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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 ended
September 30, 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)1410 Millwood Road
McKinney, Texas
(Address of principal executive offices)
    
    (I.R.S. employer identification
number)75069
(Zip code)
 Registrants telephone number, including area code: (972) 562-9473
 þ o
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ENCORE WIRE CORPORATION
 FORM 10-Q
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
 Page No.PART I. FINANCIAL INFORMATIONITEM 1.
    
    Consolidated Financial StatementsConsolidated Balance Sheets (Unaudited) September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Income (Unaudited) Quarters and Nine Months ended September 30, 2005 and September 30, 2004
    
    
    5Consolidated Statements of Cash Flows (Unaudited) Nine Months ended September 30, 2005 and September 30, 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    17ITEM 4.
    
    Controls and Procedures
    
    
    17PART II. OTHER INFORMATIONITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18ITEM 6.
    

Exhibits
    
    
    18Signatures
    
    
    
    
    19Certification by Daniel L. Jones Pursuant to Seciton 302Certification by Frank J. Bilban Pursuant to Section 302Certification by Daniel L. Jones Pursuant to Section 906Certification by Frank J. Bilban Pursuant to Section 906
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PART I. FINANCIAL INFORMATION
 
   
  September 30,
    
    
    December 31,2005
    
    
    2004In Thousands of Dollars
    
    (Unaudited)
    
    
    (See Note)ASSETSCurrent Assets:Cash
    
    $
    2,022
    
    
    $
    2,640Accounts receivable (net of allowance
of $661 and $577)
    
    
    159,203
    
    
    
    108,752Inventories
    
    
    50,194
    
    
    
    39,111Prepaid expenses and other assets
    
    
    11,707
    
    
    
    6,910Current taxes receivable
    
    
    
    
    
    
    4,751Total current assets
    
    
    223,126
    
    
    
    162,164Property, plant and equipment-on the basis of cost:Land
    
    
    7,093
    
    
    
    6,783Construction in progress
    
    
    6,929
    
    
    
    3,378Buildings and improvements
    
    
    38,130
    
    
    
    37,972Machinery and equipment
    
    
    119,835
    
    
    
    115,866Furniture and fixtures
    
    
    3,624
    
    
    
    3,195Total property, plant, and equipment
    
    
    175,611
    
    
    
    167,194Accumulated depreciation and amortization
    
    
    86,433
    
    
    
    78,51589,178
    
    
    
    88,679Other assets
    
    
    123
    
    
    
    672Total assets
    
    $
    312,427
    
    
    $
    251,515
 Note:
    The consolidated balance sheet at December 31, 2004 as presented, is
derived from the audited consolidated financial statements at that date.
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September 30,
    
    
    December 31,2005
    
    
    2004In Thousands of Dollars, Except Share Data
    
    (Unaudited)
    
    
    (See Note)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    23,879
    
    
    $
    15,091Accrued liabilities
    
    
    15,269
    
    
    
    13,658Current income taxes payable
    
    
    526
    
    
    
    Current deferred income taxes
    
    
    3,433
    
    
    
    733Total current liabilities
    
    
    43,107
    
    
    
    29,482Non-current deferred income taxes
    
    
    10,737
    
    
    
    12,653Long term notes payable
    
    
    84,300
    
    
    
    49,836Stockholders equity:Common stock, $.01 par value:Authorized 40,000,000 shares; issued and
outstanding shares 25,871,178 and 25,863,078
    
    
    259
    
    
    
    259Additional paid-in capital
    
    
    38,091
    
    
    
    38,020Treasury stock 2,758,950 and 2,758,950 shares at cost
    
    
    (15,275
    )
    
    
    (15,275
    )Retained earnings
    
    
    151,208
    
    
    
    136,540Total stockholders equity
    
    
    174,283
    
    
    
    159,544Total liabilities and stockholders equity
    
    $
    312,427
    
    
    $
    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.
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Quarter Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    207,459
    
    
    $
    158,629
    
    
    $
    513,917
    
    
    $
    455,719Cost of goods sold
    
    
    176,462
    
    
    
    136,859
    
    
    
    456,802
    
    
    
    379,991Gross profit
    
    
    30,997
    
    
    
    21,770
    
    
    
    57,115
    
    
    
    75,728Selling, general, and administrative expenses
    
    
    12,769
    
    
    
    11,124
    
    
    
    33,254
    
    
    
    31,260Operating income (loss)
    
    
    18,228
    
    
    
    10,646
    
    
    
    23,861
    
    
    
    44,468Net interest & other expenses
    
    
    1,074
    
    
    
    661
    
    
    
    2,676
    
    
    
    2,055Income (loss) before income taxes
    
    
    17,154
    
    
    
    9,985
    
    
    
    21,185
    
    
    
    42,413Provision (benefit) for income taxes
    
    
    5,949
    
    
    
    3,594
    
    
    
    6,517
    
    
    
    15,489Net income (loss)
    
    $
    11,205
    
    
    $
    6,391
    
    
    $
    14,668
    
    
    $
    26,924Net income (loss) per common and common
equivalent shares  basic
    
    $
    .48
    
    
    $
    .28
    
    
    $
    .63
    
    
    $
    1.17Weighted average common and common
equivalent shares  basic
    
    
    23,111
    
    
    
    23,104
    
    
    
    23,108
    
    
    
    22,989Net income (loss) per common and common
equivalent shares  diluted
    
    $
    .48
    
    
    $
    .27
    
    
    $
    .63
    
    
    $
    1.14Weighted average common and common
equivalent shares  diluted
    
    
    23,495
    
    
    
    23,478
    
    
    
    23,447
    
    
    
    23,545Cash 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.
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Nine Months EndedSeptember 30,In Thousands of Dollars
    
    2005
    
    
    2004OPERATING ACTIVITIESNet income (loss)
    
    $
    14,668
    
    
    $
    26,924Adjustments to reconcile net income to cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    9,252
    
    
    
    8,619Provision for bad debts
    
    
    285
    
    
    
    255Changes in operating assets and liabilities:Accounts receivable
    
    
    (50,735
    )
    
    
    (35,902
    )Inventory
    
    
    (11,083
    )
    
    
    7,598Accounts payable and accrued liabilities
    
    
    10,398
    
    
    
    3,444Other assets and liabilities
    
    
    (4,111
    )
    
    
    (7,507
    )Current income taxes receivable/payable
    
    
    6,062
    
    
    
    (1,914
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    (25,264
    )
    
    
    1,517INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (10,105
    )
    
    
    (18,613
    )Change in long-term investments
    
    
    15
    
    
    
    (38
    )Proceeds from sale of equipment
    
    
    202
    
    
    
    2,603NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (9,888
    )
    
    
    (16,048
    )FINANCING ACTIVITIESBorrowings (repayments) under notes payable
    
    
    34,463
    
    
    
    15,575Proceeds from exercise of stock options
    
    
    71
    
    
    
    2,761Purchase of treasury stock
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    34,534
    
    
    
    18,336Net increase (decrease) in cash
    
    
    (618
    )
    
    
    3,805Cash at beginning of period
    
    
    2,640
    
    
    
    391Cash at end of period
    
    $
    2,022
    
    
    $
    4,196
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QuarterEnded
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss), as reported
    
    $
    11,205
    
    
    $
    6,391
    
    
    $
    14,668
    
    
    $
    26,924Add: 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
    
    
    69
    
    
    
    95
    
    
    
    233
    
    
    
    282Pro forma net income (loss)
    
    $
    11,136
    
    
    $
    6,296
    
    
    $
    14,435
    
    
    $
    26,642Net income (loss) per shareBasic, as reported
    
    $
    0.48
    
    
    $
    0.28
    
    
    $
    0.63
    
    
    $
    1.17Basic, pro forma
    
    $
    0.48
    
    
    $
    0.27
    
    
    $
    0.62
    
    
    $
    1.16Diluted, as reported
    
    $
    0.48
    
    
    $
    0.27
    
    
    $
    0.63
    
    
    $
    1.14Diluted, pro forma
    
    $
    0.47
    
    
    $
    0.27
    
    
    $
    0.62
    
    
    $
    1.13
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September 30,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    9,894
    
    
    $
    5,026Work-in-process
    
    
    10,607
    
    
    
    5,311Finished goods
    
    
    55,295
    
    
    
    43,38975,796
    
    
    
    53,726Adjust to LIFO cost
    
    
    (25,602
    )
    
    
    (14,615
    )50,194
    
    
    
    39,111Lower of Cost or Market Adjustment
    
    
    
    
    
    
    $
    50,194
    
    
    $
    39,111
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Quarter Ended
    
    
    Quarter Ended9/30/05
    
    
    9/30/04Numerator:Net income
    
    $
    11,204,923
    
    
    $
    6,390,548Denominator:Denominator for basic earnings per
share  weighted average shares
    
    
    23,110,539
    
    
    
    23,104,164Effect of dilutive securities:Employee stock options
    
    
    384,793
    
    
    
    374,219Denominator
for diluted earnings per share  weighted average shares
    
    
    23,495,332
    
    
    
    23,478,383
  Nine Months Ended
    
    
    Nine Months Ended9/30/05
    
    
    9/30/04Numerator:Net income
    
    $
    14,668,152
    
    
    $
    26,923,819Denominator:Denominator for basic earnings per
share  weighted average shares
    
    
    23,107,940
    
    
    
    22,988,913Effect of dilutive securities:Employee stock options
    
    
    338,703
    
    
    
    556,306Denominator
for diluted earnings per share  weighted average shares
    
    
    23,446,643
    
    
    
    23,545,219
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 General
    Results of Operations
 Quarter Ended September 30, 2005 Compared to Quarter Ended September 30, 2004
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Nine Months Ended September 30, 2005 compared to Nine Months Ended September 30, 2004
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Liquidity and Capital Resources
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Information Regarding Forward Looking Statements
  
   
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PART II. OTHER INFORMATION
 
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
 Stock Repurchase Program
  
  (a)
    
    The information required by this Item 6(a) is set forth in the Index to
Exhibits accompanying this Form 10-Q.
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ENCORE WIRE CORPORATION(Registrant) Dated: November 2, 2005
    /s/ DANIEL L. JONESDaniel L. Jones, President andChief Executive Officer Dated: November 2, 2005
    /s/ FRANK J. BILBANFrank J. Bilban, Vice President  Finance,Treasurer and Secretary
Chief Financial Officer 19




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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 Daniel L. Jones, President and Chief Executive
Officer of Encore Wire Corporation, dated November 2, 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 November 2, 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 Daniel L. Jones, President and Chief Executive
Officer of Encore Wire Corporation, dated November 2, 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 November 2, 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.
 20