##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    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: 000-20278
 ENCORE WIRE CORPORATION
  Delaware
(State or other jurisdiction of incorporation or 
organization)
    
    75-2274963
(I.R.S. Employer
Identification No.)1329 Millwood Road 
McKinney, Texas
(Address of principal executive offices)
    
    75069
(Zip Code)
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value $.01 per share
    
    The NASDAQ Global Select Market
  o þ
 o þ
 Note
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
 o þ




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##### 



PageNumberPART I
    
    
    1ITEM 1. BUSINESS
    
    
    1General
    
    
    1Strategy
    
    
    1Products
    
    
    1Manufacturing
    
    
    2Customers
    
    
    3Marketing and Distribution
    
    
    3Employees
    
    
    3Raw Materials
    
    
    4Competition
    
    
    4Intellectual Property Matters
    
    
    4Internet Address/SEC Filings
    
    
    5ITEM 1A. RISK FACTORS
    
    
    5ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    7ITEM 2. PROPERTIES
    
    
    7ITEM 3. LEGAL PROCEEDINGS
    
    
    7ITEM 4. (REMOVED AND RESERVED)
    
    
    8EXECUTIVE OFFICERS OF THE COMPANY
    
    
    8PART II
    
    
    9ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
    
    
    9Equity Compensation Plan Information
    
    
    9Performance Graph
    
    
    10ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    11ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    12Executive Overview
    
    
    12General
    
    
    12Results of Operations
    
    
    13Off-Balance Sheet Arrangements
    
    
    15Liquidity and Capital Resources
    
    
    15Contractual Obligations
    
    
    17Critical Accounting Policies and Estimates
    
    
    17Information Regarding Forward Looking Statements
    
    
    18ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    18ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    19ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    34ITEM 9A. CONTROLS AND PROCEDURES
    
    
    34ITEM 9B. OTHER INFORMATION
    
    
    36PART III
    
    
    36ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    36ITEM 11. EXECUTIVE COMPENSATION
    
    
    36ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
    
    
    36ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    36ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    36PART IV
    
    
    37ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    37SIGNATURES
    
    
    38EX-10.15EX-10.16EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2


ii




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PART I
 
 Item 1. Business.
 
      
   Customer Service.
 Product Innovation.
 Low-Cost Production.
 Efficient Plant Design.
 Incentivized Work Force.
 
   1




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NM-B Cable.
 UF-B Cable.
 THWN-2 Cable
 XHHW-2 Cable.
 USE-2 Cable. USE-2 or RHH or RHW-2
 Metal Clad and Armored Cable.
 Photovoltaic Cable.
 Bare Copper.
 
    Casting
 Drawing
 Stranding.
 PVC Compounding.
 Insulating.
 2




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Jacketing.
 Metal Cladding and Armoring.
  
    
      
   3




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4




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Item 1A. Risk Factors.
      5




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6




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  
 Item 3. Legal Proceedings.
  7




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Item 4.
    
    (Removed and Reserved).
 
   Name
    
    Age
    
    Position with CompanyDaniel L. Jones
    
    
    47
    
    
    President, Chief Executive Officer, and Member of
the Board of DirectorsFrank J. Bilban
    
    
    54
    
    
    Vice President  Finance, Treasurer, Secretary,
and Chief Financial Officer
 Mr. Jones
 Mr. Bilban
 8




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
  High
    
    
    Low2010First Quarter
    
    $
    21.99
    
    
    $
    18.10Second Quarter
    
    
    23.44
    
    
    
    18.14Third Quarter
    
    
    22.40
    
    
    
    17.77Fourth Quarter
    
    
    26.07
    
    
    
    20.042009First Quarter
    
    $
    23.16
    
    
    $
    15.22Second Quarter
    
    
    24.00
    
    
    
    18.60Third Quarter
    
    
    24.49
    
    
    
    19.52Fourth Quarter
    
    
    23.71
    
    
    
    19.51
     
   Number ofsecuritiesremaining availableNumber of
    
    
    
    
    
    
    for future issuancesecurities to be
    
    
    
    
    
    
    under equityissued upon
    
    
    Weighted-average
    
    
    compensation plansexercise of
    
    
    exercise price of
    
    
    (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions, warrants
    
    
    options, warrants
    
    
    reflected in columnand rights
    
    
    and rights
    
    
    (a))PLAN CATEGORY
    
    (a)
    
    
    (b)
    
    
    (c)Equity
compensation plans
approved by
security holders
    
    
    439,576
    
    
    $
    15.11
    
    
    
    482,000Equity
compensation plans
not approved by
security holders
    
    
    0
    
    
    
    0
    
    
    
    0TOTAL
    
    
    439,576
    
    
    $
    15.11
    
    
    
    482,000
 9




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Performance Graph
   
 Initial
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Encore Wire Corporation
    
    Return %
    
    
    
    
    
    
    -3.30
    
    
    
    -27.44
    
    
    
    19.73
    
    
    
    11.43
    
    
    
    19.50Cum $
    
    
    100.00
    
    
    
    96.70
    
    
    
    70.17
    
    
    
    84.01
    
    
    
    93.62
    
    
    
    111.88Russell 2000 Index
    
    Return %
    
    
    
    
    
    
    18.35
    
    
    
    -1.55
    
    
    
    -33.80
    
    
    
    27.19
    
    
    
    26.85Cum $
    
    
    100.00
    
    
    
    118.35
    
    
    
    116.52
    
    
    
    77.14
    
    
    
    98.11
    
    
    
    124.45Peer Group
    
    Return %
    
    
    
    
    
    
    86.85
    
    
    
    44.55
    
    
    
    -67.50
    
    
    
    33.41
    
    
    
    40.27Cum $
    
    
    100.00
    
    
    
    186.85
    
    
    
    270.09
    
    
    
    87.78
    
    
    
    117.10
    
    
    
    164.26
 Notes
 (1)
    
    Data presented in the performance graph is complete through December 31, 2010.
 (2)
    
    The Peer Group is self-determined and consists of the following companies:
General Cable Corporation, Belden Inc. and Coleman Cable, Inc.
 (3)
    
    The peer group index uses only such peer groups performance and excludes the
performance of the Company. The peer group index uses beginning of period market
capitalization weighting.
 (4)
    
    Each data line represents quarterly index levels derived from compounded daily
returns that include all dividends.
 (5)
    
    The index level for all data lines was set to $100.00 on December 31, 2005.
 10




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Item 6.
    
    Selected Consolidated Financial Data.
  Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share amounts)Statement of Income Data:Net sales
    
    $
    910,222
    
    
    $
    649,613
    
    
    $
    1,081,132
    
    
    $
    1,184,786
    
    
    $
    1,249,330Cost of goods sold
    
    
    827,813
    
    
    
    599,498
    
    
    
    957,767
    
    
    
    1,073,451
    
    
    
    1,005,037Gross profit
    
    
    82,409
    
    
    
    50,115
    
    
    
    123,365
    
    
    
    111,335
    
    
    
    244,293Selling, general and
administrative expenses
    
    
    57,073
    
    
    
    43,767
    
    
    
    61,180
    
    
    
    60,400
    
    
    
    59,793Operating income
    
    
    25,336
    
    
    
    6,348
    
    
    
    62,185
    
    
    
    50,935
    
    
    
    184,500Interest and other income (expense)
    
    
    (2,395
    )
    
    
    1,633
    
    
    
    2,416
    
    
    
    1,709
    
    
    
    (74
    )Interest expense
    
    
    (522
    )
    
    
    (3,181
    )
    
    
    (4,704
    )
    
    
    (5,834
    )
    
    
    (7,686
    )Income before income taxes
    
    
    22,419
    
    
    
    4,800
    
    
    
    59,897
    
    
    
    46,810
    
    
    
    176,740Income tax expense
    
    
    7,129
    
    
    
    1,164
    
    
    
    20,126
    
    
    
    16,014
    
    
    
    61,607Net income
    
    $
    15,290
    
    
    $
    3,636
    
    
    $
    39,771
    
    
    $
    30,796
    
    
    $
    115,133Net income per common and common
equivalent shares  basic
    
    $
    0.66
    
    
    $
    0.16
    
    
    $
    1.72
    
    
    $
    1.32
    
    
    $
    4.95Net income per common and common
equivalent shares  diluted
    
    $
    0.66
    
    
    $
    0.16
    
    
    $
    1.70
    
    
    $
    1.30
    
    
    $
    4.86Weighted average common and common
equivalent shares  basic
    
    
    23,184
    
    
    
    23,011
    
    
    
    23,113
    
    
    
    23,342
    
    
    
    23,254Weighted average common and common
equivalent shares  diluted
    
    
    23,342
    
    
    
    23,298
    
    
    
    23,396
    
    
    
    23,690
    
    
    
    23,674
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share amounts)Balance Sheet Data:Working capital
    
    $
    283,944
    
    
    $
    276,882
    
    
    $
    378,033
    
    
    $
    346,910
    
    
    $
    333,865Total assets
    
    
    477,276
    
    
    
    534,558
    
    
    
    533,339
    
    
    
    513,912
    
    
    
    474,157Long-term debt, net of current portion
    
    
    
    
    
    
    
    
    
    
    100,675
    
    
    
    100,910
    
    
    
    98,974Stockholders equity
    
    
    407,377
    
    
    
    392,984
    
    
    
    389,619
    
    
    
    354,969
    
    
    
    327,121Annual dividends paid
    
    
    1,854
    
    
    
    1,840
    
    
    
    1,853
    
    
    
    1,867
    
    
    
    Annual dividends paid per common share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.00
 11




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
   
   
    
    Industry leading order-fill rates and responsive customer service.
 
    
    Product innovations based on listening to and understanding customer needs.
 
    
    Low cost manufacturing operations, resulting from a state of the art manufacturing
complex.
 
    
    A focused management team leading an incentivized work force.
 
    
    Low general and administrative overhead costs.
 
    
    A team of experienced independent manufacturers representatives with strong customer
relationships across the United States.
   
  st st
 12




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Year Ended December 31,2010
    
    
    2009
    
    
    2008Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of goods sold:Copper
    
    
    73.8
    
    
    
    67.8
    
    
    
    80.0Other raw materials
    
    
    6.6
    
    
    
    8.8
    
    
    
    6.6Depreciation
    
    
    1.3
    
    
    
    1.9
    
    
    
    1.2Labor and overhead
    
    
    6.2
    
    
    
    8.2
    
    
    
    5.6LIFO adjustment
    
    
    3.0
    
    
    
    5.6
    
    
    
    (4.8
    )Lower cost or market adjustment
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.090.9
    
    
    
    92.3
    
    
    
    88.6Gross profit
    
    
    9.1
    
    
    
    7.7
    
    
    
    11.4Selling, general and administrative expenses
    
    
    6.3
    
    
    
    6.7
    
    
    
    5.7Operating income
    
    
    2.8
    
    
    
    1.0
    
    
    
    5.7Interest and other (income) expense
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.2Income before income taxes
    
    
    2.5
    
    
    
    0.8
    
    
    
    5.5Income tax expense
    
    
    0.8
    
    
    
    0.2
    
    
    
    1.8Net income
    
    
    1.7
    %
    
    
    0.6
    %
    
    
    3.7
    %
     13




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2010
    
    
    2009
    
    
    2008Raw materials
    
    $
    27,092
    
    
    $
    14,497
    
    
    $
    16,184Work-in-process
    
    
    19,889
    
    
    
    12,239
    
    
    
    8,746Finished goods
    
    
    81,940
    
    
    
    75,239
    
    
    
    63,718128,921
    
    
    
    101,975
    
    
    
    88,648Adjust to LIFO cost
    
    
    (86,817
    )
    
    
    (59,412
    )
    
    
    (23,115
    )Lower of cost or market adjustment
    
    
    
    
    
    
    
    
    
    
    $
    42,104
    
    
    $
    42,563
    
    
    $
    65,533
     14




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Year Ended December 31,2010
    
    
    2009
    
    
    2008Net cash
provided by operating activities
    
    $
    2,444
    
    
    $
    28,605
    
    
    $
    162,092Net cash used in
investing activities
    
    
    (21,629
    )
    
    
    (18,783
    )
    
    
    (17,635
    )Net
cash used in financing activities
    
    
    (104,332
    )
    
    
    (719
    )
    
    
    (5,686
    )Net increase (decrease) in cash and cash equivalents
    
    $
    (123,517
    )
    
    $
    9,103
    
    
    $
    138,771
   15




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Payments Due By Period ($ in Thousands)Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLong-Term Debt Obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital Lease Obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    32,723
    
    
    
    32,723
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    32,723
    
    
    $
    32,723
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Note:
    
    Amounts listed as purchase obligations consist of open purchase orders for major raw
material purchases and $2.4 million of capital equipment and construction purchase orders open
as of December 31, 2010.
 
 
     17




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
    
    Fluctuations in the global and national economy.
    
    Fluctuations in the level of activity in the construction and remodeling industries.
    
    Demand for the Companys products.
    
    The impact of price competition on the Companys margins.
    
    Fluctuations in the price of copper and other key raw materials.
    
    The loss of key manufacturers representatives who sell the Companys product line.
    
    Fluctuations in utility costs, especially electricity and natural gas.
    
    Fluctuations in insurance costs of various types.
    
    Weather related disasters at the Companys and/or key vendors operating facilities.
    
    Stock price fluctuations due to stock market expectations.
    
    Unforeseen future legal issues and/or government regulatory changes.
    
    Patent and intellectual property disputes.
    
    Fluctuations in the Companys financial position or national banking issues that impede
the Companys ability to obtain reasonable financing.
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
     18




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Item 8. Financial Statements and Supplementary Data.
  19




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Internal Control-Integrated Framework
 /s/ Ernst & Young LLP 
 20




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December 31In Thousands of Dollars, Except Share Data
    
    2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    103,252
    
    
    $
    226,769Accounts receivable, net of allowance for losses of $2,582
in 2010 and $2,278 in 2009
    
    
    190,364
    
    
    
    133,176Inventories
    
    
    42,104
    
    
    
    42,563Income taxes receivable
    
    
    
    
    
    
    2,660Current deferred income taxes
    
    
    4,485
    
    
    
    Prepaid expenses and other
    
    
    1,892
    
    
    
    2,331Total current assets
    
    
    342,097
    
    
    
    407,499Property, plant and equipment  at cost:Land and land improvements
    
    
    17,971
    
    
    
    13,177Construction-in-progress
    
    
    15,564
    
    
    
    6,481Buildings and improvements
    
    
    69,440
    
    
    
    68,125Machinery and equipment
    
    
    174,916
    
    
    
    168,984Furniture and fixtures
    
    
    7,066
    
    
    
    6,742284,957
    
    
    
    263,509Accumulated depreciation
    
    
    (149,972
    )
    
    
    (136,653
    )Property, plant and equipment  net
    
    
    134,985
    
    
    
    126,856Other assets
    
    
    194
    
    
    
    203Total assets
    
    $
    477,276
    
    
    $
    534,558Liabilities and Stockholders EquityCurrent liabilities:Trade accounts payable
    
    $
    32,897
    
    
    $
    11,942Accrued liabilities
    
    
    23,191
    
    
    
    17,140Current income taxes payable
    
    
    2,065
    
    
    
    Current deferred income taxes
    
    
    
    
    
    
    1,105Current portion of notes payable
    
    
    
    
    
    
    100,430Total current liabilities
    
    
    58,153
    
    
    
    130,617Noncurrent deferred income taxes
    
    
    11,746
    
    
    
    10,957Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value: Authorized shares
2,000,000. Issued and outstanding shares  noneCommon stock, $.01 par value: Authorized shares  40,000,000
Issued shares  26,366,752 in 2010 and 26,308,002 in 2009
    
    
    264
    
    
    
    263Additional paid-in capital
    
    
    45,040
    
    
    
    44,057Treasury
stock, at cost  3,150,277 shares in 2010 and 3,148,950 shares in 2009
    
    
    (21,294
    )
    
    
    (21,269
    )Retained earnings
    
    
    383,367
    
    
    
    369,933Total stockholders equity
    
    
    407,377
    
    
    
    392,984Total liabilities and stockholders equity
    
    $
    477,276
    
    
    $
    534,558
 See accompanying notes.
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Year ended December 31In Thousands, Except Per Share Data
    
    2010
    
    
    2009
    
    
    2008Net sales
    
    $
    910,222
    
    
    $
    649,613
    
    
    $
    1,081,132Cost of goods sold
    
    
    827,813
    
    
    
    599,498
    
    
    
    957,767Gross profit
    
    
    82,409
    
    
    
    50,115
    
    
    
    123,365Selling, general and administrative expenses
    
    
    57,073
    
    
    
    43,767
    
    
    
    61,180Operating income
    
    
    25,336
    
    
    
    6,348
    
    
    
    62,185Other income (expense):Interest and other income
    
    
    194
    
    
    
    1,633
    
    
    
    2,416Loss on extinguishment of debt
    
    
    (2,589
    )
    
    
    
    
    
    
    Interest expense
    
    
    (522
    )
    
    
    (3,181
    )
    
    
    (4,704
    )Income before income taxes
    
    
    22,419
    
    
    
    4,800
    
    
    
    59,897Income tax expense
    
    
    7,129
    
    
    
    1,164
    
    
    
    20,126Net income
    
    $
    15,290
    
    
    $
    3,636
    
    
    $
    39,771Weighted average common shares  basic
    
    
    23,184
    
    
    
    23,011
    
    
    
    23,113Basic earnings per common share
    
    $
    0.66
    
    
    $
    0.16
    
    
    $
    1.72Weighted average common shares  diluted
    
    
    23,342
    
    
    
    23,298
    
    
    
    23,396Diluted earnings per common share
    
    $
    0.66
    
    
    $
    0.16
    
    
    $
    1.70Cash dividends per share
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    0.08
 See accompanying notes.
 22




---



##### Table of Contents



AdditionalCommon Stock
    
    
    Paid-In
    
    
    Treasury
    
    
    RetainedIn Thousands, Except Per Share Data
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    TotalBalance at December 31, 2007
    
    
    26,124
    
    
    $
    261
    
    
    $
    41,806
    
    
    $
    (17,315
    )
    
    $
    330,217
    
    
    $
    354,969Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,771
    
    
    
    39,771Proceeds from exercise of stock options
    
    
    21
    
    
    
    1
    
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    156Tax benefit on exercise of stock options
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    98Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    427
    
    
    
    
    
    
    
    
    
    
    
    427Dividend declared  $0.08 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,848
    )
    
    
    (1,848
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,954
    )
    
    
    
    
    
    
    (3,954
    )Balance at December 31, 2008
    
    
    26,145
    
    
    
    262
    
    
    
    42,486
    
    
    
    (21,269
    )
    
    
    368,140
    
    
    
    389,619Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,636
    
    
    
    3,636Proceeds from exercise of stock options
    
    
    163
    
    
    
    1
    
    
    
    757
    
    
    
    
    
    
    
    
    
    
    
    758Tax benefit on exercise of stock options
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    363Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    451
    
    
    
    
    
    
    
    
    
    
    
    451Dividend declared  $0.08 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,843
    )
    
    
    (1,843
    )Balance at December 31, 2009
    
    
    26,308
    
    
    
    263
    
    
    
    44,057
    
    
    
    (21,269
    )
    
    
    369,933
    
    
    
    392,984Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,290
    
    
    
    15,290Proceeds from exercise of stock options
    
    
    59
    
    
    
    1
    
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    462Tax benefit on exercise of stock options
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    55Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    467
    
    
    
    
    
    
    
    
    
    
    
    467Dividend declared  $0.08 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,856
    )
    
    
    (1,856
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (25
    )Balance at December 31, 2010
    
    
    26,367
    
    
    $
    264
    
    
    $
    45,040
    
    
    $
    (21,294
    )
    
    $
    383,367
    
    
    $
    407,377
 See accompanying notes
 23




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##### Table of Contents



Year ended December 31In Thousands of Dollars
    
    2010
    
    
    2009
    
    
    2008Operating ActivitiesNet income
    
    $
    15,290
    
    
    $
    3,636
    
    
    $
    39,771Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    13,716
    
    
    
    13,691
    
    
    
    13,933Loss on extinguishment of debt
    
    
    2,581
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (4,801
    )
    
    
    (6,240
    )
    
    
    5,601Excess tax benefits of options exercised
    
    
    (55
    )
    
    
    (363
    )
    
    
    (98
    )Stock-based compensation
    
    
    467
    
    
    
    451
    
    
    
    427Provision for bad debts
    
    
    304
    
    
    
    278
    
    
    
    2,413Other
    
    
    (132
    )
    
    
    (479
    )
    
    
    101Changes in operating assets and liabilities:Accounts receivable
    
    
    (57,492
    )
    
    
    (7,270
    )
    
    
    88,183Inventories
    
    
    459
    
    
    
    22,970
    
    
    
    16,480Prepaid expenses and other
    
    
    322
    
    
    
    (1,695
    )
    
    
    7,570Trade accounts payable and accrued liabilities
    
    
    27,005
    
    
    
    4,336
    
    
    
    (20,584
    )Current income taxes receivable / payable
    
    
    4,780
    
    
    
    (710
    )
    
    
    8,295Net cash provided by operating activities
    
    
    2,444
    
    
    
    28,605
    
    
    
    162,092Investing ActivitiesPurchases of property, plant and equipment
    
    
    (21,718
    )
    
    
    (22,950
    )
    
    
    (17,962
    )Proceeds from sale of assets
    
    
    89
    
    
    
    4,167
    
    
    
    363Other
    
    
    
    
    
    
    
    
    
    
    (36
    )Net cash used in investing activities
    
    
    (21,629
    )
    
    
    (18,783
    )
    
    
    (17,635
    )Financing ActivitiesRepayment of notes payable
    
    
    (102,919
    )
    
    
    
    
    
    
    Deferred financing fees
    
    
    (50
    )
    
    
    
    
    
    
    (133
    )Purchase of treasury stock
    
    
    (25
    )
    
    
    
    
    
    
    (3,954
    )Proceeds from issuance of common stock, net
    
    
    462
    
    
    
    758
    
    
    
    156Excess tax benefits of options exercised
    
    
    55
    
    
    
    363
    
    
    
    98Dividends paid
    
    
    (1,855
    )
    
    
    (1,840
    )
    
    
    (1,853
    )Net cash used in financing activities
    
    
    (104,332
    )
    
    
    (719
    )
    
    
    (5,686
    )Net increase (decrease) in cash and cash equivalents
    
    
    (123,517
    )
    
    
    9,103
    
    
    
    138,771Cash and cash equivalents at beginning of year
    
    
    226,769
    
    
    
    217,666
    
    
    
    78,895Cash and cash equivalents at end of year
    
    $
    103,252
    
    
    $
    226,769
    
    
    $
    217,666
  24




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25




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##### Table of Contents



Allowance for Losses Progression (In Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    2008Beginning balance January 1
    
    $
    2,278
    
    
    $
    2,000
    
    
    $
    1,003(Write offs) of bad debts, net of collections of previous write offs
    
    
    4
    
    
    
    (22
    )
    
    
    (1,416
    )Bad debt provision
    
    
    300
    
    
    
    300
    
    
    
    2,413Ending balance at December 31
    
    $
    2,582
    
    
    $
    2,278
    
    
    $
    2,000
         26




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##### Table of Contents



In Thousands of Dollars
    
    2010
    
    
    2009Raw materials
    
    $
    27,092
    
    
    $
    14,497Work-in-process
    
    
    19,889
    
    
    
    12,239Finished goods
    
    
    81,940
    
    
    
    75,239128,921
    
    
    
    101,975Adjust to LIFO cost
    
    
    (86,817
    )
    
    
    (59,412
    )Lower of cost or market adjustment
    
    
    
    
    
    
    $
    42,104
    
    
    $
    42,563
    In Thousands of Dollars
    
    2010
    
    
    2009Sales volume discounts payable
    
    $
    14,997
    
    
    $
    10,120Property taxes payable
    
    
    2,648
    
    
    
    2,555Commissions payable
    
    
    2,290
    
    
    
    1,569Accrued salaries
    
    
    2,591
    
    
    
    418Other accrued liabilities
    
    
    665
    
    
    
    2,478$
    23,191
    
    
    $
    17,140
   In Thousands of Dollars5.27% Senior Notes due 2011
    
    $
    45,000Floating Rate Senior Notes due 2011
    
    
    55,000Unrecognized gain on swap termination
    
    
    430$
    100,430
 27




---



##### Table of Contents



In Thousands of Dollars
    
    2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    11,268
    
    
    $
    6,819
    
    
    $
    13,630State
    
    
    663
    
    
    
    585
    
    
    
    895Deferred
    
    
    (4,802
    )
    
    
    (6,240
    )
    
    
    5,601$
    7,129
    
    
    $
    1,164
    
    
    $
    20,126
 28




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##### Table of Contents



In Thousands of Dollars
    
    2010
    
    
    2009
    
    
    2008Amount computed using the statutory rate
    
    $
    7,847
    
    
    $
    1,680
    
    
    $
    20,964State income taxes, net of federal tax benefit
    
    
    263
    
    
    
    162
    
    
    
    613Qualified domestic production activity deduction
    
    
    (1,198
    )
    
    
    (439
    )
    
    
    (876
    )Other items
    
    
    217
    
    
    
    (239
    )
    
    
    (575
    )$
    7,129
    
    
    $
    1,164
    
    
    $
    20,126
   Deferred Tax Asset (Liability)2010
    
    
    2009In Thousands of Dollars
    
    Current
    
    
    Non-current
    
    
    Current
    
    
    Non-currentDepreciation
    
    $
    
    
    
    $
    (11,746
    )
    
    $
    
    
    
    $
    (10,957
    )Inventory
    
    
    2,878
    
    
    
    
    
    
    
    (1,684
    )
    
    
    Allowance for doubtful accounts
    
    
    937
    
    
    
    
    
    
    
    826
    
    
    
    Uniform capitalization rules
    
    
    206
    
    
    
    
    
    
    
    56
    
    
    
    Other
    
    
    464
    
    
    
    
    
    
    
    (303
    )
    
    
    $
    4,485
    
    
    $
    (11,746
    )
    
    $
    (1,105
    )
    
    $
    (10,957
    )
      29




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##### Table of Contents



Number
    
    
    Weighted
    
    
    Weighted Averageof
    
    
    Average Exercise
    
    
    Remaining
    
    
    Aggregate IntrinsicShares
    
    
    Price
    
    
    Contractual Term
    
    
    ValueOutstanding at January 1, 2010
    
    
    483,926
    
    
    $
    14.09Granted
    
    
    18,000
    
    
    
    19.22Exercised
    
    
    (58,750
    )
    
    
    7.85Forfeited/Cancelled
    
    
    (3,600
    )
    
    
    16.97Outstanding at December 31, 2010
    
    
    439,576
    
    
    $
    15.11
    
    
    
    4.00
    
    
    $
    4,382Vested and exercisable at December 31, 2010
    
    
    305,396
    
    
    $
    12.65
    
    
    
    2.54
    
    
    $
    3,797
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Risk-free interest rate
    
    1.76%
    
    
    2.70
    %
    
    
    3.00
    %Expected dividend yield
    
    0.42%
    
    
    0.38
    %
    
    
    0.47
    %Expected volatility
    
    48.3%
    
    
    52.9
    %
    
    
    50.4
    %Expected lives
    
    5.0 years
    
    5.0 years
    
    5.0 years
      In Thousands
    
    2010
    
    
    2009
    
    
    2008Numerator:Net income
    
    $
    15,290
    
    
    $
    3,636
    
    
    $
    39,771Denominator:Denominator for basic earnings per share
 weighted average shares
    
    
    23,184
    
    
    
    23,011
    
    
    
    23,113Effect of dilutive securities:Employee stock options
    
    
    158
    
    
    
    287
    
    
    
    283Denominator for diluted earnings per
share weighted average shares
    
    
    23,342
    
    
    
    23,298
    
    
    
    23,396
 30




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##### Table of Contents



2010
    
    
    2009
    
    
    2008Weighted average anti-dilutive stock options
    
    
    182,593
    
    
    
    168,954
    
    
    
    208,750Weighted average exercise price
    
    $
    24.51
    
    
    $
    25.37
    
    
    $
    22.17
 8.
    
    Stockholders Equity       31




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##### Table of Contents



32




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##### Table of Contents



Three Months Ended2010
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Net sales
    
    $
    175,229
    
    
    $
    236,094
    
    
    $
    242,751
    
    
    $
    256,148Gross profit
    
    
    10,601
    
    
    
    26,915
    
    
    
    22,768
    
    
    
    22,125Net income (loss)
    
    
    (2,466
    )
    
    
    8,135
    
    
    
    5,092
    
    
    
    4,529Net income (loss) per common share  basic
    
    
    (0.11
    )
    
    
    0.35
    
    
    
    0.22
    
    
    
    0.20Net income (loss) per common share  diluted
    
    
    (0.11
    )
    
    
    0.35
    
    
    
    0.22
    
    
    
    0.19
 Three Months Ended2009
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31Net sales
    
    $
    144,485
    
    
    $
    159,351
    
    
    $
    168,695
    
    
    $
    177,082Gross profit
    
    
    17,835
    
    
    
    11,860
    
    
    
    11,355
    
    
    
    9,065Net income (loss)
    
    
    4,616
    
    
    
    600
    
    
    
    325
    
    
    
    (1,905
    )Net income (loss) per common share  basic
    
    
    0.20
    
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.08
    )Net income (loss) per common share  diluted
    
    
    0.20
    
    
    
    0.03
    
    
    
    0.01
    
    
    
    (0.08
    )
 33




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##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
      Internal Control 
Integrated Framework.
  By:
    /s/ Daniel L. JonesDaniel L. JonesPresident , Chief Executive Officer and DirectorBy:
    /s/ Frank J. BilbanFrank J. BilbanVice President  Finance, Treasurer, Secretary
and Chief Financial Officer 34




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##### Table of Contents



Internal ControlIntegrated Framework
      /s/ Ernst & Young LLP 
 35




---



##### Table of Contents



Item 9B. Other Information.
  
 PART III
 
 Item 10. Directors, Executive Officers, and Corporate Governance.
   
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
  36




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##### Table of Contents



PART IV
 Item 15. Exhibits, Financial Statement Schedules.
  (1)
    
    Consolidated Financial Statements included in Item 8; and(2)
    
    The exhibits required by Item 601 of Regulation S-K, as
set forth in the Index to Exhibits accompanying this
Annual Report on Form 10-K.
 37




---



##### Table of Contents



By:
    /s/ DANIEL L. JONESDaniel L. JonesPresident and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ DANIEL L. JONES
    
    President, Chief Executive
    
    March 4, 2011Daniel L. Jones
    
    Officer and Director
(Principal Executive Officer)/s/ FRANK J. BILBAN

Frank J. Bilban
    
    Vice President-Finance,
Treasurer, Secretary and 
Chief Financial Officer
(Principal Financial and 
Accounting Officer)
    
    March 4, 2011/s/ DONALD E. COURTNEY
    
    Director
    
    March 4, 2011Donald E. Courtney/s/ JOHN H. WILSON
    
    Director
    
    March 4, 2011John H. Wilson/s/ WILLIAM R. THOMAS, III
    
    Director
    
    March 4, 2011William R. Thomas, III/s/ SCOTT D. WEAVER
    
    Director
    
    March 4, 2011Scott D. Weaver/s/ THOMAS L. CUNNINGHAM
    
    Director
    
    March 4, 2011Thomas L. Cunningham
 38




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##### Table of Contents



ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of Encore Wire Corporation and all
amendments thereto (filed as Exhibit 3.1 to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31,
2009, and incorporated herein by reference).3.2
    
    Second Amended and Restated Bylaws of Encore Wire Corporation, as
amended through December 13, 2007 (filed as Exhibit 3.2 to the
Companys Annual Report on Form 10-K for the year ended December
31, 2007, and incorporated herein by reference).10.1
    
    Credit Agreement by and among Encore Wire Limited, as Borrower,
Bank of America, N.A., as Agent, and Bank of America, N.A. and
Wells Fargo Bank, National Association, as Lenders, dated August
27, 2004 (filed as Exhibit 10.1 to the Companys Quarterly Report
on Form 10-Q for the quarter ended September 30, 2004 and
incorporated herein by reference).10.2
    
    First Amendment to Credit Agreement of August 27, 2004, dated May
16, 2006 by and among Encore Wire Limited, as Borrower, Bank of
America, N.A., as Agent, and Bank of America, N.A. and Wells Fargo
Bank, National Association, as Lenders (filed as Exhibit 10.3 to
the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006, and incorporated herein by reference).10.3
    
    Second Amendment to Credit Agreement of August 27, 2004, dated
August 31, 2006 by and among Encore Wire Limited, as Borrower,
Bank of America, N.A., as Agent, and Bank of America, N.A. and
Wells Fargo Bank, National Association, as Lenders (filed as
Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for
the quarter ended September 30, 2006, and incorporated herein by
reference).10.4
    
    Third Amendment to Credit Agreement of August 27, 2004, dated June
29, 2007 by and among Encore Wire Corporation, as Borrower, Bank
of America, N.A., as Agent, and Bank of America, N.A. and Wells
Fargo Bank, National Association, as Lenders (filed as Exhibit
10.6 to the Companys Quarterly Report on Form 10-Q for the
quarter ended June 30, 2007, and incorporated herein by
reference).10.5
    
    Fourth Amendment to Credit Agreement of August 27, 2004, dated
August 6, 2008, by and among Encore Wire Corporation, as Borrower,
Bank of America, N.A., as Agent, and Bank of America, N.A. and
Wells Fargo Bank, National Association, as Lenders (filed as
Exhibit 10.7 to the Companys Quarterly Report on Form 10-Q for
the quarter ended June 30, 2008, and incorporated herein by
reference).10.6
    
    Fifth Amendment to Credit Agreement of August 27, 2004, dated March 26, 2010,
by and among Encore Wire Corporation, as Borrower, Bank of America, N.A., as
Agent, and Bank of America, N.A. and Wells Fargo Bank, National Association,
as Lenders (filed as Exhibit 10.1 to the Companys Current Report on Form 8-K
filed with the SEC on April 1, 2010, and incorporated herein by reference).10.7
    
    Note Purchase Agreement for $45,000,000 of 5.27% Senior Notes, Series
2004-A due August 27, 2011, by and among Encore Wire Limited and Encore Wire
Corporation, as Debtors, and Hartford Life Insurance Company, Great-West Life
and Annuity Insurance Company, London Life Insurance Company and London Life
and Casualty Reinsurance Corporation, as Purchasers, dated August 1, 2004
(filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004 and incorporated herein by reference).
 39




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##### Table of Contents



ExhibitNumber
    
    Description10.8
    
    Waiver to Note Purchase Agreement for $45,000,000 of 5.27% Senior Notes,
Series 2004-A, due August 27, 2011, by and among Encore Wire Limited and
Encore Wire Corporation, as Debtors, and Hartford Life Insurance Company,
Great-West Life and Annuity Insurance Company, London Life Insurance Company,
London Life and General Reinsurance Company Limited, as Holders, dated June
29, 2007 (filed as Exhibit 10.8 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2007, and incorporated herein by
reference).10.9
    
    Master Note Purchase Agreement for $300,000,000 Aggregate Principal Amount of
Senior Notes Issuable in Series, by and among Encore Wire Limited and Encore
Wire Corporation, as Debtors, and Metropolitan Life Insurance Company,
Metlife Insurance Company of Connecticut and Great-West Life & Annuity
Insurance Company, as Purchasers, dated September 28, 2006 (filed as Exhibit
10.5 to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2006 and incorporated herein by reference).10.10
    
    Waiver to Master Note Purchase Agreement for $55,000,000 of Floating Rate
Senior Notes, Series 2006-A, due September 30, 2011, by and among Encore Wire
Limited and Encore Wire Corporation, as Debtors, and Metropolitan Life
Insurance Company, Metlife Insurance Company of Connecticut and Great-West
Life & Annuity Insurance Company, as Holders, dated June 29, 2007 (filed as
Exhibit 10.10 to the Companys Quarterly Report on form 10-Q for the quarter
ended June 30, 2007, and incorporated herein by reference).10.11*
    
    1999 Stock Option Plan, as amended and restated, effective as of February 20,
2006 (filed as Exhibit 4.1 to the Companys Registration Statement on Form
S-8 (No. 333-138165), and incorporated herein by reference).10.12*
    
    2010 Stock Option Plan (filed as Annex A to the Companys Proxy Statement
filed with the SEC on March 26, 2010 and incorporated herein by reference).10.13*
    
    Form of Indemnification Agreement (filed as Exhibit 10.11 to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and
incorporated herein by reference).10.14*
    
    Form of Stock Option Agreement under the 1999 Stock Option Plan (filed as
Exhibit 10.12 to the Companys Quarterly Report on Form 10-Q for the quarter
ended June 30, 2009 and incorporated herein by reference).10.15*
    
    Form of Incentive Stock Option Agreement under the 2010 Stock Option Plan.10.16*
    
    Form of Non-Qualified Stock Option Agreement under the 2010 Stock Option Plan.21.1
    
    Subsidiaries23.1
    
    Consent of Ernst & Young LLP31.1
    
    Certification by Daniel L. Jones, President and Chief Executive Officer of
the Company, dated March 4, 2011 and submitted pursuant to Rule
13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification by Frank J. Bilban, Vice President  Finance, Treasurer,
Secretary and Chief Financial Officer of the Company, dated March 4, 2011 and
submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Daniel L. Jones, President and Chief Executive Officer of
the Company, dated March 4, 2011 as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Frank J. Bilban, Vice President  Finance, Treasurer,
Secretary and Chief Financial Officer, dated March 4, 2011 as required by 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
 
 *
    
    Management contract or compensatory plan
 40