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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedMarch 31, 2005 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: 0-20278 ENCORE WIRE CORPORATION (Exact name of registrant as specified in its charter)
 Delaware
    
    75-2274963(State of Incorporation)
    
    (I.R.S. employer identification number)1410 Millwood RoadMcKinney, Texas
    
    75069(Address of principal executive offices)
    
    (Zip code)
 Registrants telephone number, including area code: (972) 562-9473 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such Reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Yes þ No o Number of shares of Common Stock outstanding as of April 30, 2004: 23,107,128 Page 1 of 24 Sequentially Numbered Pages
Index to Exhibits on Page 18




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FORM 10-Q ENCORE WIRE CORPORATION FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005  
 Page No.PART I. FINANCIAL INFORMATIONITEM 1. Consolidated Financial StatementsConsolidated Balance Sheets March 31, 2005 (Unaudited) and December 31, 2004
    
    
    3Consolidated Statements of Income (Unaudited)
Quarters ended March 31, 2005 and March 31, 2004
    
    
    5Consolidated Statements of Cash Flows (Unaudited)
Quarters ended March 31, 2005 and March 31, 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    11ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16ITEM 4. Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16ITEM 6. Exhibits
    
    
    16Signatures
    
    
    17Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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FORM 10-Q 
 PART I. FINANCIAL INFORMATION 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS ENCORE WIRE CORPORATION 
 CONSOLIDATED BALANCE SHEETS March 31,
    
    
    December 31,2005
    
    
    2004In Thousands of Dollars
    
    (Unaudited)
    
    
    See NoteASSETSCurrent Assets:Cash
    
    $
    2,289
    
    
    $
    2,640Accounts receivable (net of allowance
of $621 and $577)
    
    
    103,889
    
    
    
    108,752Inventories (Note 3)
    
    
    48,014
    
    
    
    39,111Prepaid expenses and other assets
    
    
    14,278
    
    
    
    6,910Current taxes receivable
    
    
    4,739
    
    
    
    4,751Total current assets
    
    
    173,209
    
    
    
    162,164Property, plant and equipment-on the basis of cost:Land
    
    
    7,078
    
    
    
    6,783Construction in progress
    
    
    4,189
    
    
    
    3,378Buildings and improvements
    
    
    38,130
    
    
    
    37,972Machinery and equipment
    
    
    116,416
    
    
    
    115,866Furniture and fixtures
    
    
    3,500
    
    
    
    3,195Total property, plant, and equipment
    
    
    169,313
    
    
    
    167,194Accumulated depreciation and amortization
    
    
    81,447
    
    
    
    78,51587,866
    
    
    
    88,679Other assets
    
    
    123
    
    
    
    672Total assets
    
    $
    261,198
    
    
    $
    251,515
  Note:
    The consolidated balance sheet at December 31, 2004 as presented, is
derived from the audited consolidated financial statements at that date. See accompanying notes. 3




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FORM 10-Q ENCORE WIRE CORPORATION CONSOLIDATED BALANCE SHEETS (continued) March 31,
    
    
    December 31,2005
    
    
    2004In Thousands of Dollars, Except Share Data
    
    (Unaudited)
    
    
    See NoteLIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    14,781
    
    
    $
    15,091Accrued liabilities
    
    
    7,489
    
    
    
    13,658Current income taxes payable
    
    
    
    
    
    
    Current deferred income taxes
    
    
    917
    
    
    
    733Total current liabilities
    
    
    23,187
    
    
    
    29,482Non-current deferred income taxes
    
    
    11,412
    
    
    
    12,652Long term notes payable
    
    
    66,000
    
    
    
    49,837Stockholders equity:Common stock, $.01 par value:Authorized 40,000,000 shares; issued and
outstanding shares 25,866,078 and
25,863,078
    
    
    259
    
    
    
    259Additional paid-in capital
    
    
    38,038
    
    
    
    38,020Treasury stock 2,758,950 and 2,758,950 shares at cost
    
    
    (15,275
    )
    
    
    (15,275
    )Retained earnings
    
    
    137,577
    
    
    
    136,540Total stockholders equity
    
    
    160,599
    
    
    
    159,544Total liabilities and stockholders equity
    
    $
    261,198
    
    
    $
    251,515
  Note:
    The consolidated balance sheet at December 31, 2004, as presented, is
derived from the audited consolidated financial statements at that date.Note:
    All share and per share data in this Quarterly Report have been restated to reflect the effect of the Companys 3-for-2
stock split which was effective in August 2004. See accompanying notes. 4




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FORM 10-Q ENCORE WIRE CORPORATION 
 CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Quarter EndedMarch 31,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    
    2004Net sales
    
    $
    137,193
    
    
    $
    158,942Cost of goods sold
    
    
    126,446
    
    
    
    126,021Gross profit
    
    
    10,747
    
    
    
    32,921Selling, general, and administrative expenses
    
    
    9,587
    
    
    
    11,218Operating income (loss)
    
    
    1,160
    
    
    
    21,703Net interest & other expenses
    
    
    832
    
    
    
    633Income (loss) before income taxes
    
    
    328
    
    
    
    21,070Provision (benefit) for income taxes
    
    
    (709
    )
    
    
    7,805Net income (loss)
    
    $
    1,037
    
    
    $
    13,265Net income (loss) per common and common
equivalent shares  basic
    
    $
    .04
    
    
    $
    .58Weighted average common and common
equivalent shares  basic
    
    
    23,106
    
    
    
    22,812Net income (loss) per common and common
equivalent shares - diluted
    
    $
    .04
    
    
    $
    .56Weighted average common and common
equivalent shares - diluted
    
    
    23,427
    
    
    
    23,517Cash dividends declared per share
    
    $
    
    
    
    $
    
  Note:
    All share and per share data in this Quarterly Report have been restated to reflect the
effect of the Companys 3-for-2 stock split which was effective in August 2004. See accompanying notes. 5




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FORM 10-Q ENCORE WIRE CORPORATION 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Quarter EndedMarch 31,In Thousands of Dollars
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income (loss)
    
    $
    1,037
    
    
    $
    13,265Adjustments to reconcile net income to cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    3,072
    
    
    
    2,795Provision for bad debts
    
    
    45
    
    
    
    180Changes in operating assets and liabilities:Accounts receivable
    
    
    4,818
    
    
    
    (36,875
    )Inventory
    
    
    (8,902
    )
    
    
    (21,273
    )Accounts payable and accrued liabilities
    
    
    (6,479
    )
    
    
    11,420Other assets and liabilities
    
    
    (6,802
    )
    
    
    (2,997
    )Current income taxes receivable/payable
    
    
    (1,057
    )
    
    
    3,894NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    (14,268
    )
    
    
    (29,591
    )INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (2,564
    )
    
    
    (7,466
    )Change in long-term investments
    
    
    
    
    
    
    Proceeds from sale of equipment
    
    
    299
    
    
    
    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (2,265
    )
    
    
    (7,466
    )FINANCING ACTIVITIESBorrowings (repayments) under notes payable
    
    
    16,163
    
    
    
    34,918Proceeds from issuance of common stock
    
    
    19
    
    
    
    2,117Purchase of treasury stock
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    16,182
    
    
    
    37,035Net increase (decrease) in cash
    
    
    (351
    )
    
    
    (22
    )Cash at beginning of period
    
    
    2,640
    
    
    
    391Cash at end of period
    
    $
    2,289
    
    
    $
    369
 See accompanying notes. 6




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FORM 10-Q ENCORE WIRE CORPORATION 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) NOTE 1  BASIS OF PRESENTATION The unaudited consolidated financial statements of Encore Wire Corporation (the Company) have
been prepared in accordance with U.S. generally accepted accounting principles for interim
information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments considered necessary for a fair presentation, have
been included. All share and per share data in this Quarterly Report have been restated to reflect
the effect of the Companys 3-for-2 stock split which was effective in August 2004. Results of
operations for interim periods presented do not necessarily indicate the results that may be
expected for the entire year. These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2004. NOTE 2  STOCK BASED EMPLOYEE COMPENSATION The Company has a stock option plan for employees that provides for the granting of stock options.
The Company accounts for stock-based compensation utilizing the intrinsic value method in
accordance with the provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting
for Stock Issued to Employees and related interpretations. Accordingly, no compensation expense
is recognized for fixed option plans because the exercise prices of employee stock options equal or
exceed the market prices of the underlying stock on the dates of grant. 7




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FORM 10-Q The following table represents the effect on net income (loss) and earnings per share if the
Company had applied the fair value based method and recognition provisions of Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, to
stock-based Employee compensation: ($s in 000s) QuarterEndedMarch 31,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    
    2004Net income (loss), as reported
    
    $
    1,037
    
    
    $
    13,265Add: Stock-based employee compensation expense
included in reported income, net of related tax effects
    
    
    
    
    
    
    Deduct: Total stock-based employee compensation expense
determined under fair value based methods for all
awards net of related tax effects
    
    
    83
    
    
    
    92Pro forma net income (loss)
    
    $
    954
    
    
    $
    13,173Net income (loss) per shareBasic, as reported
    
    $
    0.04
    
    
    $
    0.58Basic, pro forma
    
    $
    0.04
    
    
    $
    0.58Diluted, as reported
    
    $
    0.04
    
    
    $
    0.56Diluted, pro forma
    
    $
    0.04
    
    
    $
    0.56
 As required, the pro forma disclosures above include options granted since January 1, 1995.
Consequently, the effects of applying SFAS 123 for providing pro forma disclosures may not be
representative of the effects on reported net income for future years until all options outstanding
are included in the pro forma disclosures. For purposes of pro forma disclosures, the estimated
fair value of stock-based compensation plans and other options is amortized to expense primarily
over the vesting period. 8




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FORM 10-Q NOTE 3  INVENTORIES Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or
market. Inventories (in thousands) consisted of the following: March 31,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    5,427
    
    
    $
    5,026Work-in-process
    
    
    7,202
    
    
    
    5,311Finished goods
    
    
    52,546
    
    
    
    43,38965,175
    
    
    
    53,726Adjust to LIFO cost
    
    
    (17,162
    )
    
    
    (14,615
    )48,013
    
    
    
    39,111Lower of Cost or Market Adjustment
    
    
    
    
    
    
    $
    48,013
    
    
    $
    39,111
 An actual valuation of inventory under the LIFO method can be made only at the end of each year
based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must
necessarily be based on managements estimates of expected year-end inventory levels and costs.
Because these are subject to many forces beyond managements control, interim results are subject
to the final year-end LIFO inventory valuation. 9




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FORM 10-Q NOTE 4  NET INCOME PER SHARE Net income (loss) per common and common equivalent share is computed using the weighted average
number of shares of common stock and common stock equivalents outstanding during each period. If
dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the
treasury stock method. The following table sets forth the computation of basic and diluted net income per share: Quarter Ended
    
    
    Quarter Ended3/31/05
    
    
    3/31/04Numerator:Net income
    
    $
    1,036,833
    
    
    $
    13,264,636Denominator:Denominator for basic
earnings per share 
weighted average
shares
    
    
    23,105,728
    
    
    
    22,811,535Effect of dilutive securities:Employee stock options
    
    
    320,948
    
    
    
    705,740Denominator for diluted earnings per share
 weighted average shares
    
    
    23,426,676
    
    
    
    23,517,275
 NOTE 5  LONG TERM NOTE PAYABLE Effective August 27, 2004, the Company through its indirectly wholly-owned subsidiary, Encore Wire
Limited, a Texas Limited partnership (Encore Wire Limited), refinanced its unsecured loan
facility with two banks (the Financing Agreement) and also arranged for a private placement of
debt (the Note Purchase Agreement). The Company is the guarantor of the indebtedness.
Obligations under the Financing Agreement and the Note Purchase Agreement are the only contractual
obligations or commercial borrowing commitments of the Company. The term of the Financing
Agreement extends through August 27, 2009. The Financing Agreement provides for maximum borrowings
of the lesser of $85 million or the amount of eligible accounts receivable plus the amount of
eligible finished goods and raw materials, less any reserves established by the banks. The
calculated maximum borrowing amount available at March 31, 2005, as computed under the Financing
Agreement, was $85 million. The Financing Agreement is with two banks, Bank of America, N.A., as
Agent, and Wells Fargo Bank, National Association, and replaces the previous financing agreement
that was effective August 31, 1999 and had been extended by amendments through May 31, 2007 with a
total credit line of $125 million. 10




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FORM 10-Q Concurrent with the Financing Agreement, Encore Wire Limited and the Company, through its agent
bank, entered into the Note Purchase Agreement with Hartford Life Insurance Company, Great-West
Life & Annuity Insurance Company, London Life Insurance Company and London Life and Casualty
Reinsurance Corporation (collectively referred to as the Purchasers), whereby Encore Wire Limited
issued and sold $45 million of 5.27% Senior Notes, Series 2004-A, due August 27, 2011 (the Senior
Notes) to the Purchasers, the proceeds of which were used to repay a portion of the Companys
outstanding indebtedness under the previous financing agreement. Through its agent bank, the
Company then entered into an interest rate swap agreement to convert the fixed rate on the Senior
Notes to a variable rate based on LIBOR plus a fixed adder for the seven-year duration of these
notes. As of March 31, 2005, the Company recorded an unrealized reduction to Notes Payable on the
balance sheet of $746,311 to account for the fair value of the interest rate swap. The Financing Agreement and the Senior Notes are unsecured and contain customary covenants and
events of default. The Company was in compliance with these covenants, as of March 31, 2005.
Under the Financing Agreement, the Company is allowed to pay cash dividends. At March 31, 2005,
the total balance outstanding under the Financing Agreement and the Senior Notes was $66.0 million.
Amounts outstanding under the Financing Agreement are payable on August 27, 2009, with interest
payments due quarterly. Interest payments on the Senior Notes are due semi-annually. NOTE 6  STOCK REPURCHASE AUTHORIZATION On November 6, 2001, the Board of Directors of the Company approved a stock repurchase program
covering the purchase of up to 450,000 additional shares of its common stock dependent upon market
conditions. Common stock purchases under this program were authorized through December 31, 2002 on
the open market or through privately negotiated transactions at prices determined by the Chairman
of the Board or the President of the Company. As of December 31, 2002, 225,300 shares had been
purchased under this authorization. The Board of Directors has extended this program three times,
through December 31, 2005 for the remaining 224,700 shares, however there were no repurchases of
stock in 2003, 2004 and thus far in 2005. NOTE 7  CONTINGENCIES The Company is a party to litigation and claims that arise out of the ordinary business of the
Company. While the results of these matters cannot be predicted with certainty, the Company does
not believe the final outcome of such litigation and claims will have a material adverse effect on
the financial condition, the results of operation or the cash flows of the Company. The Company
also believes that it has adequate insurance to cover any damages that may ultimately be awarded. 
  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS General The Company is a low-cost manufacturer of copper electrical building wire and cable. The Company
is a significant supplier of residential wire for interior wiring in homes, 11




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FORM 10-Q apartments and manufactured housing and commercial wire for commercial and industrial buildings. The Companys operating results in any given time period are driven by several key factors,
including; the volume of product produced and shipped, the cost of copper and other raw materials,
the competitive pricing environment in the wire industry and the resulting influence on gross
margins and the efficiency with which the Companys plant operates during the period, among others.
Price competition for electrical wire and cable is intense, and the Company sells its products in
accordance with prevailing market prices. Copper is the principal raw material used by the Company
in manufacturing its products. Copper accounted for approximately 73.0%, 67.1% and 63.9% of the
Companys cost of goods sold during fiscal 2004, 2003 and 2002, respectively. The price of copper
fluctuates, depending on general economic conditions and in relation to supply and demand and other
factors, which has caused monthly variations in the cost of copper purchased by the Company. The
Company cannot predict copper prices in the future or the effect of fluctuations in the cost of
copper on the Companys future operating results. The following discussion and analysis relates to factors that have affected the operating results
of the Company for the quarterly periods ended March 31, 2005 and 2004. Reference should also be
made to the audited financial statements and notes thereto included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2004. Results of Operations Quarter Ended March 31, 2005 Compared to Quarter Ended March 31, 2004 Net sales for the first quarter of 2005 amounted to $137.2 million compared with net sales of
$158.9 million for the first quarter of 2004. This dollar decrease was primarily the result of a
16% decrease in the volume of product shipped, offset somewhat by a 3% increase in the price of
wire sold. The company believes the volume of wire sold decreased principally due to reduced
demand in the marketplace. The average cost per pound of raw copper purchased increased 23% in the
first quarter of 2005 compared to the first quarter of 2004, and was the principal reason the
average sales price for wire increased. Fluctuations in sales prices are primarily a result of
changing copper raw material prices and product price competition. Cost of goods sold remained relatively flat at $126.4 million, or 92.2% of net sales, in the first
quarter of 2005, compared to $126.0 million, or 79.3% of net sales, in the first quarter of 2004.
Gross profit decreased to $10.7 million, or 7.8% of net sales, in the first quarter of 2005 versus
$32.9 million, or 20.7% of net sales, in the first quarter of 2004. The decreased gross profit and
gross margin percentages were primarily the result of the decreased volumes and margins in 2005
versus 2004. The margins were compressed dramatically as price competition in the building wire
industry intensified in the quarter as overall demand in the marketplace dropped. As stated above,
wire prices increased only 3% in the first quarter of 2005 versus the first quarter of 2004,
despite the fact that raw copper costs, the principal input into building wire, rose by 23% in the
same period. 12




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FORM 10-Q Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market.
The Company maintains only one inventory pool for LIFO purposes as all inventories held by the
Company generally relate to the Companys only business segment, the manufacture and sale of copper
building wire products. As permitted by U.S. generally accepted accounting principles, the Company
maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and
makes a quarterly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO.
The Company applies the lower of cost or market (LCM) test by comparing the LIFO cost of its raw
materials, work-in-process and finished goods inventories to estimated market values, which are
based primarily upon the most recent quoted market price of copper, in pound quantities, as of the
end of each reporting period. Additionally, future reductions in the quantity of inventory on hand
could cause copper that is carried in inventory at costs different from the cost of copper in the
period in which the reduction occurs to be included in costs of goods sold for that period. As a result of increasing copper costs during the first quarter 2005, a LIFO adjustment was
recorded increasing cost of sales by $2.5 million during the quarter. Based on the current copper
prices, there is no LCM adjustment necessary. Future reductions in the price of copper could
require the Company to record an LCM adjustment against the related inventory balance, which would
result in a negative impact on net income. Selling expenses for the first quarter of 2005 were $7.7 million, or 5.6% of net sales, compared to
$9.0 million, or 5.7% of net sales, in the first quarter of 2004. The slight percentage decrease
was due to decreased commission costs as a percentage of net sales offset somewhat by an increase
in freight costs due to higher fuel costs being passed on to the Company by trucking companies.
General and administrative expenses decreased to $1.8 million, or 1.3% of net sales, in the first
quarter of 2005 compared to $2.0 million, or 1.3% of net sales, in the first quarter of 2004. The
General and Administrative costs are semi-fixed by nature and therefore do not fluctuate
proportionately with sales. The provision for bad debts was $45,000 in the first quarter of 2005
versus $180,000 in the first quarter of 2004, when the Company added to its provision to reflect
the larger accounts receivable balances outstanding consistent with the rapid growth of sales in
that period. The net interest and other income and expense category was $832,000 in the first quarter of 2005
compared to $633,000 in the first quarter of 2004. The increase was due to slightly higher
interest rates during the first quarter of 2005 than the comparable period during 2004, as well as
losses on sales of miscellaneous fixed assets. Results for the first quarter of 2005 included an adjustment to reduce deferred tax liabilities by
approximately $0.8 million, which was finalized by the Company in its tax provision review. This
adjustment increased net income for the quarter ended March 31, 2005 by $0.8 million. As a result of the foregoing factors, the Companys net income decreased to $1.0 million in the
first quarter of 2005 from $13.3 million in the first quarter of 2004. Liquidity and Capital Resources The Company maintains a substantial inventory of finished products to satisfy customers prompt
delivery requirements. As is customary in the industry, the Company 13




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FORM 10-Q provides payment terms to most of its customers that exceed terms that it receives from its
suppliers. Therefore, the Companys liquidity needs have generally consisted of operating capital
necessary to finance these receivables and inventory. Capital expenditures have historically been
necessary to expand the production capacity of the Companys manufacturing operations. The Company
has historically satisfied its liquidity and capital expenditure needs with cash generated from
operations, borrowings under its various debt arrangements and sales of its common stock. The
Company uses its revolving credit facility to manage day to day operating cash needs as required
by daily fluctuations in working capital. The total debt balance fluctuates daily as cash inflows
differ from cash outflows. The ending balance of debt outstanding at the end of a quarter, coupled
with explanations detailing cash flows and changes in the debt balance in these quarterly reports,
is representative of the net effect of these cash flows during the period. Effective August 27, 2004, the Company through its indirectly wholly-owned subsidiary, Encore Wire
Limited, a Texas Limited partnership (Encore Wire Limited), refinanced its unsecured revolving
loan facility with two banks (the Financing Agreement). Effective the same day and concurrent
with the Financing Agreement, the Company arranged for a private placement of debt by entering into
a Note Purchase Agreement (the Note Purchase Agreement). The Company is the guarantor of the
indebtedness under both the Financing Agreement and the Note Purchase Agreement. Obligations under
the Financing Agreement, the Note Purchase Agreement, and the Senior Notes issued thereunder, as
defined below, are the only contractual obligations or commercial borrowing commitments of the
Company. The Financing Agreement extends through August 27, 2009 and provides for maximum borrowings of the
lesser of $85 million or the amount of eligible accounts receivable plus the amount of eligible
finished goods and raw materials, less any reserves established by the banks. The calculated
maximum borrowing amount available at March 31, 2005, as computed under the Financing Agreement,
was $85 million. The Financing Agreement is with two banks, Bank of America, N.A., as Agent, and
Wells Fargo Bank, National Association, and replaces the previous financing agreement that was
effective August 31, 1999 and had been extended by amendments through May 31, 2007 with a total
credit line of $125 million. Concurrent with the Financing Agreement, Encore Wire Limited and the Company, through its agent
bank, entered into the Note Purchase Agreement with Hartford Life Insurance Company, Great-West
Life & Annuity Insurance Company, London Life Insurance Company and London Life and Casualty
Reinsurance Corporation (collectively referred to as the Purchasers), whereby Encore Wire Limited
issued and sold $45 million of 5.27% Senior Notes, Series 2004-A, due August 27, 2011 (the Senior
Notes) to the Purchasers, the proceeds of which were used to repay a portion of the Companys
outstanding indebtedness under the previous financing agreement. Through its agent bank, the
Company then entered into an interest rate swap agreement to convert the fixed rate on the Senior
Notes to a variable rate based on LIBOR plus a fixed adder for the seven-year duration of these
notes. As of March 31, 2005, the Company recorded an unrealized reduction to Notes Payable on the
balance sheet of $746,311 to account for the fair value of the interest rate swap. The Financing Agreement and the Senior Notes are unsecured and contain customary covenants and
events of default. The Company was in compliance with these 14




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FORM 10-Q covenants, as of March 31, 2005. Under the Financing Agreement, the Company is allowed to pay cash
dividends. At March 31, 2005, the total balance outstanding under the Financing Agreement and the
Senior Notes was $66.0 million. Amounts outstanding under the Financing Agreement are payable on
August 27, 2009, with interest payments due quarterly. Interest payments on the Senior Notes are
due semi-annually. Cash used in operations was $14.3 million in the first quarter of 2005 compared to $29.6 million of
cash used in operations in the first quarter of 2004. This decrease in cash used in operations
resulted primarily from a decrease in accounts receivable of $4.8 million and an increase in
inventory of $8.9 million in the first quarter of 2005, versus an increase in accounts receivable
of $36.9 million and an increase in inventory of $21.3 million in the first quarter of 2004, offset
by a decrease in accounts payable of $6.5 million in the first quarter of 2005 versus an increase
of $11.4 million in the first quarter of 2004. The use of cash in 2004 resulted from the large
increase in copper prices driving inventories and receivables higher in the first quarter of 2004.
Cash used in investing activities decreased to $2.6 million in the first quarter of 2005 from $7.5
million in the first quarter of 2004. In 2004, the funds were used primarily to begin construction
of the new 162,000 square foot addition to the distribution center as well as the purchase of
associated manufacturing equipment that was part of the Companys capital plan. The $16.2 million
and the $34.9 million of cash provided by financing activities in the first quarter of 2005 and
2004 respectively, were a result of the Companys increase in outstanding bank debt as discussed
above. During the remainder of 2005, the Company expects its capital expenditures will consist of
additional plant and equipment for its residential and commercial wire operations, primarily
related to the new armored cable plant, which was discussed in a press release, dated March 21,
2005. Current plans are to construct this plant during 2005 and the first half of 2006. The total
capital expenditures associated with these projects are currently estimated to be in the $15.0 to
$22.0 million range in 2005. The Company will continue to manage its working capital requirements.
These requirements may increase as a result of expected continued sales increases and may be
impacted by the price of copper. The Company believes that the cash flow from operations and the
financing available under the Financing Agreement will satisfy working capital and capital
expenditure requirements during 2005. Information Regarding Forward Looking Statements This report on Form 10-Q contains various forward-looking statements (within the meaning of
Section 27A of the securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended) and information that are based on managements belief as well as
assumptions made by and information currently available to management. Although the Company
believes that the expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct. Such statements are
subject to certain risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those expected. Among the key factors that may have a direct bearing on the
Companys operating results are fluctuations in the economy and in the level of activity in the
building and construction industry, demand for the Companys products, the impact of price
competition and fluctuations in the price of copper. For more information regarding forward
looking statements see Information 15




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FORM 10-Q Regarding Forward Looking Statements in Part II, Item 7 of the Companys Annual Report on Form
10-K for the year ended December 31, 2004, which is hereby incorporated by reference. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the information provided in Item 7.A of the Companys
Annual Report on Form 10-K for the year ended December 31, 2004. 
 ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this report, an evaluation was performed under the
supervision and with the participation of the Companys management, including the Chief Executive
Officer (the CEO) and the Chief Financial Officer (the CFO), of the effectiveness of the design
and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule
13a-15 and 15d-15. Based on that evaluation, the Companys management, including the CEO and CFO,
concluded that the Companys disclosure controls and procedures are adequately designed to ensure
that the information required to be disclosed in this report has been accumulated and communicated
to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding such
required disclosure and to ensure that the Companys disclosure controls and procedures are
functioning effectively. There have been no changes in the Companys internal controls over financial reporting or in other
factors that have materially affected, or are reasonably likely to materially affect, internal
controls over financial reporting during the period covered by this report. 
 PART II. OTHER INFORMATION 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS Stock Repurchase Program On November 6, 2001, the Board of Directors of the Company approved a stock repurchase program
covering the purchase of up to 450,000 additional shares of its common stock dependent upon market
conditions. Common stock purchases under this program were authorized through December 31, 2002 on
the open market or through privately negotiated transactions at prices determined by the Chairman
of the Board or the President of the Company. As of December 31, 2002, 225,300 shares had been
purchased under this authorization. The Board of Directors has extended this program three times,
through December 31, 2005, for the remaining 224,700 shares, however there were no repurchases of
stock in 2003, 2004 and thus far in 2005. 
 ITEM 6. EXHIBITS The information required by this Item 6 is set forth in the Index to Exhibits accompanying
this Form 10-Q. 16




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FORM 10-Q 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on behalf by the undersigned thereunto duly
authorized. ENCORE WIRE CORPORATION(Registrant)Dated: May 9, 2005
    
    /s/ VINCENT A. REGOVincent A. Rego, Chairman of the Board and
Chief Executive OfficerDated: May 9, 2005
    
    /s/ DANIEL L. JONESDaniel L. Jones, President and
Chief Operating OfficerDated: May 9, 2005
    
    /s/ FRANK J. BILBANFrank J. Bilban, Vice President  Finance,Treasurer and Secretary
Chief Financial Officer
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FORM 10-Q 
 INDEX TO EXHIBITS ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of Encore Wire Corporation, as
amended through July 20, 2004 (filed on Exhibit 3.1 to the
Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2004, and incorporated herein by reference).3.2
    
    Amended and Restated Bylaws of Encore Wire Corporation, as amended
through July 20, 2004 (filed as Exhibit 3.2 to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004,
and incorporated herein by reference).10.1*
    
    1999 Stock Option Plan, as amended and restated, effective as of
October 24, 2001 (filed as Exhibit 99.1 to the Companys
Registration Statement on Form S-8 (No. 333-86620), and
incorporated herein by reference).10.2*
    
    1989 Stock Option Plan, as amended and restated (filed as Exhibit
4.1 to the Companys Registration Statement on Form S-8 (No.
333-38729), and incorporated herein by reference), terminated
except with respect to outstanding options thereunder.31.1
    
    Certification by Vincent A. Rego, Chairman and Chief Executive
Officer of Encore Wire Corporation, dated May 9, 2005 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, Chief
Financial Officer, Treasurer and Secretary of Encore Wire
Corporation, dated May 9, 2005 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 Vincent A. Rego, Chairman and Chief Executive
Officer of Encore Wire Corporation, dated May 9, 2005 and
submitted as required by 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Frank J. Bilban, Vice President-Finance, Chief
Financial Officer, Treasurer and Secretary of Encore Wire
Corporation, dated May 9, 2005 as required by 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
    
    Management contract or compensatory plan.
 18