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UNITED STATES SECURITIES AND EXHANGE 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 March 31, 2006
 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
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ




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ENCORE WIRE CORPORATION
 FORM 10-Q
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006
 Page No.PART I. FINANCIAL INFORMATIONITEM 1. Consolidated Financial StatementsConsolidated Balance Sheets March 31, 2006 (Unaudited) and December 31, 2005
    
    
    3Consolidated Statements of Income (Unaudited)Quarters ended March 31, 2006 and March 31, 2005
    
    
    5Consolidated Statements of Cash Flows (Unaudited) Quarters ended March 31, 2006 and March 31, 2005
    
    
    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
    
    
    16ITEM 4. Controls and Procedures
    
    
    16PART II. OTHER INFORMATIONITEM 1A. Risk Factors
    
    
    17ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17ITEM 6. Exhibits
    
    
    17Signatures
    
    
    181999 Stock Option PlanCertification of Chief Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of Chief Executive Officer Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906
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PART I. FINANCIAL INFORMATION
 
   
  March 31,
    
    
    December 31,2006
    
    
    2005In Thousands of Dollars
    
    (Unaudited)
    
    
    (See Note)ASSETSCurrent Assets:Cash
    
    $
    2,063
    
    
    $
    2,622Accounts receivable (net of allowance
of $736 and $690)
    
    
    183,311
    
    
    
    164,930Inventories (Note 3)
    
    
    73,136
    
    
    
    67,932Prepaid expenses and other assets
    
    
    11,964
    
    
    
    18,628Current taxes receivable
    
    
    
    
    
    
    Current deferred income taxes
    
    
    2,729
    
    
    
    1,121Total current assets
    
    
    273,203
    
    
    
    255,233Property, plant and equipment-on the basis of cost:Land
    
    
    8,375
    
    
    
    8,375Construction in progress
    
    
    18,291
    
    
    
    12,113Buildings and improvements
    
    
    38,063
    
    
    
    38,063Machinery and equipment
    
    
    121,656
    
    
    
    120,326Furniture and fixtures
    
    
    3,654
    
    
    
    3,624Total property, plant, and equipment
    
    
    190,039
    
    
    
    182,501Accumulated depreciation and amortization
    
    
    92,111
    
    
    
    89,36497,928
    
    
    
    93,137Other assets
    
    
    107
    
    
    
    106Total assets
    
    $
    371,238
    
    
    $
    348,476
 Note:
    
    The consolidated balance sheet at December 31, 2005, as presented, is
derived from the audited consolidated financial statements at that date.
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March 31,
    
    
    December 31,2006
    
    
    2005In Thousands of Dollars, Except Share Data
    
    (Unaudited)
    
    
    (See Note)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    19,327
    
    
    $
    17,277Accrued liabilities
    
    
    13,394
    
    
    
    19,304Current income taxes payable
    
    
    9,910
    
    
    
    19,540Current deferred income taxes
    
    
    
    
    
    
    Total current liabilities
    
    
    42,631
    
    
    
    56,121Non-current deferred income taxes
    
    
    10,213
    
    
    
    10,620Long term notes payable
    
    
    88,792
    
    
    
    70,438Other long term liabilities
    
    
    1,608
    
    
    
    762Stockholders equity:Common stock, $.01 par value:Authorized 40,000,000 shares; issued and
outstanding shares 26,018,152 and 25,939,103
    
    
    260
    
    
    
    259Additional paid-in capital
    
    
    40,253
    
    
    
    38,932Treasury stock 2,758,950 and 2,758,950 shares at cost
    
    
    (15,275
    )
    
    
    (15,275
    )Retained earnings
    
    
    202,756
    
    
    
    186,619Total stockholders equity
    
    
    227,994
    
    
    
    210,535Total liabilities and stockholders equity
    
    $
    371,238
    
    
    $
    348,476
 Note:
    
    The consolidated balance sheet at December 31, 2005, as presented, is
derived from the audited consolidated financial statements at that date.
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Quarter EndedMarch 31,In Thousands of Dollars, Except Per Share Data
    
    2006
    
    
    2005Net sales
    
    $
    252,048
    
    
    $
    137,193Cost of goods sold
    
    
    212,676
    
    
    
    126,446Gross profit
    
    
    39,372
    
    
    
    10,747Selling, general, and administrative expenses
    
    
    13,438
    
    
    
    9,587Operating income (loss)
    
    
    25,934
    
    
    
    1,160Net interest & other expenses
    
    
    1,133
    
    
    
    832Income (loss) before income taxes
    
    
    24,801
    
    
    
    328Provision (benefit) for income taxes
    
    
    8,664
    
    
    
    (709
    )Net income (loss)
    
    $
    16,137
    
    
    $
    1,037Net income (loss) per common and common
equivalent shares  basic
    
    $
    .70
    
    
    $
    .04Weighted average common and common
equivalent shares  basic
    
    
    23,213
    
    
    
    23,106Net income (loss) per common and common
equivalent shares  diluted
    
    $
    .68
    
    
    $
    .04Weighted average common and common
equivalent shares  diluted
    
    
    23,694
    
    
    
    23,427Cash dividends declared per share
    
    $
    
    
    
    $
    
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Quarter EndedMarch 31,In Thousands of Dollars
    
    2006
    
    
    2005OPERATING ACTIVITIESNet income (loss)
    
    $
    16,137
    
    
    $
    1,037Adjustments to reconcile net income to cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    2,837
    
    
    
    3,072Provision for bad debts
    
    
    45
    
    
    
    45Changes in operating assets and liabilities:Accounts receivable
    
    
    (18,426
    )
    
    
    4,818Inventory
    
    
    (5,204
    )
    
    
    (8,902
    )Accounts payable and accrued liabilities
    
    
    (3,860
    )
    
    
    (6,479
    )Other assets and liabilities
    
    
    6,628
    
    
    
    (6,802
    )Current and
deferred income taxes
    
    
    (11,644
    )
    
    
    (1,057
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    (13,487
    )
    
    
    (14,268
    )INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (7,672
    )
    
    
    (2,564
    )Change in long-term investments
    
    
    
    
    
    
    Proceeds from sale of equipment
    
    
    78
    
    
    
    299NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (7,594
    )
    
    
    (2,265
    )FINANCING ACTIVITIESBorrowings (repayments) under notes payable
    
    
    19,200
    
    
    
    16,163Proceeds from issuance of common stock
    
    
    648
    
    
    
    19Tax benefit of options exercised
    
    
    674
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    20,522
    
    
    
    16,182Net increase (decrease) in cash
    
    
    (559
    )
    
    
    (351
    )Cash at beginning of period
    
    
    2,622
    
    
    
    2,640Cash at end of period
    
    $
    2,063
    
    
    $
    2,289
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ENCORE WIRE CORPORATION
 
        Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Share-Based Payment
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WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateNumber
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicOf Shares
    
    
    Exercise Price
    
    
    Term
    
    
    ValueBalance outstanding
at December 31,
2005
    
    
    639,825
    
    
    $
    6.73Granted
    
    
    0
    
    
    
    0Exercised
    
    
    79,049
    
    
    
    6.96Forfeited/Cancelled
    
    
    1,500
    
    
    
    7.70Balance outstanding
at March 31, 2006
    
    
    559,276
    
    
    
    6.25
    
    
    
    4.51
    
    
    $
    15,450Options exercisable
at March 31, 2006
    
    
    481,806
    
    
    $
    5.80
    
    
    
    4.28
    
    
    $
    13,527
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March 31,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    14,244
    
    
    $
    11,288Work-in-process
    
    
    11,687
    
    
    
    8,428Finished goods
    
    
    93,065
    
    
    
    84,665118,996
    
    
    
    104,381Adjust to LIFO cost
    
    
    (45,860
    )
    
    
    (36,449
    )73,136
    
    
    
    67,932Lower of Cost or Market Adjustment
    
    
    
    
    
    
    $
    73,136
    
    
    $
    67,932
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Quarter Ended
    
    
    Quarter Ended3/31/06
    
    
    3/31/05Numerator:Net income
    
    $
    16,137,198
    
    
    $
    1,036,833Denominator:Denominator for basic
earnings per share 
weighted average
shares
    
    
    23,213,394
    
    
    
    23,105,728Effect of dilutive securities:Employee stock options
    
    
    480,464
    
    
    
    320,948Denominator for diluted earnings per share
 weighted average shares
    
    
    23,693,858
    
    
    
    23,426,676
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General
    Results of Operations
 Quarter Ended March 31, 2006 Compared to Quarter Ended March 31, 2005
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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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ENCORE WIRE CORPORATION(Registrant)Dated: May 9, 2006
    
    /s/ DANIEL L. JONESDaniel L. Jones, President andChief Executive OfficerDated: May 9, 2006
    
    /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 February 20, 2006 (filed as Exhibit 3.2 to the Companys
Annual Report on Form 10-K for the year ended December 31, 2005,
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*
    
    1999 Stock Option Plan, as amended and restated, effective as of
February 20, 2006.10.3*
    
    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 there under.31.1
    
    Certification by Daniel L. Jones,
President and Chief Executive
Officer of Encore Wire Corporation, dated May 9, 2006
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, 2006 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 May 9, 2006
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, 2006 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.
 19