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
 March 31, 2010
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   ENCORE WIRE CORPORATION
  Delaware
(State or other jurisdiction of incorporation or organization)
    
    75-2274963
(I.R.S. Employer Identification No.)1329 Millwood Road 
McKinney, Texas
(Address of principal executive offices)
    
    75069
(Zip 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 MARCH 31, 2010
 Page No.
 PART IFINANCIAL INFORMATIONItem 1.    Financial Statements.Consolidated Balance Sheets
March 31, 2010 (Unaudited) and December 31, 2009
    
    
    1Consolidated Statements of Income (Unaudited)
Quarters ended March 31, 2010 and March 31, 2009
    
    
    3Consolidated Statements of Cash Flows (Unaudited)
Quarters ended March 31, 2010 and March 31, 2009
    
    
    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.
    
    
    14Item 4.    Controls and Procedures.
    
    
    14PART IIOTHER INFORMATIONItem 1.    Legal Proceedings.
    
    
    14Item 1A.  Risk Factors.
    
    
    15Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    15Item 6.    Exhibits.
    
    
    15Signatures
    
    
    16




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PART IFINANCIAL INFORMATION
 Item 1. Financial Statements
   March 31,
    
    
    December 31,In Thousands of Dollars
    
    2010
    
    
    2009(Unaudited)
    
    
    (See Note)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    130,356
    
    
    $
    226,769Accounts receivable (net of allowance
of $2,353 and $2,278)
    
    
    142,540
    
    
    
    133,176Inventories
    
    
    32,530
    
    
    
    42,563Income taxes receivable
    
    
    1,122
    
    
    
    2,660Current deferred income taxes
    
    
    1,904
    
    
    
    Prepaid expenses and other
    
    
    9,235
    
    
    
    2,331Total current assets
    
    
    317,687
    
    
    
    407,499Property, plant and equipment  at cost:Land and land improvements
    
    
    13,177
    
    
    
    13,177Construction-in-progress
    
    
    9,456
    
    
    
    6,481Buildings and improvements
    
    
    68,125
    
    
    
    68,125Machinery and equipment
    
    
    169,074
    
    
    
    168,984Furniture and fixtures
    
    
    6,807
    
    
    
    6,742Total property, plant and equipment
    
    
    266,639
    
    
    
    263,509Accumulated depreciation
    
    
    (140,000)
    
    
    
    (136,653)Property, plant and equipment  net
    
    
    126,639
    
    
    
    126,856Other assets
    
    
    233
    
    
    
    203Total assets
    
    $
    444,559
    
    
    $
    534,558
 Note:
    
    The consolidated balance sheet at December 31, 2009, as presented, is
derived from the audited consolidated financial statements at that date.
  1




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March 31,
    
    
    December 31,In Thousands of Dollars, Except Share Data
    
    2010
    
    
    2009(Unaudited)
    
    
    (See Note)LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    30,778
    
    
    $
    11,942Accrued liabilities
    
    
    12,862
    
    
    
    17,140Current deferred income taxes
    
    
    
    
    
    
    1,105Current portion of notes payable
    
    
    
    
    
    
    100,430Total current liabilities
    
    
    43,640
    
    
    
    130,617Non-current deferred income taxes
    
    
    10,717
    
    
    
    10,957Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value:
    
    
    
    
    
    
    Authorized shares  2,000,000; none issuedCommon stock, $.01 par value:Authorized shares  40,000,000;
Issued shares  26,310,002 and 26,308,002
    
    
    263
    
    
    
    263Additional paid-in capital
    
    
    44,205
    
    
    
    44,057Treasury stock, at cost  3,148,950 and 3,148,950
shares
    
    
    (21,269)
    
    
    
    (21,269)Retained earnings
    
    
    367,003
    
    
    
    369,933Total stockholders equity
    
    
    390,202
    
    
    
    392,984Total liabilities and stockholders equity
    
    $
    444,559
    
    
    $
    534,558
 Note:
    
    The consolidated balance sheet at December 31, 2009, as presented, is
derived from the audited consolidated financial statements at that date.
  2




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Quarter EndedMarch 31,In Thousands, Except Per Share Data
    
    2010
    
    
    2009Net sales
    
    $
    175,229
    
    
    $
    144,485Cost of goods sold
    
    
    164,628
    
    
    
    126,650Gross profit
    
    
    10,601
    
    
    
    17,835Selling, general and administrative expenses
    
    
    11,985
    
    
    
    10,608Operating income (loss)
    
    
    (1,384)
    
    
    
    7,227Net interest and other expenses
    
    
    2,702
    
    
    
    288Income (loss) before income taxes
    
    
    (4,086)
    
    
    
    6,939Provision (benefit) for income taxes
    
    
    (1,620)
    
    
    
    2,323Net income (loss)
    
    $
    (2,466)
    
    
    $
    4,616Net income (loss) per common and common
equivalent share  basic
    
    $
    (0.11)
    
    
    $
    0.20Weighted average common and common
equivalent shares  basic
    
    
    23,159
    
    
    
    22,997Net income (loss) per common and common
equivalent share  diluted
    
    $
    (0.11)
    
    
    $
    0.20Weighted average common and common
equivalent shares  diluted
    
    
    23,159
    
    
    
    23,277Cash dividends declared per share
    
    $
    0.02
    
    
    $
    0.02
  3




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Quarter EndedMarch 31,In Thousands of Dollars
    
    2010
    
    2009OPERATING ACTIVITIESNet income (loss)
    
    $
    (2,466)
    
    
    $
    4,616Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    3,473
    
    
    
    3,494Deferred income taxes
    
    
    (3,249)
    
    
    
    1,510Other
    
    
    (251)
    
    
    
    104Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,439)
    
    
    
    16,446Inventories
    
    
    10,033
    
    
    
    (1,958)Trade accounts payable and accrued liabilities
    
    
    14,558
    
    
    
    693Other assets and liabilities
    
    
    (6,990)
    
    
    
    144Current income taxes receivable / payable
    
    
    1,538
    
    
    
    609NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    7,207
    
    
    
    25,658INVESTING ACTIVITIESPurchases of property, plant and equipment
    
    
    (3,150)
    
    
    
    (12,225)Proceeds from sale of assets
    
    
    10
    
    
    
    46NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    
    (3,140)
    
    
    
    (12,179)FINANCING ACTIVITIESRepayment of notes payable
    
    
    (100,000)
    
    
    
    Deferred financing fees
    
    
    (50)
    
    
    
    Proceeds from issuances of common stock
    
    
    34
    
    
    
    17Dividend paid
    
    
    (464)
    
    
    
    (460)Excess tax benefits of options exercised
    
    
    
    
    
    
    2NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    (100,480)
    
    
    
    (441)Net increase (decrease) in cash and cash equivalents
    
    
    (96,413)
    
    
    
    13,038Cash and cash equivalents at beginning of period
    
    
    226,769
    
    
    
    217,666Cash and cash equivalents at end of period
    
    $
    130,356
    
    
    $
    230,704
  4




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March 31,
    
    December 31,In Thousands of Dollars
    
    2010
    
    2009Raw materials
    
    $
    5,443
    
    
    $
    14,497Work-in-process
    
    
    19,508
    
    
    
    12,239Finished goods
    
    
    75,506
    
    
    
    75,239100,457
    
    
    
    101,975Adjust to LIFO cost
    
    
    (67,927)
    
    
    
    (59,412)Lower of cost or market adjustment
    
    
    
    
    
    
    $
    32,530
    
    
    $
    42,563
   5




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March 31,
    
    December 31,In Thousands of Dollars
    
    2010
    
    2009Sales volume discounts payable
    
    $
    7,653
    
    
    $
    10,120Property taxes payable
    
    
    665
    
    
    
    2,555Commissions payable
    
    
    1,922
    
    
    
    1,569Accrued salaries
    
    
    817
    
    
    
    418Other accrued liabilities
    
    
    1,805
    
    
    
    2,478$
    12,862
    
    
    $
    17,140
      6




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Quarter EndedMarch 31,
    
    March 31,In Thousands
    
    2010
    
    2009Numerator:Net income (loss)
    
    $
    (2,466
    )
    
    $
    4,616Denominator:Denominator for basic
earnings per share 
weighted average
shares
    
    
    23,159
    
    
    
    22,997Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    280Denominator for diluted earnings per share
 weighted average shares
    
    
    23,159
    
    
    
    23,277
    st 7
      8
      Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General
   9
      Results of Operations
 Quarter Ended March 31, 2010 Compared to Quarter Ended March 31, 2009
    10
      Liquidity and Capital Resources
  11
      st
    12
      Information Regarding Forward Looking Statements
  13
      Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  Item 4.
    
    Controls and Procedures.
   PART IIOTHER INFORMATION
 Item 1.
    
    Legal Proceedings.
  14
      Item 1A.
    
    Risk Factors.
  Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
  Item 6.
    
    Exhibits.
  15
      ENCORE WIRE CORPORATION(Registrant)Dated: May 6, 2010
    
    /s/ DANIEL L. JONES
Daniel L. Jones, President and
Chief Executive OfficerDated: May 6, 2010
    
    /s/ FRANK J. BILBAN
Frank J. Bilban, Vice President  Finance,
Chief Financial Officer,
Treasurer and Secretary
 16
      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
    
    Fifth Amendment dated March 26, 2010 to Credit Agreement dated
August 27, 2004 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 10.1 to the Companys Current Report on Form 8-K filed
with the SEC on April 1, 2010).31.1
    
    Certification by Daniel J. Jones, President and Chief Executive Officer of Encore Wire
Corporation, dated May 6, 2010 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 6, 2010 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 6, 2010 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 6, 2010 as required by 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.