programs; s participating in joint cost savings teams; s assigning our employees as on-site support personnel; s recommending energy-efficient product s upgrades; and offering safety and product training for customer s employees. 18 WESCO International, Inc. 2000 Annual Report & Form 10-K
  23. 23. MARKETS AND CUSTOMERS National Accounts Programs. The typical National Account customer is a Fortune 500 industrial company, We have a large base of approximately 130,000 a large utility or other major customer, in each customers diversified across our principal markets. case with multiple locations. Our National Accounts While one customer accounted for approximately programs provide customers with total supply chain 3% of 2000 sales, no other customer accounted for cost reductions by coordinating purchasing activity more than 2%. for MRO supplies across multiple locations. Industrial Customers. Sales to industrial customers, Comprehensive implementation plans establish jointly- which include numerous manufacturing and process managed teams at the local and national level to industries, and original equipment manufacturers prioritize activities, identify key performance measures (“OEMs”) accounted for approximately 43% of our and track progress against objectives. We involve sales in 2000. our preferred suppliers early in the implementation process, where they can contribute expertise and prod- MRO products are needed to maintain and upgrade the uct knowledge to accelerate program implementation electrical and communications networks at all industrial and the achievement of cost savings and process sites. Expenditures are greatest in the heavy process improvements. industries, such as food processing, pulp and paper and petrochemical. Typically, electrical MRO is the first Integrated Supply Programs. Our Integrated Supply or second ranked product category by purchase value programs offer customers a variety of services to for total MRO requirements for an industrial site. support their objectives for improved supply chain Other MRO product categories include, among others, management. We integrate our personnel, product lubricants; pipe, valves and fittings; fasteners; cutting and distribution expertise, electronic technologies and tools and power transmission products. service capabilities with the customer’s own internal resources to meet particular service requirements. OEM customers incorporate electrical components Each Integrated Supply program is uniquely config- and assemblies into their own products. OEMs ured to deliver a significant reduction in the number typically require a reliable, high volume supply of a of MRO suppliers, reduce total procurement costs, narrow range of electrical items. Customers in this improve operating controls and lower administrative segment are particularly service and price sensitive expenses. Our solutions range from just-in-time due to the volume and the critical nature of the product fulfillment to assuming full responsibility for the used, and they also expect value-added services such entire procurement function for all indirect purchases. as design and technical support, just-in-time supply We believe that customers will increasingly seek to and electronic commerce. utilize us as an “integrator,” responsible for selecting Electrical Contractors. Sales to electrical contractors and managing the supply of a wide range of MRO accounted for approximately 36% of our sales in and OEM products. 2000. These customers range from large contractors Major Projects. We have a Major Projects Group, for major industrial and commercial projects, the comprised of our most experienced construction man- customer types we principally serve, to small residen- agement personnel, which focuses on serving the tial contractors, which represent a small portion of complex needs of North America’s largest engineering our sales. Electrical products purchased by electrical and construction firms and the top 50 U.S. electrical sub-contractors typically account for approximately contractors on a multi-regional basis. These con- 40% to 50% of their installed project cost, and, tractors typically specialize in building industrial therefore, accurate cost estimates and competitive sites, water treatment plants, airport expansions, material costs are critical to a contractor’s success healthcare facilities, correctional institutions and in obtaining profitable projects. new sports stadiums. Utilities. Sales to utilities accounted for approxi- mately 16% of our sales in 2000. This market includes large investor-owned utilities, rural electric cooperatives and municipal power authorities. We provide our utility customers with power line products and an extensive range of supplies to meet their MRO and capital projects needs. Full materials management and procurement outsourcing arrangements are also important in this market as cost pressures and deregulation cause utility customers to streamline purchasing and inventory control practices. WESCO International, Inc. 2000 Annual Report & Form 10-K 19
  24. 24. SALES ORGANIZATION Commercial, Institutional and Governmental Customers (“CIG”). Sales to CIG customers General Sales Force. Our general sales force is based accounted for approximately 5% of our sales in 2000. at the local branches and comprises approximately This fragmented market includes schools, hospitals, 2,200 of our employees, almost half of whom are property management firms, retailers and government outside sales representatives and the remainder are agencies of all types. Through our WR Controls inside sales personnel. Outside sales representatives, Division, we now have a platform to sell integrated who have an average of more than eight years of lighting control and distribution equipment in a single experience with us, are paid under a compensation package for multi-site specialty retailers, restaurant structure which is heavily weighted towards chains and department stores. commissions. They are responsible for making direct customer calls, performing on-site technical support, DISTRIBUTION NETWORK generating new customer relations and developing Branch Network. We have over 350 branches, of existing territories. The inside sales force is a key which approximately 290 are located in the U.S., point of contact for responding to routine customer approximately 50 are located in Canada and the inquiries such as price and availability requests and remainder are located in Puerto Rico, Mexico, Guam, for entering and tracking orders. the United Kingdom and Singapore. Over the last National Accounts. Our National Accounts sales three years, we have opened approximately seven force is comprised of an experienced group of sales branches per year, principally to service National executives who negotiate and administer contracts, Account customers. In addition to consolidations in coordinate branch participation and identify sales and connection with acquisitions, we occasionally close service opportunities. National Accounts managers’ or consolidate existing branch locations to improve efforts are aligned by targeted customer industries, operating efficiency. including automotive, pulp and paper, petrochemical, Distribution Centers. To support our branch network, steel, mining and food processing. we have five distribution centers located in the Data Communications. Sales of premise cable, United States and Canada, including facilities located connectors, hardware, network electronics and outside near Pittsburgh, Pennsylvania, serving the Northeast plant products are generated by our general sales and Midwest U.S.; near Reno, Nevada, serving the force and a dedicated group of outside and inside Western U.S.; near Memphis, Tennessee, serving data communications sales representatives. They are the Southeast and Central U.S.; near Montreal, Quebec, supported by a centralized customer service center serving Eastern and Central Canada; and near and additional resources in product management, Vancouver, British Columbia, serving Western Canada. purchasing, inventory control and sales management. Our distribution centers add value for our branches We also have a training organization that provides our and customers through the combination of a broad general sales force and customers with state-of-the-art, and deep selection of inventory, on-line ordering, industry certified product and installation training. same day shipment and central order handling and Major Projects. Since 1995 our group of experienced fulfillment. Our distribution center network reduces sales managers target, on a national basis, the market the lead-time and improves the reliability of our sup- for large construction projects with electrical material ply chain, giving us a distinct competitive advantage valued in excess of $1 million. Through the Major in customer service. Additionally, the distribution Projects Group, we can meet the needs of contractors centers reduce the time and cost of supply chain for complex construction projects such as new sports activities through automated replenishment and ware- stadiums, industrial sites, water treatment plants, house management systems, and economies of scale airport expansions, healthcare facilities and correc- in purchasing, inventory management, administration tional institutions. and transportation. e-Commerce. We established our initial electronic catalog on the Internet in 1996. Since that time, we have worked with a variety of large customers to establish customized electronic catalogs for their use in internal systems. Additionally, in 1999 we began a process of providing electronic catalogs to multiple e-Commerce service providers, trade exchanges and industry specific electronic commerce portals. Our 20 WESCO International, Inc. 2000 Annual Report & Form 10-K
  25. 25. MANAGEMENT INFORMATION SYSTEMS e-business strategy is to serve existing customers by tailoring our catalog and Internet-based procurement Our corporate information system, WESNET, provides applications to their internal systems or through their processing for a full range of our business operations, preferred technology and trading exchange partner- such as customer service, inventory and logistics ships. Additionally, we have entered into several management, accounting and administrative support. e-business partnerships with leading technology or The system utilizes decision support, executive infor- marketing oriented e-portals that target selected mar- mation system analysis and retrieval capabilities to ket segments and will continue to do so. Through provide extensive operational analysis and detailed these niche oriented marketing arrangements, we income statement and balance sheet variance and expect to reach thousands of new customers who were trend reporting at the branch level. The system also previously not served through WESCO’s sales force. provides activity-based costing capabilities for analyzing profitability by customer, sales representa- We have initiated “WESCO Direct,” a new direct tive and shipment type. Sales and margin trends ship fulfillment operation, responsible for supporting and variances can be analyzed by branch, customer, smaller customers and select national account loca- product category, supplier or account representative. tions. Customers can order over 35,000 electrical and data communications products stocked in WESCO The WESNET system is fully distributed within warehouses through a centralized customer service WESCO, and every branch (other than our Bruckner center or over the Internet on wescodirect.com. A Integrated Supply Division and certain newly proactive telesales approach utilizing catalogs, direct acquired branches) utilizes its own computer system mail, e-mail and personal phone selling is used to to support local business activities. All branch provide a high level of customer service. In support operations are linked through a wide area network to of this initiative, WESCO recently introduced a centralized information on inventory status in our lighting catalog and is in the process of completing distribution centers as well as other branches and a new comprehensive electrical catalog. an increasing number of on-line suppliers. Recent advances in WESNET capabilities make it possible to INTERNATIONAL OPERATIONS consolidate administrative and procurement functions, To serve the Canadian market, we operate a network and bring systematic improvement through new pric- of approximately 50 branches in nine provinces. ing systems and controls. EESCO, one of our largest Branch operations are supported by two distribution acquisitions to-date, was integrated into the WESNET centers located near Montreal and Vancouver. With system during the third quarter of 2000. sales of approximately US $320 million, Canada We routinely process customer orders, shipping represented 8.2% of our total sales in 2000. The notices, suppliers’ purchase orders, and funds transfer Canadian market for electrical distribution is consid- via EDI transactions with our trading partners. Our erably smaller than the U.S. market, with roughly electronic commerce strategy calls for tighter linkages US $2.9 billion in total sales in 2000, according to both customers and suppliers through greater use to industry sources. of technological advances, including Internet and We sell internationally through domestic export electronic catalogs, enhanced EDI and other inno- sales offices located within North America and sales vative improvements. offices in international locations. We have operations Our Integrated Supply services are supported by our in Aberdeen, Scotland and London, England to proprietary procurement and inventory management support our sales efforts in Europe, Africa and the systems. These systems provide a fully integrated, former Soviet Union, and an office in Singapore flexible supply chain platform that currently handles to support our sales in Asia. We also have branch over 95% of our Integrated Supply customers’ operations in Mexico. transactions electronically. Our configuration options for a customer range from on-line linkages to the customer’s business and purchasing systems, to total replacement of a customer’s procurement and inventory management system for MRO supplies. WESCO International, Inc. 2000 Annual Report & Form 10-K 21
  26. 26. COMPETITION FORWARD LOOKING INFORMATION WESCO operates in a highly competitive industry. This Annual Report on Form 10-K contains various We compete directly with national, regional and local “forward looking statements” within the meaning of providers of electrical and other industrial MRO sup- the Private Securities Litigation Reform Act of 1995. plies. Competition is primarily focused on the local These statements involve certain unknown risks service area, and is generally based on product line and uncertainties, including, among others, those breadth, product availability, service capabilities and contained in Item 1, “Business” and Item 7, price. Another source of competition is buying groups “Management’s Discussion and Analysis of Financial formed by smaller distributors to increase purchasing Condition and Results of Operations.” When used in power and provide some cooperative marketing this Annual Report on Form 10-K, the words “antici- capability. While increased buying power may pates,” “plans,” “believes,” “estimates,” “intends,” improve the competitive position of buying groups “expects,” “projects” and similar expressions may locally, we believe these groups have not been able identify forward looking statements, although not all to compete effectively with us for National Account forward looking statements contain such words. Such customers due to the difficulty in coordinating a statements, including, but not limited to, our state- diverse ownership group. During 1999 and 2000 ments regarding business strategy, growth strategy, numerous special purpose Internet-based procurement productivity and profitability enhancement, competi- service companies, auction businesses, and trade tion, new product and service introductions and exchanges were organized. Many of them targeted liquidity and capital resources are based on manage- industrial MRO and contractor customers of the type ment’s beliefs, as well as on assumptions made by, served by WESCO. WESCO responded with its own and information currently available to, management, e-Commerce capabilities and as of year-end 2000, and involve various risks and uncertainties, some of business losses, if any, to competitors of this type which are beyond our control. Our actual results were minimal. We expect that numerous new com- could differ materially from those expressed in any petitors will develop over time as Internet-based forward looking statement made by or on our behalf. enterprises become more established and refine their In light of these risks and uncertainties, there can be service capabilities. no assurance that the forward looking information will in fact prove to be accurate. We have undertaken EMPLOYEES no obligation to publicly update or revise any forward As of December 31, 2000, we had approximately looking statements, whether as a result of new infor- 6,000 employees worldwide, of which approximately mation, future events or otherwise. 5,200 were located in the U.S. and approximately 800 in Canada and our other international locations. Less Item 2. Properties than 5% of our employees are represented by unions. We believe our labor relations are generally good. We have over 350 branches, of which approximately 290 are located in the U.S., approximately 50 are INTELLECTUAL PROPERTY located in Canada and the remainder are located in Our trade and service marks, including “WESCO,” Puerto Rico, Mexico, Guam, the United Kingdom “the extra effort people ®,” and the running man and Singapore. Approximately 30% of branches are design, are filed in the U.S. Patent and Trademark owned facilities, and the remainder are leased. Office, the Canadian Trademark Office and the The following table summarizes our distribution Mexican Instituto de la Propriedad Industrial. centers: Location Square Feet Leased/Owned ENVIRONMENTAL MATTERS Warrendale, PA 252,700 Owned and Leased We believe that we are in compliance in all material Sparks, NV 196,800 Leased respects with applicable environmental laws. We do Byhalia, MS 148,000 Owned not expect significant capital expenditures for envi- Dorval, QE 90,000 Leased ronmental control matters in the current year or in Burnaby, BC 34,300 Owned the near future. We also lease our 76,200 square foot headquarters in Pittsburgh, Pennsylvania. We do not regard the real property associated with any single branch location as material to our operations. We believe our facilities are in good operating condition. 22 WESCO International, Inc. 2000 Annual Report & Form 10-K
  27. 27. Item 3. Legal Proceedings James H. Mehta has been Vice President, Business Development of WESCO since November 1995. We are party to routine litigation incidental to our From 1993 to 1995, Mr. Mehta was a principal with business. We do not believe that any legal proceedings Schroder Ventures, a private equity investment firm to which we are a party or to which any of our prop- based in London, England. erty is subject will have a material adverse effect on Robert B. Rosenbaum has been Vice President, our financial position or results of operations. Operations of WESCO since September 1998. From 1982 until 1998, Mr. Rosenbaum was the Item 4. Submission of Matters President of the Bruckner Supply Company, Inc., to a Vote of Security Holders an Integrated Supply company WESCO acquired in September 1998. No matters were submitted to a vote of the Company’s security holders during the fourth quarter of 2000. Patrick M. Swed has been Vice President, Operations of WESCO since March 1994. Mr. Swed had been EXECUTIVE OFFICERS Vice President of Branch Operations for WESCO Our executive officers and their respective ages and from 1991 to 1994. positions are set forth below. Donald H. Thimjon has been Vice President, Name Age Position Operations of WESCO since March 1994. Mr. Roy W. Haley 54 Chairman and Thimjon served as Vice President, Utility Group Chief Executive Officer for WESCO from 1991 to 1994 and as Regional William M. Goodwin 55 Vice President, Operations Manager from 1980 to 1991. James H. Mehta 45 Vice President, Business Development Ronald P. Van, Jr. has been Vice President, Robert B. Rosenbaum 43 Vice President, Operations Operations of WESCO since October 1998. Mr. Van Patrick M. Swed 57 Vice President, Operations was a Vice President and Controller of EESCO, an Donald H. Thimjon 57 Vice President, Operations electrical distributor WESCO acquired in 1996. Ronald P. Van, Jr. 40 Vice President, Operations Stephen A. Van Oss has been Vice President and Stephen A. Van Oss 46 Vice President and Chief Financial Officer of WESCO since October Chief Financial Officer 2000. Mr. Van Oss served as Director, Information Daniel A. Brailer 43 Secretary and Treasurer Systems for WESCO from 1997 to 2000 and as Set forth below is biographical information for our Director, Acquisition Management in 1997. From executive officers and directors listed above. 1995 to 1996, Mr. Van Oss served as Chief Operating Officer and Chief Financial Officer of Paper Back Roy W. Haley became Chairman of the Board in Recycling of America, Inc. From 1979 to 1995, August 1998. Mr. Haley has been Chief Executive Mr. Van Oss held various management positions Officer and a director of WESCO since February with Reliance Electric Corporation. 1994. From 1988 to 1993, Mr. Haley was an execu- tive at American General Corporation, a diversified Daniel A. Brailer has been Treasurer and Director financial services company, where he served as of Investor Relations of WESCO since March 1999. Chief Operating Officer and as President and Director. During 1999, Mr. Brailer was also appointed to the Mr. Haley is also a director of United Stationers, Inc. position of Corporate Secretary. From 1982 to 1999, and Cambrex Corporation. Mr. Brailer held various positions at Mellon Financial Corporation, most recently as Senior Vice-President. William M. Goodwin has been Vice President, Operations of WESCO since March 1994. Since 1987, Mr. Goodwin has served as a branch, district and region manager for WESCO in various locations and also served as Managing Director of WESCOSA, a former Westinghouse affiliated manufacturing and distribution business in Saudi Arabia. WESCO International, Inc. 2000 Annual Report & Form 10-K 23
  28. 28. part ii Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters On May 17, 1999, WESCO completed its initial public offering of common stock (“the Offering”), which is listed on the New York Stock Exchange under the symbol “WCC.” As of February 22, 2001, there were 40,158,973 shares of common stock and 4,653,131 shares of Class B common stock outstand- ing held by approximately 123 holders of record. No dividends were paid on the common stock, nor does the Company intend to pay dividends in the foreseeable future. See “Liquidity and Capital Resources.” The following table sets forth the high and low sales price of the shares since the Offering. Quarter High Low 2000 71/16 First 9 7 7 3/4 Second 10 /8 1 7 1/2 Third 10 /8 7 6 5/16 Fourth 9 /8 1999 21 1/4 171/2 Second (from Offering date) 22 7/8 12 3/8 Third 14 1/2 51/2 Fourth In connection with the Offering, the Board of Directors approved a 57.8 to one stock split effected in the form of a stock dividend of WESCO’s common stock. The Board of Directors also reclassified the Class A common stock into common stock, increased the authorized common stock to 210,000,000 shares and the authorized Class B common stock to 20,000,000 shares and authorized 20,000,000 shares of $.01 par value preferred stock, all effective May 11, 1999. In May 2000, WESCO’s board of directors authorized an additional $25 million to be added to its existing $25 million share repurchase program which was authorized in November 1999. WESCO’s common stock may be purchased at management’s discretion, subject to certain financial ratios, in open market transactions and the program may be discontinued at any time. As of February 22, 2001, the Company had purchased approximately 3.9 million shares of its common stock for approximately $32.8 million pursuant to this program. 24 WESCO International, Inc. 2000 Annual Report & Form 10-K