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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 June 30, 2009
 OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
  ENCORE WIRE CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State of Incorporation)
    
    75-2274963
(I.R.S. Employer Identification Number)1329 Millwood Road 
McKinney, Texas
(Address of principal executive offices)
    
    75069
(Zip Code)
 Registrants telephone number, including area code: (972) 562-9473
  x
    Large accelerated filer
    
    [ ]
    
    
    
    Accelerated filer xNon-accelerated filer
    
    [ ]
    
    (Do not check if a smaller reporting company)
    
    Smaller reporting company [ ]
 x




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##### 



ENCORE WIRE CORPORATION
 FORM 10-Q
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009
 Page No.PART IFINANCIAL INFORMATIONITEM 1. Consolidated Financial StatementsConsolidated Balance Sheets 
June 30, 2009 (Unaudited) and December 31, 2008
    
    
    1Consolidated Statements of Income (Unaudited)

Quarters and Six Months ended June 30, 2009 and June 30, 2008
    
    
    3Consolidated Statements of Cash Flows (Unaudited)

Six Months ended June 30, 2009 and June 30, 2008
    
    
    4Notes to Consolidated Financial Statements
    
    
    5ITEM 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    9ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15ITEM 4. Controls and Procedures
    
    
    15PART IIOTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    16ITEM 1A. Risk Factors
    
    
    16ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    17ITEM 6. Exhibits
    
    
    17Signatures
    
    
    18EX-10.12EX-31.1EX-31.2EX-32.1EX-32.2




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PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
  June 30,
    
    
    December 31,In Thousands of Dollars
    
    2009
    
    
    2008(Unaudited)
    
    
    (See Note)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    232,307
    
    
    $
    217,666Accounts receivable (net of allowance
of $2,152 and $2,000)
    
    
    111,636
    
    
    
    126,184Inventories
    
    
    61,045
    
    
    
    65,533Prepaid expenses and other assets
    
    
    5,166
    
    
    
    788Current income taxes receivable
    
    
    2,035
    
    
    
    1,587Total current assets
    
    
    412,189
    
    
    
    411,758Property,
plant and equipment - at cost:Land and land improvements
    
    
    11,727
    
    
    
    11,727Construction in progress
    
    
    7,362
    
    
    
    7,483Buildings and improvements
    
    
    65,058
    
    
    
    65,026Machinery and equipment
    
    
    166,170
    
    
    
    156,234Furniture and fixtures
    
    
    6,742
    
    
    
    6,604Total property, plant and equipment
    
    
    257,059
    
    
    
    247,074Accumulated depreciation
    
    
    (130,389)
    
    
    
    (125,632)Net property, plant and equipment
    
    
    126,670
    
    
    
    121,442Other assets
    
    
    142
    
    
    
    139Total assets
    
    $
    539,001
    
    
    $
    533,339
 
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##### Table of Contents



June 30,
    
    
    December 31,In Thousands of Dollars, Except Share Data
    
    2009
    
    
    2008(Unaudited)
    
    
    (See Note)LIABILITIES
AND
STOCKHOLDERS
EQUITYCurrent liabilities:Trade accounts payable
    
    $
    10,691
    
    
    $
    4,639Accrued liabilities
    
    
    15,208
    
    
    
    20,104Current deferred income taxes
    
    
    7,839
    
    
    
    8,982Total current liabilities
    
    
    33,738
    
    
    
    33,725Non-current deferred income taxes
    
    
    10,451
    
    
    
    9,320Long term notes payable
    
    
    100,554
    
    
    
    100,675Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value:Authorized shares  2,000,000; none
issued
    
    
    -
    
    
    
    -Common stock, $.01 par value:Authorized shares 
40,000,000; 
Issued shares  26,154,452 and 26,145,452
    
    
    262
    
    
    
    262Additional paid-in capital
    
    
    42,830
    
    
    
    42,486Treasury stock, at cost  3,148,950 and 3,148,950
Shares
    
    
    (21,269)
    
    
    
    (21,269)Retained earnings
    
    
    372,435
    
    
    
    368,140Total stockholders equity
    
    
    394,258
    
    
    
    389,619Total liabilities and stockholders equity
    
    $
    539,001
    
    
    $
    533,339
 
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Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,In Thousands, Except Per Share Data
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    159,351
    
    
    $
    322,845
    
    
    $
    303,836
    
    
    $
    604,604Cost of goods sold
    
    
    147,491
    
    
    
    303,322
    
    
    
    274,141
    
    
    
    549,610Gross profit
    
    
    11,860
    
    
    
    19,523
    
    
    
    29,695
    
    
    
    54,994Selling, general, and administrative expenses
    
    
    10,730
    
    
    
    16,923
    
    
    
    21,338
    
    
    
    31,390Operating income
    
    
    1,130
    
    
    
    2,600
    
    
    
    8,357
    
    
    
    23,604Net interest and other expenses
    
    
    476
    
    
    
    587
    
    
    
    764
    
    
    
    1,320Income before income taxes
    
    
    654
    
    
    
    2,013
    
    
    
    7,593
    
    
    
    22,284Provision for income taxes
    
    
    54
    
    
    
    682
    
    
    
    2,377
    
    
    
    7,334Net income
    
    $
    600
    
    
    $
    1,331
    
    
    $
    5,216
    
    
    $
    14,950Net income per common and common 
equivalent
share  basic
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.23
    
    
    $
    0.65Weighted average common and common 
equivalent
shares  basic
    
    
    22,999
    
    
    
    23,120
    
    
    
    22,998
    
    
    
    23,138Net income per common and common 
equivalent
share  diluted
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.22
    
    
    $
    0.64Weighted average common and common 
equivalent
shares  diluted
    
    
    23,299
    
    
    
    23,426
    
    
    
    23,288
    
    
    
    23,427Cash dividends declared per share
    
    $
    0.02
    
    
    $
    0.02
    
    
    $
    0.04
    
    
    $
    0.04
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Six Months EndedJune 30,In Thousands of Dollars
    
    2009
    
    
    2008OPERATING ACTIVITIESNet income
    
    $
    5,216
    
    
    $
    14,950Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    7,006
    
    
    
    7,156Deferred income tax provision (benefit)
    
    
    (12)
    
    
    
    (1,945)Other
    
    
    191
    
    
    
    343Changes in operating assets and liabilities:Accounts receivable
    
    
    14,396
    
    
    
    (23,205)Inventory
    
    
    4,488
    
    
    
    14,119Accounts payable and accrued liabilities
    
    
    1,155
    
    
    
    12,180Other assets and liabilities
    
    
    (646)
    
    
    
    7,089Current income taxes receivable / payable
    
    
    (407)
    
    
    
    6,943NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    31,387
    
    
    
    37,630INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (16,064)
    
    
    
    (9,269)Proceeds from sale of equipment
    
    
    117
    
    
    
    166Other
    
    
    -
    
    
    
    -NET CASH USED IN INVESTING ACTIVITIES
    
    
    (15,947)
    
    
    
    (9,103)FINANCING ACTIVITIESPurchase of treasury stock
    
    
    -
    
    
    
    (2,063)Proceeds from issuances of common stock
    
    
    80
    
    
    
    124Dividends paid
    
    
    (920)
    
    
    
    (927)Excess tax benefits of options exercised
    
    
    41
    
    
    
    85NET CASH USED IN FINANCING ACTIVITIES
    
    
    (799)
    
    
    
    (2,781)Net increase in cash and cash equivalents
    
    
    14,641
    
    
    
    25,746Cash and cash equivalents at beginning of period
    
    
    217,666
    
    
    
    78,895Cash and cash equivalents at end of period
    
    $
    232,307
    
    
    $
    104,641
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June 30,
    
    
    December 31,In Thousands of Dollars
    
    2009
    
    
    2008Raw materials
    
    $
    9,664
    
    
    $
    16,184Work-in-process
    
    
    14,119
    
    
    
    8,746Finished goods
    
    
    74,227
    
    
    
    63,71898,010
    
    
    
    88,648Adjust to LIFO cost
    
    
    (36,965)
    
    
    
    (23,115)Lower of cost or market adjustment
    
    
    
    
    
    
    $
    61,045
    
    
    $
    65,533
   5




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June 30,
    
    
    December 31,In Thousands of Dollars
    
    2009
    
    
    2008Sales volume discounts payable
    
    $
    7,676
    
    
    $
    12,706Property taxes payable
    
    
    1,199
    
    
    
    2,207Commissions payable
    
    
    1,332
    
    
    
    1,240Accrued salaries
    
    
    1,145
    
    
    
    2,572Other accrued liabilities
    
    
    3,856
    
    
    
    1,379$
    15,208
    
    
    $
    20,104
    Quarter EndedJune 30,
    
    
    June 30,In Thousands
    
    2009
    
    
    2008Numerator:Net income
    
    $
    600
    
    
    $
    1,331Denominator:Denominator for basic earnings
per share  weighted average
shares
    
    
    22,999
    
    
    
    23,120Effect of dilutive securities:Employee stock options
    
    
    300
    
    
    
    306Denominator for diluted earnings per share 
weighted average shares
    
    
    23,299
    
    
    
    23,426
  6




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Six Months EndedJune 30,
    
    
    June 30,In Thousands
    
    2009
    
    
    2008Numerator:Net income
    
    $
    5,216
    
    
    $
    14,950Denominator:Denominator for basic earnings per
share  weighted average shares
    
    
    22,998
    
    
    
    23,138Effect of dilutive securities:Employee stock
options
    
    
    290
    
    
    
    289Denominator
for diluted earnings per share  weighted
average shares
    
    
    23,288
    
    
    
    23,427
     7




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8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General
    9




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Results of Operations
 Quarter Ended June 30, 2009 Compared to Quarter Ended June 30, 2008
     10




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Six Months Ended June 30, 2009 compared to Six Months Ended June 30, 2008
   11




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12




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Liquidity and Capital Resources
    13




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14




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Information Regarding Forward Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
  15




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PART IIOTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
   
 Item 1A.
    
    Risk Factors.
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
  16




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Item 4. Submission of Matters to a Vote of Security Holders.
     NUMBER OF VOTESNOMINEE FOR DIRECTOR
    
    
    NUMBER OF VOTES FOR
    
    
    WITHHELDDonald E. Courtney
    
    
    
    21,621,696
    
    
    
    
    86,303Thomas L. Cunningham
    
    
    
    21,636,030
    
    
    
    
    71,969Daniel L. Jones
    
    
    
    21,644,463
    
    
    
    
    63,536William R. Thomas III
    
    
    
    21,612,884
    
    
    
    
    95,115Scott D. Weaver
    
    
    
    21,495,845
    
    
    
    
    212,154John H. Wilson
    
    
    
    21,401,644
    
    
    
    
    306,355
  
 Item 6. Exhibits.
  17




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ENCORE WIRE CORPORATION(Registrant)Dated: August 7, 2009
    /s/ DANIEL L. JONESDaniel L. Jones, President andChief Executive OfficerDated: August 7, 2009
    /s/ FRANK J. BILBANFrank J. Bilban, Vice President  Finance,Treasurer and Secretary
Chief Financial Officer 18




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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).




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10.6
    
    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 & 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).10.7
    
    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).10.8
    
    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).10.9
    
    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).10.10*
    
    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).10.11
    
    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).10.12
    
    Form of Stock Option Agreement under the 1999 Stock Option Plan.31.1
    
    Certification by Daniel L. Jones, President and Chief Executive
Officer of Encore Wire Corporation, dated August 7, 2009 and
submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.




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31.2
    
    Certification by Frank J. Bilban, Vice President-Finance, Chief
Financial Officer, Treasurer and Secretary of Encore Wire
Corporation, dated August 7, 2009 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 August 7, 2009 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 August 7, 2009 as required by 18 U.S.C. 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
    
    Compensatory plan.