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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 1934For the quarterly period ended June 30, 2005ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from  to
 Commission File Number: 0-20278
 ENCORE WIRE CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
(State of Incorporation)
    
    75-2274963
(I.R.S. employer identification number)
 1410 Millwood Road
McKinney, Texas
(Address of principal executive offices)
    
    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 JUNE 30, 2005
 Page No.PART I. FINANCIAL INFORMATIONITEM 1. Consolidated Financial StatementsConsolidated Balance Sheets June 30, 2005 (Unaudited) and December 31, 2004
    
    
     3Consolidated Statements of Income (Unaudited) Quarters and Six Months ended June 30, 2005 and June 30, 2004
    
    
    5Consolidated Statements of Cash Flows (Unaudited) Six Months ended June 30, 2005 and June 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
    
    
    17ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    18ITEM 6. Exhibits
    
    
    18Signatures
    
    
    19Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906
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PART I. FINANCIAL INFORMATION
 
   
  June 30,
    
    December 31,2005
    
    2004In Thousands of Dollars
    
    (Unaudited)
    
    (See Note)ASSETSCurrent Assets:Cash
    
    $
    1,058
    
    
    $
    2,640Accounts receivable (net of allowance
of $666 and $577)
    
    
    124,611
    
    
    
    108,752Inventories (Note 3)
    

    
    49,722
    
    
    
    39,111Prepaid expenses and other assets
    
    
    9,400
    
    
    
    6,910Current taxes receivable
    
    
    3,453
    
    
    
    4,751Total current assets
    
    
    188,244
    
    
    
    162,164Property, plant and equipment-on the basis of cost:Land
    
    
    7,093
    
    
    
    6,783Construction in progress
    
    
    2,862
    
    
    
    3,378Buildings and improvements
    
    
    38,130
    
    
    
    37,972Machinery and equipment
    
    
    118,561
    
    
    
    115,866Furniture and fixtures
    
    
    3,634
    
    
    
    3,195Total property, plant, and equipment
    
    
    170,280
    
    
    
    167,194Accumulated depreciation and amortization
    
    
    83,459
    
    
    
    78,51586,821
    
    
    
    88,679Other assets
    
    
    982
    
    
    
    672Total assets
    
    $
    276,047
    
    
    $
    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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June 30,
    
    December 31,2005
    
    2004In Thousands of Dollars, Except Share Data
    
    (Unaudited)
    
    (See Note)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    18,996
    
    
    $
    15,091Accrued liabilities
    
    
    11,475
    
    
    
    13,658Current income taxes payable
    
    
    
    
    
    
    Current deferred income taxes
    
    
    1,128
    
    
    
    733Total current liabilities
    
    
    31,599
    
    
    
    29,482Non-current deferred income taxes
    
    
    11,157
    
    
    
    12,653Long term notes payable
    
    
    70,254
    
    
    
    49,836Stockholders equity:Common stock, $.01 par value:Authorized 40,000,000 shares; issued and
oustanding
shares 25,867,878 and 25,863,078
    
    
    259
    
    
    
    259Additional paid-in capital
    
    
    38,049
    
    
    
    38,020Treasury stock 2,758,950 and 2,758,950 shares at cost
    
    
    (15,275
    )
    
    
    (15,275
    )Retained earnings
    
    
    140,004
    
    
    
    136,540Total stockholders equity
    
    
    163,037
    
    
    
    159,544Total liabilities and stockholders equity
    
    $
    276,047
    
    
    $
    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
    
    Six Months EndedJune 30,
    
    June 30,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    2004
    
    2005
    
    2004Net sales
    
    $
    169,265
    
    
    $
    138,148
    
    
    $
    306,459
    
    
    $
    297,090Cost of goods sold
    
    
    153,894
    
    
    
    117,112
    
    
    
    280,340
    
    
    
    243,133Gross profit
    
    
    15,371
    
    
    
    21,036
    
    
    
    26,119
    
    
    
    53,957Selling, general, and administrative expenses
    
    
    10,898
    
    
    
    8,917
    
    
    
    20,486
    
    
    
    20,135Operating income (loss)
    
    
    4,473
    
    
    
    12,119
    
    
    
    5,633
    
    
    
    33,822Net interest & other expenses
    
    
    770
    
    
    
    761
    
    
    
    1,602
    
    
    
    1,395Income (loss) before income taxes
    
    
    3,703
    
    
    
    11,358
    
    
    
    4,031
    
    
    
    32,427Provision (benefit) for income taxes
    
    
    1,277
    
    
    
    4,089
    
    
    
    568
    
    
    
    11,894Net income (loss)
    
    $
    2,426
    
    
    $
    7,269
    
    
    $
    3,463
    
    
    $
    20,533Net income (loss) per common and common
equivalent shares  basic
    
    $
    .10
    
    
    $
    .32
    
    
    $
    .15
    
    
    $
    .90Weighted average common and common
equivalent shares  basic
    
    
    23,107
    
    
    
    23,050
    
    
    
    23,107
    
    
    
    22,931Net income (loss) per common and common
equivalent shares  diluted
    
    $
    .10
    
    
    $
    .31
    
    
    $
    .15
    
    
    $
    .87Weighted average common and common
equivalent shares  diluted
    
    
    23,393
    
    
    
    23,590
    
    
    
    23,413
    
    
    
    23,569Cash 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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Six Months EndedJune 30,In Thousands of Dollars
    
    2005
    
    2004OPERATING ACTIVITIESNet income (loss)
    
    $
    3,463
    
    
    $
    20,533Adjustments to reconcile net income to cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    6,143
    
    
    
    5,642Provision for bad debts
    
    
    90
    
    
    
    210Changes in operating assets and liabilities:Accounts receivable
    
    
    (15,948
    )
    
    
    (15,599
    )Inventory
    
    
    (10,610
    )
    
    
    (7,240
    )Accounts payable and accrued liabilities
    
    
    1,721
    
    
    
    (3,918
    )Other assets and liabilities
    
    
    (2,648
    )
    
    
    (2,342
    )Current income taxes receivable/payable
    
    
    197
    
    
    
    (4,767
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    (17,592
    )
    
    
    (7,481
    )INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (4,633
    )
    
    
    (13,939
    )Change in long-term investments
    
    
    
    
    
    
    Proceeds from sale of equipment
    
    
    196
    
    
    
    374NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (4,437
    )
    
    
    (13,565
    )FINANCING ACTIVITIESBorrowings (repayments) under notes payable
    
    
    20,418
    
    
    
    19,075Proceeds from exercise of stock options
    
    
    29
    
    
    
    2,709Purchase of treasury stock
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    20,447
    
    
    
    21,784Net increase (decrease) in cash
    
    
    (1,582
    )
    
    
    738Cash at beginning of period
    
    
    2,640
    
    
    
    391Cash at end of period
    
    $
    1,058
    
    
    $
    1,129
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QuarterEnded June 30,
    

Six
Months EndedJune 30,In Thousands of Dollars, Except Per Share Data
    
    2005
    
    2004
    
    2005
    
    2004Net income (loss), as reported
    
    $
    2,426
    
    
    $
    7,269
    
    
    $
    3,463
    
    
    $
    20,533Add: 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
    
    
    82
    
    
    
    95
    
    
    
    165
    
    
    
    187Pro forma net income (loss)
    
    $
    2,344
    
    
    $
    7,174
    
    
    $
    3,298
    
    
    $
    20,346Net income (loss) per shareBasic, as reported
    
    $
    0.10
    
    
    $
    0.32
    
    
    $
    0.15
    
    
    $
    0.90Basic, pro forma
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.14
    
    
    $
    0.88Diluted, as reported
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.15
    
    
    $
    0.87Diluted, pro forma
    
    $
    0.10
    
    
    $
    0.31
    
    
    $
    0.14
    
    
    $
    0.87
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June 30,
    
    December 31,2005
    
    2004Raw materials
    
    $
    10,554
    
    
    $
    5,026Work-in-process
    
    
    7,697
    
    
    
    5,311Finished goods
    
    
    52,544
    
    
    
    43,38970,795
    
    
    
    53,726Adjust to LIFO cost
    
    
    (21,073
    )
    
    
    (14,615
    )49,722
    
    
    
    39,111Lower of Cost or Market Adjustment
    
    
    
    
    
    
    $
    49,722
    
    
    $
    39,111
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Quarter Ended
    
    Quarter Ended6/30/05
    
    6/30/04Numerator:Net income
    
    $
    2,426,396
    
    
    $
    7,268,635Denominator:Denominator for basic
earnings per share 
weighted average
shares
    
    
    23,107,499
    
    
    
    23,049,774Effect of dilutive securities:Employee stock options
    
    
    285,657
    
    
    
    540,300Denominator for diluted earnings per share
 weighted average shares
    
    
    23,393,156
    
    
    
    23,590,074
  Six Months
    
    Six MonthsEnded
    
    Ended6/30/05
    
    6/30/04Numerator:Net income
    
    $
    3,463,229
    
    
    $
    20,533,271Denominator:Denominator for basic
earnings per share 
weighted average
shares
    
    
    23,106,618
    
    
    
    22,930,655Effect of dilutive securities:Employee stock options
    
    
    306,237
    
    
    
    638,188Denominator for diluted earnings per share
 weighted average shares
    
    
    23,412,855
    
    
    
    23,568,843
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General
    Results of Operations
 Quarter Ended June 30, 2005 Compared to Quarter Ended June 30, 2004
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Six Months Ended June 30, 2005 compared to Six Months Ended June 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
 
  Stock Repurchase Program
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Annual Meeting of Stockholders
 (a)
    
    The annual meeting of the stockholders of the Company was held in
McKinney, Texas at 9:00 a.m., local time, on May 3, 2005.(b)
    
    Proxies were solicited by the Board of Directors of the Company pursuant
to Regulation 14A under the Securities and Exchange Act of 1934; there was no
solicitation in opposition to the Board of Directors nominees for director as
listed in the proxy statement; and all of such nominees were duly elected as
reported below.(c)
    
    Out of a total of 23,107,128 shares of the Companys common stock
outstanding and entitled to vote, 21,766,657 shares were present in person or by
proxy, representing approximately 94.2% of the outstanding shares.The first matter voted on by the stockholders, as fully described in the
proxy statement for the annual meeting, was the election of directors. No
nominee for director received less than 90.7% of the shares voted. The
following table presents the number of shares voted for, voted against, and
withheld for each nominee for director.
 NOMINEE FOR
    
    NUMBER OF
    
    NUMBER OFDIRECTOR
    
    VOTES FOR
    
    VOTES WITHHELDVincent A. Rego
    
    
    21,493,123
    
    
    
    273,534Donald E. Courtney
    
    
    21,498,411
    
    
    
    268,246Daniel L. Jones
    
    
    21,535,221
    
    
    
    231,436Thomas L. Cunningham
    
    
    21,547,437
    
    
    
    219,220William R. Thomas
    
    
    21,487,887
    
    
    
    278,770John H. Wilson
    
    
    21,559,762
    
    
    
    206,895Joseph M. Brito
    
    
    21,488,441
    
    
    
    278,216Scott D. Weaver
    
    
    20,956,544
    
    
    
    810,113
 The second matter voted on by the stockholders, as fully described in the
proxy statement for the annual meeting, was a resolution to approve Ernst &
Young LLP as the independent auditors of the Companys financial statements
for the year ending December 31, 2005. The resolution was adopted with the
holders of 21,652,290 shares voting in favor of the resolution and the holders
of 102,529 shares voting against. Holders of 11,837 shares abstained from
voting.(d)
    
    Inapplicable.
 
  (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: August 5, 2005
    
    /s/ DANIEL L. JONESDaniel L. Jones, President andChief Executive OfficerDated: August 5, 2005
    
    /s/ FRANK J. BILBANFrank J. Bilban, Vice President  Finance,Treasurer and SecretaryChief Financial Officer
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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 August 5, 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, and Treasurer and Secretary of Encore Wire
Corporation, dated August 5, 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 August 5, 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 August 5, 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