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





For
the quarterly period ended September 30, 2008





or





 ̈
            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: 000-52046





Logo


(Exact
name of registrant as specified in its charter)








Delaware
              36-4151663(State
      or other jurisdiction of  incorporation or
      organization)
              (I.R.S.
      Employer Identification No.)10201
      North Loop East
                Houston,
      Texas
              77029(Address
      of principal executive offices)
              (Zip
      Code)





(713)
609-2100


(Registrant’s
telephone number, including area code)








Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days   YES   x             NO    ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definition of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act





Large
      Accelerated Filer     ̈
              Accelerated
      Filer    x
              Non-Accelerated
      Filer     ̈
              Smaller
      Reporting Company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act)  YES       ̈          NO      x





At
November 1, 2008 there were 17,642,552 outstanding shares of the registrant’s
common stock, $0.001 par value per share.










HOUSTON
WIRE & CABLE COMPANY


Form
10-Q


For
the Quarter Ended September 30, 2008





INDEX





PART I. FINANCIAL INFORMATIONItem 1.  Financial Statements
      (Unaudited)Consolidated Balance Sheets
                  2Consolidated Statements of Income
                  3Consolidated Statements of Cash Flows
                  4Notes to Consolidated Financial
    Statements
                  5Item 2.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
                  7Overview
                  7Results of Operations
                  9Impact of Inflation and Commodity
    Prices
                  12Liquidity and Capital Resources
                  12Contractual Obligations
                  14Cautionary Statement for the Purposes of the “Safe
      Harbor”
                  14Item 3. Quantitative and Qualitative Disclosures about Market
      Risk
                  14Item 4.  Controls and Procedures
                  14PART II. OTHER INFORMATIONItem 1A.  Risk Factors
                  14Item 2.  Unregistered Sales of Equity Securities
      and Use of Proceeds
                  15Item 6.  Exhibits
                  15Signature Page
                  16


1
 Index


HOUSTON WIRE & CABLE COMPANY


Consolidated Balance Sheets


(In
thousands, except share data)





September 30,
                      
                      
                      December
      31,2008
                      
                      
                      2007(unaudited)AssetsCurrent
      assets:Cash
      and short-term investments
                      
                      $
                      —
                      
                      
                      $
                      —Accounts
      receivable, net
                      
                      
                      66,633
                      
                      
                      
                      58,202Inventories,
      net
                      
                      
                      71,053
                      
                      
                      
                      69,299Deferred
      income taxes
                      
                      
                      1,121
                      
                      
                      
                      1,054Prepaid
      expenses
                      
                      
                      971
                      
                      
                      
                      832Income
      taxes receivable
                      
                      
                      711
                      
                      
                      
                      2,004Total
      current assets
                      
                      
                      140,489
                      
                      
                      
                      131,391Property
      and equipment, net
                      
                      
                      3,227
                      
                      
                      
                      3,234Goodwill
                      
                      
                      2,996
                      
                      
                      
                      2,996Deferred
      income taxes
                      
                      
                      1,834
                      
                      
                      
                      1,356Other
      assets
                      
                      
                      107
                      
                      
                      
                      114Total
      assets
                      
                      $
                      148,653
                      
                      
                      $
                      139,091Liabilities
      and stockholders' equityCurrent
      liabilities:Book
      overdraft
                      
                      $
                      4,106
                      
                      
                      $
                      3,854Trade
      accounts payable
                      
                      
                      16,438
                      
                      
                      
                      12,297Accrued
      and other current liabilities
                      
                      
                      13,059
                      
                      
                      
                      17,263Total
      current liabilities
                      
                      
                      33,603
                      
                      
                      
                      33,414Long
      term obligations
                      
                      
                      40,200
                      
                      
                      
                      34,507Stockholders'
      equity:Common
      stock, $0.001 par value; 100,000,000 shares authorized; 20,988,952 shares
      issued: 17,642,552 and18,577,727
      outstanding at September 30, 2008 and December 31, 2007,
      respectively
                      
                      
                      21
                      
                      
                      
                      21Additional
      paid-in-capital
                      
                      
                      55,337
                      
                      
                      
                      54,131Retained
      earnings
                      
                      
                      74,359
                      
                      
                      
                      57,846Treasury
      stock
                      
                      
                      (54,867
                      )
                      
                      
                      (40,828
                      )Total
      stockholders' equity
                      
                      
                      74,850
                      
                      
                      
                      71,170Total
      liabilities and stockholders' equity
                      
                      $
                      148,653
                      
                      
                      $
                      139,091





The
accompanying Notes are an integral part of these Consolidated Financial
Statements


2
 Index


HOUSTON
WIRE & CABLE COMPANY


Consolidated Statements of Income


(Unaudited)


(In
thousands, except share and per share data)





Three
      Months Ended
                                                
                                                
                                                Nine
      Months EndedSeptember
      30,
                                                
                                                
                                                September
      30,2008
                                                
                                                
                                                2007
                                                
                                                
                                                2008
                                                
                                                
                                                2007Sales
                                                
                                                $
                                                98,854
                                                
                                                
                                                $
                                                98,922
                                                
                                                
                                                $
                                                285,679
                                                
                                                
                                                $
                                                269,920Cost
      of sales
                                                
                                                
                                                76,214
                                                
                                                
                                                
                                                74,116
                                                
                                                
                                                
                                                216,141
                                                
                                                
                                                
                                                198,781Gross
      profit
                                                
                                                
                                                22,640
                                                
                                                
                                                
                                                24,806
                                                
                                                
                                                
                                                69,538
                                                
                                                
                                                
                                                71,139Operating
      expenses:Salaries
      and commissions
                                                
                                                
                                                6,159
                                                
                                                
                                                
                                                6,298
                                                
                                                
                                                
                                                18,330
                                                
                                                
                                                
                                                17,475Other
      operating expenses
                                                
                                                
                                                5,302
                                                
                                                
                                                
                                                4,818
                                                
                                                
                                                
                                                15,287
                                                
                                                
                                                
                                                13,884Depreciation
      and amortization
                                                
                                                
                                                136
                                                
                                                
                                                
                                                112
                                                
                                                
                                                
                                                392
                                                
                                                
                                                
                                                331Total
      operating expenses
                                                
                                                
                                                11,597
                                                
                                                
                                                
                                                11,228
                                                
                                                
                                                
                                                34,009
                                                
                                                
                                                
                                                31,690Operating
      income
                                                
                                                
                                                11,043
                                                
                                                
                                                
                                                13,578
                                                
                                                
                                                
                                                35,529
                                                
                                                
                                                
                                                39,449Interest
      expense
                                                
                                                
                                                472
                                                
                                                
                                                
                                                290
                                                
                                                
                                                
                                                1,463
                                                
                                                
                                                
                                                661Income
      before income taxes
                                                
                                                
                                                10,571
                                                
                                                
                                                
                                                13,288
                                                
                                                
                                                
                                                34,066
                                                
                                                
                                                
                                                38,788Income
      taxes
                                                
                                                
                                                3,996
                                                
                                                
                                                
                                                4,994
                                                
                                                
                                                
                                                13,009
                                                
                                                
                                                
                                                14,776Net
      income
                                                
                                                $
                                                6,575
                                                
                                                
                                                $
                                                8,294
                                                
                                                
                                                $
                                                21,057
                                                
                                                
                                                $
                                                24,012Earnings
      per share:Basic
                                                
                                                $
                                                0.37
                                                
                                                
                                                $
                                                0.41
                                                
                                                
                                                $
                                                1.17
                                                
                                                
                                                $
                                                1.16Diluted
                                                
                                                $
                                                0.37
                                                
                                                
                                                $
                                                0.41
                                                
                                                
                                                $
                                                1.17
                                                
                                                
                                                $
                                                1.15Weighted
      average common shares outstanding:Basic
                                                
                                                
                                                17,676,468
                                                
                                                
                                                
                                                20,395,199
                                                
                                                
                                                
                                                17,943,130
                                                
                                                
                                                
                                                20,739,550Diluted
                                                
                                                
                                                17,704,818
                                                
                                                
                                                
                                                20,452,695
                                                
                                                
                                                
                                                17,978,208
                                                
                                                
                                                
                                                20,828,983Dividends
      declared per share
                                                
                                                $
                                                0.085
                                                
                                                
                                                $
                                                0.075
                                                
                                                
                                                $
                                                0.255
                                                
                                                
                                                $
                                                0.075





The
accompanying Notes are an integral part of these Consolidated Financial
Statements


3
 Index


HOUSTON
WIRE& CABLE COMPANY


Consolidated Statements of Cash Flows


(Unaudited)


(In
thousands)





Nine
      Months EndedSeptember
      30,2008
                                  
                                  
                                  2007Operating
      activitiesNet
      income
                                  
                                  $
                                  21,057
                                  
                                  
                                  $
                                  24,012Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                                  
                                  
                                  392
                                  
                                  
                                  
                                  331Amortization
      of capitalized loan costs
                                  
                                  
                                  60
                                  
                                  
                                  
                                  48Employee
      stock-based compensation expense
                                  
                                  
                                  1,570
                                  
                                  
                                  
                                  1,352Provision
      for doubtful accounts
                                  
                                  
                                  114
                                  
                                  
                                  
                                  (299
                                  )Provision
      for returns and allowances
                                  
                                  
                                  33
                                  
                                  
                                  
                                  (151
                                  )Provision
      for inventory obsolescence
                                  
                                  
                                  (43
                                  )
                                  
                                  
                                  (79
                                  )Deferred
      income taxes
                                  
                                  
                                  (545
                                  )
                                  
                                  
                                  (396
                                  )Changes
      in operating assets and liabilities:Accounts
      receivable
                                  
                                  
                                  (8,578
                                  )
                                  
                                  
                                  (15,638
                                  )Inventories
                                  
                                  
                                  (1,711
                                  )
                                  
                                  
                                  (3,902
                                  )Prepaid
      expenses
                                  
                                  
                                  (139
                                  )
                                  
                                  
                                  (569
                                  )Other
      assets
                                  
                                  
                                  (53
                                  )
                                  
                                  
                                  (48
                                  )Book
      overdraft
                                  
                                  
                                  252
                                  
                                  
                                  
                                  1,117Trade
      accounts payable
                                  
                                  
                                  4,141
                                  
                                  
                                  
                                  4,651Accrued
      and other current liabilities
                                  
                                  
                                  (3,484
                                  )
                                  
                                  
                                  1,941Income
      taxes payable/receivable
                                  
                                  
                                  1,293
                                  
                                  
                                  
                                  (613
                                  )Net
      cash provided by operating activities
                                  
                                  
                                  14,359
                                  
                                  
                                  
                                  11,757Investing
      activitiesExpenditures
      for property and equipment
                                  
                                  
                                  (384
                                  )
                                  
                                  
                                  (388
                                  )Net
      cash used in investing activities
                                  
                                  
                                  (384
                                  )
                                  
                                  
                                  (388
                                  )Financing
      activitiesBorrowings
      on revolver
                                  
                                  
                                  289,165
                                  
                                  
                                  
                                  287,453Payments
      on revolver
                                  
                                  
                                  (283,472
                                  )
                                  
                                  
                                  (270,917
                                  )Proceeds
      from exercise of stock options
                                  
                                  
                                  57
                                  
                                  
                                  
                                  91Excess
      tax benefit for stock options
                                  
                                  
                                  264
                                  
                                  
                                  
                                  1,216Payment
      of dividends
                                  
                                  
                                  (4,544
                                  )
                                  
                                  
                                  (1,554
                                  )Purchase
      of treasury stock
                                  
                                  
                                  (15,445
                                  )
                                  
                                  
                                  (27,658
                                  )Net
      cash used in financing activities
                                  
                                  
                                  (13,975
                                  )
                                  
                                  
                                  (11,369
                                  )Net
      change in cash
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —Cash
      at beginning of period
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —Cash
      at end of period
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —





The
accompanying Notes are an integral part of these Consolidated Financial
Statements


4
 Index


HOUSTON
WIRE & CABLE COMPANY


Notes to Consolidated Financial Statements
(Unaudited)


(in
thousands, except per share amounts)


1.
Basis of Presentation





Houston
Wire & Cable Company (“HWC” or the “Company”) through its wholly owned
subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable
Management Services Inc., distributes specialty electrical wire and cable to the
U.S. electrical distribution market through eleven locations in ten states
throughout the United States.  The Company has no other business
activity.





The
consolidated financial statements as of September 30, 2008 and for the three and
nine months ended September 30, 2008 and 2007 have been prepared in accordance
with U.S. generally accepted accounting principles (“GAAP”) for interim
financial information and Article 10 of Regulation S-X.  Accordingly
they do not include all of the information and footnotes required by GAAP for
complete financial statements.  In the opinion of management, all
adjustments, consisting only of normal recurring accruals, considered necessary
for a fair presentation of the results of these interim periods have been
included.  The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for the full
year.





The
preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.  The most significant
estimates are those relating to the allowance for doubtful accounts, reserve for
returns and allowances, reserve for inventory obsolescence and the accrual for
vendor rebates.  These estimates are continually reviewed and adjusted
as necessary, but actual results could differ from those estimates.





For
further information, refer to the consolidated financial statements and notes
thereto included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007 filed with the Securities and Exchange Commission (the
“SEC”).





Recent
Accounting Pronouncements





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007),
Business Combinations
(“SFAS 141R”). SFAS 141R establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in the
acquiree and the goodwill acquired. SFAS 141R also requires transaction costs
related to the business combination to be expensed as incurred and establishes
disclosure requirements to enable the evaluation of the nature and financial
effects of the business combination. SFAS 141R is effective for fiscal years
beginning after December 15, 2008, and the Company will adopt it in the first
quarter of fiscal 2009. The Company does not expect the adoption of SFAS 141R to
have a material impact on its Consolidated Financial Statements.





Adoption
of New Accounting Policy





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
(“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets
and liabilities. It also responds to investors’ requests for expanded
information about the extent to which companies measure assets and liabilities
at fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value and does
not expand the use of fair value in any new circumstances. The Company’s
adoption of this standard on January 1, 2008 did not have a material impact on
its Consolidated Financial Statements.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115   (“SFAS 159”). SFAS 159 permits companies to choose
to measure many financial instruments and certain other items at fair value in
order to mitigate volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply complex hedge
accounting provisions. SFAS No. 159 was effective for financial statements
issued for fiscal years beginning after November 15, 2007. The Company’s
adoption of this standard on January 1, 2008 did not have a material impact on
its Consolidated Financial Statements.





2.
Earnings per Share





In
accordance with SFAS No. 128, Earnings per Share, basic
earnings per share is calculated by dividing the net income by the
weighted-average number of common shares outstanding. Diluted earnings per share
includes the dilutive effects of stock option awards.  The numerator
used in the calculation of both basic and diluted earnings per share for all
periods presented was net income.  The denominator for each period
presented was determined as follows:





Three
      Months Ended
                          
                          
                          Nine
      Months EndedSeptember
      30,
                          
                          
                          September
      30,2008
                          
                          
                          2007
                          
                          
                          2008
                          
                          
                          2007Weighted
      average common shares for basic earnings per share
                          
                          
                          17,676
                          
                          
                          
                          20,395
                          
                          
                          
                          17,943
                          
                          
                          
                          20,740Effect
      of dilutive securities
                          
                          
                          29
                          
                          
                          
                          58
                          
                          
                          
                          35
                          
                          
                          
                          89Denominator
      of diluted earnings per share
                          
                          
                          17,705
                          
                          
                          
                          20,453
                          
                          
                          
                          17,978
                          
                          
                          
                          20,829


5
 Index




The
weighted average number of stock-based awards not included in the calculation of
the dilutive effect of stock-based awards was 834 and 660 for the three months
ended September 30, 2008 and 2007, respectively, and 837 and 541 for the nine
months ended September 30, 2008 and 2007, respectively.





3.   Long Term
Obligations





The
Company’s current loan and security agreement provides for a $75,000 revolving
loan, bears interest at the lender’s base interest rate and matures on May 21,
2010. The balance outstanding of $40,200 at September 30, 2008 is almost
entirely due to borrowings in connection with the Company’s stock repurchase
program that began in the latter portion of 2007 and has continued in
2008.  The Company is in compliance with the financial covenants
governing its indebtedness.





4.  Stockholders’
Equity





The Board
of Directors approved a stock repurchase program to be completed on or before
August 30, 2009, where the Company is authorized to purchase up to $75,000 of
its outstanding shares of common stock, from time to time, depending on market
conditions, trading activity, business conditions and other
factors.  Shares of stock purchased under the program are currently
being held as treasury shares and may be used to satisfy the exercise of
options, to fund acquisitions, or for other uses as authorized by the Board of
Directors. Total shares repurchased were 977 and 1,498 at a cost of $14,725 and
$27,942 during the nine months ended September 30, 2008 and 2007,
respectively.  Accrued share purchases totaled $283, $270, and $0 at
September 30, 2007, December 31, 2007 and September 30, 2008,
respectively.  The statement of cash flows for the nine months ended
September 30, 2007 has been adjusted to exclude accrued share purchases at
September 30, 2007 funded during the fourth quarter of 2007.  Since
inception, total shares repurchased are 3,392 at a total cost of
$55,615.





During
each of the first three quarters of 2008, the Board of Directors approved a
quarterly dividend of $0.085 per share payable to stockholders.  Total
dividends paid were $4,544 and $1,554 during the nine months ended September 30,
2008 and 2007, respectively.





5.
Stock Based Compensation





On May 8,
2008, at the Annual Meeting of Stockholders, the Company issued options to
purchase 5 shares of its common stock to each non-employee director who was
re-elected (other than the Chairman of the Board, who received an option to
purchase 10 shares of the Company’s common stock) and 15 shares of common stock
to the newly-elected non-employee director, for an aggregate of 45 shares. Each
option has an exercise price equal to the fair market value of the Company’s
common stock at the close of trading on May 8, 2008, has a contractual life of
ten years and vests one year after the date of grant.





On
January 9, 2008, the Company granted to the Company’s chief executive officer
options to purchase 65 shares of its common stock with an exercise price equal
to the fair market value of the Company’s stock at the close of trading on
January 9, 2008. These options have a contractual life of ten years and vest 50%
on March 9, 2011 and the remaining 50% on March 9, 2012, provided that in the
event of the chief executive officer’s death or permanent disability, such
options would vest ratably based on the days served from the date of
grant.





On May 1,
2007, at the Annual Meeting of Stockholders, upon re-election, the four
independent directors each received the annual grant of an option to purchase 5
shares of common stock with an exercise price equal to the fair market value of
the Company’s stock at the close of trading on that day. These options have a
contractual life of ten years and vest after one year.





On March
9, 2007, the Company granted to the Company’s chief executive officer, an option
to purchase 500 shares of its common stock with an exercise price equal to the
fair market value of the Company’s stock at the close of trading on March 9,
2007. This option has a contractual life of ten years and vests 50% four years
after the date of grant and the remaining 50% five years after the date of
grant, provided that in the event of the chief executive officer’s death or
permanent disability, such option would vest ratably based on the days served
from the date of grant.





The fair
value of each option awarded is estimated on the date of grant using a
Black-Scholes option-pricing model. Expected volatilities are based on
historical volatility of the Company's stock, and the historical volatility of
the stock of similar companies and other factors. The Company uses historical
data to estimate option exercises and employee terminations within the valuation
model. The expected life of options granted represents the period of time that
options granted are expected to be outstanding. The risk-free rate for periods
within the life of the option is based on the U.S. Treasury yield curve in
effect at the time of grant.


6
 Index


The
following weighted average assumptions were used to calculate the fair value of
the Company’s options issued during the nine months ended September 30, 2008 and
2007:





2008
                    
                    2007Expected
      volatility
                    69%
                    
                    42%Expected
      life in years
                    5.5
      years
                    
                    5.5
      yearsRisk-free
      interest rate
                    3.81%
                    
                    4.59%Dividend
      yield
                    2.28%
                    
                    0%





Total
stock-based compensation cost was $513 and $497 for the three months ended
September 30, 2008 and 2007, respectively, and $1,570 and $1,352 for the nine
months ended September 30, 2008 and 2007, respectively. Total income tax benefit
recognized for stock-based compensation arrangements was $197 and $191 for the
three months ended September 30, 2008 and 2007, respectively, and $604 and $521
for the nine months ended September 30, 2008 and 2007,
respectively.





As of
September 30, 2008, there was $6,296 of total unrecognized stock-based
compensation cost related to nonvested share-based compensation arrangements.
The cost is expected to be recognized over a weighted average period of
approximately 40 months.





6.
Contingencies





HWC,
along with many other defendants, has been named in a number of lawsuits in the
state courts of Minnesota, North Dakota and South Dakota alleging that certain
wire and cable, which may have contained asbestos, caused injury to the
plaintiffs who were exposed to this wire and cable. These lawsuits are
individual personal injury suits that seek unspecified amounts of money damages
as the sole remedy. It is not clear whether the alleged injuries occurred as a
result of the wire and cable in question or whether HWC, in fact, distributed
the wire and cable alleged to have caused any injuries. In addition, HWC did not
manufacture any of the wire and cable at issue, and HWC would rely on any
warranties from the manufacturers of such cable if it were determined that any
of the wire or cable that HWC distributed contained asbestos which caused injury
to any of these plaintiffs. In connection with ALLTEL's sale of the Company in
1997, ALLTEL provided indemnities with respect to costs and damages associated
with these claims that HWC believes it could enforce if its insurance coverage
proves inadequate. In addition, HWC maintains general liability insurance that
has applied to these claims. To date, all costs associated with these claims
have been covered by the applicable insurance policies and all defense of these
claims has been handled by the applicable insurance companies.





Except
for the foregoing cases, there are no legal proceedings pending against or
involving the Company that, in management's opinion, based on the current known
facts and circumstances, are expected to have a material adverse effect on the
Company's consolidated financial position, cash flows, or results from
operations.





7.  Subsequent
Event





On
November 7, 2008, the Board of Directors approved a dividend on the shares of
common stock of the Company in the amount of $0.085 per share, payable on
November 28, 2008, to stockholders of record at the close of business on
November 15, 2008.




Item 2.   Management’s Discussion and Analysis of
Financial Condition and Results of Operations





The
following Management’s Discussion and Analysis (“MD&A”) is intended to help
the reader understand the Company’s financial position and results of
operations.  MD&A is provided as a supplement to the Company’s
Consolidated Financial Statements (unaudited) and the accompanying Notes to
Consolidated Financial Statements (unaudited) and should be read in conjunction
with the MD&A included in the Company’s Form 10-K for the year ended
December 31, 2007.





Overview





We are
one of the largest distributors of specialty wire and cable and related services
to the U.S. electrical distribution market. We serve over 2,800 customers in
over 8,200 individual locations, including virtually all of the top 200
electrical distributors in the U.S. We have strong relationships with leading
wire and cable manufacturers and provide them with efficient access to the
fragmented electrical distribution market. We distribute approximately 23,000
SKUs (stock-keeping units) from eleven strategically located distribution
centers in ten states. We are focused on providing our electrical distributor
customers with a single-source solution for specialty wire and cable and related
services by offering a large selection of in-stock items, exceptional customer
service and high levels of product expertise.


7
 Index


We offer
products in most categories of specialty wire and cable, including:




·
            continuous and interlocked armor
      cable (cable encapsulated in either a seamless or interlocked aluminum
      protective sheath);


·
            control and power cable (single
      or multiple conductor industrial
cable);


·
            electronic wire and cable
      (computer, audio and signal
cable);


·
            flexible and portable cords
      (flexible, heavy duty industrial
cable);


·
            instrumentation and thermocouple
      cable (cables used for transmitting signals for instruments and heat
      sensing devices);


·
            lead and high temperature cable
      (single conductor cable used for low or high temperature
      applications);


·
            medium voltage cable (cables used
      for applications between 2,001 volts and 35,000 volts);
      and


·
            premise and category wire and
      cable (cable used for home and high speed data
      applications).





We also
offer private branded products, including our LifeGuardTM low-smoke, zero-halogen
cable. Low-smoke, zero halogen products are made with compounds that produce no
halogen gases and very little smoke while under combustion.





In
addition to our product offerings, we provide comprehensive value-added services
including: standard same day shipment from our extensive inventory and
distribution network; application engineering support through our knowledgeable
sales and technical support staff; custom cutting of wire and cable to exact
specifications; cable management programs that provide job-specific asset
management and just-in-time delivery; job-site delivery and logistics support;
24/7/365 customer service provided by our own employees; and customized
internet-based ordering capabilities.





Critical
Accounting Policies





Critical
accounting policies are those that both are important to the accurate portrayal
of a company's financial condition and results, and require subjective or
complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain.





In order
to prepare financial statements that conform to GAAP, we make estimates and
assumptions that affect the amounts reported in our financial statements and
accompanying notes. Certain estimates are particularly sensitive due to their
significance to the financial statements and the possibility that future events
may be significantly different from our expectations.





We have
identified the following accounting policies as those that require us to make
the most subjective or complex judgments in order to fairly present our
consolidated financial position and results of operations. Actual results in
these areas could differ materially from management's estimates under different
assumptions and conditions.





Allowance
for Doubtful Accounts





We
maintain an allowance for doubtful accounts receivable for estimated losses
resulting from the inability of our customers to make required payments. We
perform periodic credit evaluations of our customers and typically do not
require collateral. Consistent with industry practices, we require payment from
most customers within 30 days of invoice date. We have an estimation procedure,
based on historical data and recent changes in the aging of these receivables,
which we use to record reserves throughout the year. In the last five years,
write-offs against our allowance for doubtful accounts have averaged
approximately $112,000 per year. A 20% change in our estimate at September 30,
2008 would have resulted in a change in income before income taxes of
approximately $33,000.





Reserve
for Returns and Allowances





We
estimate the gross profit impact of returns and allowances for previously
recorded sales. This reserve is calculated on historical and statistical returns
and allowances data and adjusted as trends in the variables change. A 20% change
in our estimate at September 30, 2008 would have resulted in a change in income
before income taxes of approximately $135,000.





Reserve
for Inventory Obsolescence





We
continually monitor our inventory levels at each of our distribution locations.
Our reserve for inventory obsolescence is based on the age of the inventory,
movements of our inventory over the prior twelve months and the experience of
our purchasing and sales departments in estimating demand for the product in the
succeeding year. Our inventories are generally not susceptible to technological
obsolescence. A 20% change in our estimate at September 30, 2008 would have
resulted in a change in income before income taxes of approximately
$351,000.


8
 Index


Accrual
for Vendor Rebates





Many of
our arrangements with our vendors entitle us to receive a rebate of a specified
amount when we achieve any of a number of measures, generally related to the
volume of purchases from the vendor. We account for these rebates as a reduction
of the prices of the vendor's products, which reduces inventory until we sell
the product, at which time these rebates reduce cost of sales. Throughout the
year, we estimate the amount of rebates earned based on our purchases to date
and our estimate of purchases to be made for the remainder of the year relative
to the purchase levels that mark our progress toward earning the rebates. We
continually revise these estimates to reflect actual purchase levels. A 20%
change in our estimate of total rebates earned during the nine months ended
September 30, 2008 would have resulted in a change in income before income taxes
of approximately $1,195,000.





Goodwill





Goodwill
represents the excess of the amount we paid to acquire businesses over the
estimated fair value of tangible assets and identifiable intangible assets
acquired, less liabilities assumed. At September 30, 2008, our net goodwill
balance was $3.0 million, representing 2.0% of our total assets.





Under the
provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets ("SFAS 142"), we test goodwill for impairment annually, or more
frequently if indications of possible impairment exist, by applying a fair
value-based test. In October 2008, we performed our annual goodwill impairment
tests for goodwill and other indefinite-lived intangible assets, and, as a
result of this test, we believe the goodwill on our balance sheet is not
impaired.





If
circumstances change or events occur to indicate that our fair value has fallen
below book value, we will compare the estimated fair value of the goodwill to
its carrying value. If the carrying value of goodwill exceeds the estimated fair
value of goodwill, we will recognize the difference as an impairment loss in
operating income.




Results of Operations





The
following table shows, for the periods indicated, information derived from our
consolidated statements of income, expressed as a percent of net sales for the
periods presented.





Three
      Months Ended
                                
                                
                                Nine
      Months EndedSeptember
      30,
                                
                                
                                September
      30,2008
                                
                                
                                2007
                                
                                
                                2008
                                
                                
                                2007Sales
                                
                                
                                100.0
                                %
                                
                                
                                100.0
                                %
                                
                                
                                100.0
                                %
                                
                                
                                100.0
                                %Cost
      of sales
                                
                                
                                77.1
                                %
                                
                                
                                74.9
                                %
                                
                                
                                75.7
                                %
                                
                                
                                73.6
                                %Gross
      profit
                                
                                
                                22.9
                                %
                                
                                
                                25.1
                                %
                                
                                
                                24.3
                                %
                                
                                
                                26.4
                                %Operating
      expenses:Salaries
      and commissions
                                
                                
                                6.2
                                %
                                
                                
                                6.4
                                %
                                
                                
                                6.4
                                %
                                
                                
                                6.5
                                %Other
      operating expenses
                                
                                
                                5.4
                                %
                                
                                
                                4.9
                                %
                                
                                
                                5.4
                                %
                                
                                
                                5.1
                                %Depreciation
      and amortization
                                
                                
                                0.1
                                %
                                
                                
                                0.1
                                %
                                
                                
                                0.1
                                %
                                
                                
                                0.1
                                %Total
      operating expenses:
                                
                                
                                11.7
                                %
                                
                                
                                11.4
                                %
                                
                                
                                11.9
                                %
                                
                                
                                11.7
                                %Operating
      income
                                
                                
                                11.2
                                %
                                
                                
                                13.7
                                %
                                
                                
                                12.4
                                %
                                
                                
                                14.6
                                %Interest
      expense
                                
                                
                                0.5
                                %
                                
                                
                                0.3
                                %
                                
                                
                                0.5
                                %
                                
                                
                                0.2
                                %Income
      before income taxes
                                
                                
                                10.7
                                %
                                
                                
                                13.4
                                %
                                
                                
                                11.9
                                %
                                
                                
                                14.4
                                %Income
      taxes
                                
                                
                                4.0
                                %
                                
                                
                                5.0
                                %
                                
                                
                                4.6
                                %
                                
                                
                                5.5
                                %Net
      income
                                
                                
                                6.7
                                %
                                
                                
                                8.4
                                %
                                
                                
                                7.4
                                %
                                
                                
                                8.9
                                %





Note:
 Due to rounding,
percentages may not add up to total operating expenses, operating income, income
before taxes or net income.


9
 Index


Comparison
of the Three Months Ended September 30, 2008 and 2007





Sales


Three
      Months EndedSeptember
      30,(Dollars
      in millions)
                                                        
                                                        2008
                                                        
                                                        
                                                        2007
                                                        
                                                        
                                                        ChangeSales
                                                        
                                                        $
                                                        98.9
                                                        
                                                        
                                                        $
                                                        98.9
                                                        
                                                        
                                                        $
                                                        0.0
                                                        
                                                        
                                                        
                                                        (0.1
                                                        )%





Sales in
the third quarter of 2008 remained flat at $98.9 million when compared to the
third quarter of 2007 in spite of very difficult conditions due to a slowing
economy and market liquidity pressures resulting from the credit
crisis.   Although the Company's five internal growth initiatives
encompassing Emission Controls, Engineering & Construction, Industrials,
LifeGuardTM (and other private branded products) and Utility Power Generation are
not directly tied to markets or customers most severely affected by these
conditions, we did experience increased competitive pressures that tempered
sales opportunities and revenues.





During
September, we experienced significant business interruptions in the Louisiana
and Texas Gulf Coast region due to Hurricanes Gustav and
Ike.  Although our business continuity plans worked as intended, our
customer base in the expanded geography of the strike zones was severely
affected and electrical power was disrupted or absent for approximately two
weeks after each storm.  Order flow rates from many of our customers
in the hurricane affected areas were down significantly during these post-storm
periods.





Sales in
our core Repair and Replacement sector, also referred to as Maintenance, Repair
and Operations ("MRO"), were down slightly as we believe this sector continued
to be negatively affected by broad market conditions that influence select
discretionary expense deferral and business disruptions resulting from the
aforementioned hurricanes.  Project business was slightly positive on
a quarter over quarter basis and the Company continued to benefit from further
penetration and success in the growth initiative markets.








Gross
Profit


Three
      Months EndedSeptember
      30,(Dollars
      in millions)
                                      
                                      2008
                                      
                                      
                                      2007
                                      
                                      
                                      ChangeGross
      profit
                                      
                                      $
                                      22.6
                                      
                                      
                                      $
                                      24.8
                                      
                                      
                                      $
                                      (2.2
                                      )
                                      
                                      
                                      (8.7
                                      )%Gross
      profit as a percent of sales
                                      
                                      
                                      22.9
                                      %
                                      
                                      
                                      25.1
                                      %
                                      
                                      
                                      (2.2
                                      )%





Gross
profit decreased 8.7% to $22.6 million in 2008 from $24.8 million in 2007. Our
gross profit as a percentage of sales (gross margin) decreased to 22.9% in 2008,
which was 220 basis points lower than 2007. The reduction in gross margin was
primarily attributable to competitive pricing pressures resulting from the
current market environment, commodity price deflation, and reduced supplier
incentives.





Operating
Expenses


Three
      Months EndedSeptember
      30,(Dollars
      in millions)
                                                      
                                                      2008
                                                      
                                                      
                                                      2007
                                                      
                                                      
                                                      ChangeOperating
      expenses:Salaries
      and commissions
                                                      
                                                      $
                                                      6.2
                                                      
                                                      
                                                      $
                                                      6.3
                                                      
                                                      
                                                      $
                                                      (0.1
                                                      )
                                                      
                                                      
                                                      (2.2
                                                      )%Other
      operating expenses
                                                      
                                                      
                                                      5.3
                                                      
                                                      
                                                      
                                                      4.8
                                                      
                                                      
                                                      
                                                      0.5
                                                      
                                                      
                                                      
                                                      10.0
                                                      %Depreciation
      and amortization
                                                      
                                                      
                                                      0.1
                                                      
                                                      
                                                      
                                                      0.1
                                                      
                                                      
                                                      
                                                      0.0
                                                      
                                                      
                                                      
                                                      21.4
                                                      %Total
      operating expenses
                                                      
                                                      $
                                                      11.6
                                                      
                                                      
                                                      $
                                                      11.2
                                                      
                                                      
                                                      $
                                                      0.4
                                                      
                                                      
                                                      
                                                      3.3
                                                      %Operating
      expenses as a percent of sales
                                                      
                                                      
                                                      11.7
                                                      %
                                                      
                                                      
                                                      11.4
                                                      %
                                                      
                                                      
                                                      0.3
                                                      %





Note:  Due
to rounding, numbers may not add up to total operating expenses.





Salaries
and commissions decreased slightly to $6.2 million in 2008 from $6.3 million in
2007. Commissions decreased due to lower gross margin and changes to commission
programs from the prior year and were partially offset by higher salaries which
were attributable to additional employees, annual pay increases and an increase
in stock compensation expense. Salaries and commissions as a percentage of sales
were also down slightly to 6.2% in 2008 from 6.4% in 2007.





Other
operating expenses increased primarily due to higher employee insurance costs,
costs associated with additional sales personnel and bad debt expense. These
expenses were partially offset by lower professional fees.


10
 Index


Depreciation
and amortization expense was consistent at $0.1 million for both
periods.





Operating
expenses as a percent of sales increased slightly to 11.7% in 2008 from 11.4% in
2007.





Interest
Expense





Interest
expense increased $0.2 million or 62.8% from $0.3 million in 2007 to $0.5
million in 2008 due primarily to increased debt for stock repurchases in the
latter portion of 2007 and during 2008. Average debt was $46.9 million for the
quarter ended September 30, 2008 versus $14.3 million for the quarter ended
September 30, 2007. The average effective interest rate decreased to 3.9% in the
2008 period, from 7.9% in 2007 due to market interest rate
declines.





Income
Taxes





Income
taxes decreased $1.0 million or 20.0% as our income before income taxes
decreased $2.7 million or 20.4%. The effective income tax rate increased
slightly from 37.6% in 2007 to 37.8% in 2008.





Net
Income





Based on
the factors discussed above, we achieved net income of $6.6 million in 2008
compared to net income of $8.3 million in 2007, a decrease of
20.7%.








Comparison
of the Nine Months Ended September 30, 2008 and 2007





Sales


Nine
      Months EndedSeptember
      30,(Dollars
      in millions)
                                                  
                                                  2008
                                                  
                                                  
                                                  2007
                                                  
                                                  
                                                  ChangeSales
                                                  
                                                  $
                                                  285.7
                                                  
                                                  
                                                  $
                                                  269.9
                                                  
                                                  
                                                  $
                                                  15.8
                                                  
                                                  
                                                  
                                                  5.8
                                                  %





Sales in
the first nine months of 2008 increased 5.8% to $285.7 million from $269.9
million in the first nine months of 2007.  Internal growth accounted
for the entire increase in sales.  The company estimates that the
entire sales growth resulted from project activity in the five internal growth
initiatives encompassing Emission Controls, Engineering & Construction,
Industrials, LifeGuardTM (and other private branded products) and Utility Power
Generation.  Investment and capital expansion within these initiatives
remained healthy as project business was up slightly as we benefited from
continued penetration into these markets.  Our core Repair and
Replacement sector was down slightly as this sector continued to face a slowing
economy, market liquidity pressures resulting from the credit crisis, and
significant business interruptions in large industrial markets during the month
of September as a result of Hurricanes Gustav and Ike.




Gross
Profit


Nine
      Months EndedSeptember
      30,(Dollars
      in millions)
                                                      
                                                      2008
                                                      
                                                      
                                                      2007
                                                      
                                                      
                                                      ChangeGross
      profit
                                                      
                                                      $
                                                      69.5
                                                      
                                                      
                                                      $
                                                      71.1
                                                      
                                                      
                                                      $
                                                      (1.6
                                                      )
                                                      
                                                      
                                                      (2.3
                                                      )%Gross
      profit as a percent of sales
                                                      
                                                      
                                                      24.3
                                                      %
                                                      
                                                      
                                                      26.4
                                                      %
                                                      
                                                      
                                                      (2.1
                                                      )%





Gross
profit decreased 2.3% to $69.5 million in 2008 from $71.1 million in 2007 as a
compression in gross margin more than offset the increase in sales. Our gross
margin was 24.3% in 2008 which was 210 basis points lower than 2007. The
compressed gross margin was primarily attributable to competitive pricing
pressures in the current market environment, reduced supplier incentives,
increased customer incentives due to increased sales and an additional number of
targeted customers eligible for the incentives.


11
 Index


Operating
Expenses


Nine
      Months EndedSeptember
      30,(Dollars
      in millions)
                                                        
                                                        2008
                                                        
                                                        
                                                        2007
                                                        
                                                        
                                                        ChangeOperating
      expenses:Salaries
      and commissions
                                                        
                                                        $
                                                        18.3
                                                        
                                                        
                                                        $
                                                        17.5
                                                        
                                                        
                                                        $
                                                        0.9
                                                        
                                                        
                                                        
                                                        4.9
                                                        %Other
      operating expenses
                                                        
                                                        
                                                        15.3
                                                        
                                                        
                                                        
                                                        13.9
                                                        
                                                        
                                                        
                                                        1.4
                                                        
                                                        
                                                        
                                                        10.1
                                                        %Depreciation
      and amortization
                                                        
                                                        
                                                        0.4
                                                        
                                                        
                                                        
                                                        0.3
                                                        
                                                        
                                                        
                                                        0.1
                                                        
                                                        
                                                        
                                                        18.4
                                                        %Total
      operating expenses
                                                        
                                                        $
                                                        34.0
                                                        
                                                        
                                                        $
                                                        31.7
                                                        
                                                        
                                                        $
                                                        2.3
                                                        
                                                        
                                                        
                                                        7.3
                                                        %Operating
      expenses as a percent of sales
                                                        
                                                        
                                                        11.9
                                                        %
                                                        
                                                        
                                                        11.7
                                                        %
                                                        
                                                        
                                                        0.2
                                                        %





Note:  Due
to rounding, numbers may not add up to total operating expenses.





The
increase in salaries and commissions is due to higher salaries. The higher
salaries are attributable to additional employees, annual pay increases and an
increase in stock compensation expense.





Other
operating expenses increased due to bad debt expense in 2008 versus a credit in
2007, increased sales activities, warehouse supplies and facility costs. These
increases were partially offset by lower professional fees and reduced stock
compensation expense for our Board of Directors.





Depreciation
and amortization increased slightly to $0.4 million in 2008 from $0.3 million in
2007.





Operating
expenses as a percent of sales increased slightly to 11.9% in 2008 compared to
11.7% in 2007.





Interest
Expense





Interest
expense increased $0.8 million or 121.3% from $0.7 million in 2007 to $1.5
million in 2008 due primarily to increased debt for stock repurchases in the
latter portion of 2007 and in 2008.  Average debt was $43.6 million
for the period ended September 30, 2008 versus $10.7 million for the period
ended September 30, 2007. The average effective interest rate decreased to 4.3%
for the period ended September 30, 2008 from 7.9% for the period ended September
30, 2007 due to market rate declines.





Income
Taxes





Income
taxes decreased $1.8 million or 12.0% as our income before taxes decreased $4.7
million or 12.2%. The effective income tax rate increased slightly from 38.1% in
2007 to 38.2% in 2008.





Net
Income





Based on
the factors discussed above, we achieved net income of $21.1 million in 2008
compared to $24.0 million in 2007, a decrease of 12.3%.





Impact of Inflation and Commodity Prices





Our
results of operations are affected by changes in the inflation rate and
commodity prices. Moreover, because copper and petrochemical products are
components of the wire and cable we sell, fluctuations in the costs of these and
other commodities have historically affected our operating results. To the
extent we are unable to pass on to our customers cost increases due to inflation
or rising commodity prices, it could adversely affect our operating
results.  To the extent commodity prices decline, the net realizable
value of our existing inventory could be reduced and our gross profit could be
adversely affected. As we turn our inventory approximately four times a year,
the impact of decreasing commodity prices would primarily affect the results of
the succeeding calendar quarter.





Liquidity and Capital Resources





Our
primary capital needs are for working capital obligations, debt service, capital
expenditures and other general corporate purposes. Our primary sources of
working capital are cash from operations supplemented by bank borrowings. During
2008, we have funded our capital expenditures through cash from operations. Our
working capital amounted to $106.9 million at September 30, 2008 compared to
$98.0 million at December 31, 2007.


12
 Index


Liquidity
is defined as the ability to generate adequate amounts of cash to meet the
current need for cash. We assess our liquidity in terms of our ability to
generate cash to fund our operating activities. Significant factors which could
affect liquidity include the following:





•
            the adequacy of available bank
      lines of credit;


•
            the ability to attract long-term
      capital with satisfactory
terms;


•
            additional stock
      repurchases;


•
            cash flows generated from
      operating activities;


•
            payment of
      dividends;


•
            capital expenditures;
      and


•
            acquisitions.





Comparison
of the Nine Months Ended September 30, 2008 and 2007





Our cash
provided by operating activities for the nine months ended September 30, 2008,
was $14.4 million compared to $11.8 million in the prior year period. Our net
income was $21.1 million in 2008 compared to $24.0 million in 2007. Accounts
receivable increased $8.6 million due to increased sales. Accrued and other
liabilities decreased due to lower customer prepayments on orders and lower
accrued wire purchases. Accounts payable increased due to increased inventory
and a higher number of invoices matched to the inventory receivers which
increased accounts payable and reduced accrued wire purchases. Inventory levels
increased due to an increase in cable management inventory, partially offset by
a decrease in regular stock inventory. There is an income tax receivable of $0.7
million at September 30, 2008.





Net cash
used in investing activities was $0.4 million in 2008 and 2007 as requirements
for additional capital resources remained low.





Net cash
used in financing activities was $14.0 million in 2008 compared to $11.4 million
in 2007. Treasury stock purchases of $15.4 million and dividend payments of $4.5
million partially offset by net borrowings of $5.7 million, were the main
components of cash used in financing activities.





Indebtedness





Our
principal source of liquidity at September 30, 2008 was working capital of
$106.9 million compared to $98.0 million at December 31, 2007. We also had
available borrowing capacity of approximately $34.8 million at September 30,
2008 and $40.5 million at December 31, 2007 under our $75 million loan and
security agreement.





We
believe that we have adequate availability of capital to fund our present
operations, meet our commitments on our existing debt, continue the stock
repurchase program, continue to fund our dividend payments and fund anticipated
growth over the next twelve months, including expansion in existing and targeted
market areas. We continually seek potential acquisitions and from time to time
hold discussions with acquisition candidates. If suitable acquisition
opportunities or working capital needs arise that would require additional
financing, we believe that our financial position and earnings history provide a
solid base for obtaining additional financing resources at competitive rates and
terms. Additionally, depending upon market conditions, we may issue additional
shares of common or preferred stock to raise funds.





Loan
and Security Agreement





We have a
loan and security agreement with a lender that provides for a revolving loan
through May 21, 2010. On September 28, 2007, we increased the facility to $75.0
million to fund the stock repurchase program and fund business
growth.  The agreement allows for the payment of dividends, not to
exceed $10.0 million in the aggregate in any twelve month period; and, effective
January 29, 2008, the repurchase of stock, prior to December 31, 2009, in the
aggregate amount of not more than $75 million.  The lender has a
security interest in all of our assets, including accounts receivable and
inventory. The loan bears interest at the lender’s base interest
rate.  Portions of the outstanding loan may be converted to LIBOR
loans in minimum amounts of $1.0 million and integral multiples of $0.1 million.
Upon such conversion, interest is payable at LIBOR plus a margin ranging from
1.0% to 1.5%, depending on the Company’s debt-to-EBITDA ratio. We have entered
into a series of one-month LIBOR loans, which, upon maturity, are either rolled
back into the revolving loan or renewed under a new LIBOR
contract.


13
 Index


Contractual Obligations





The
following table describes our loan commitment at September 30,
2008:





Less
      than
                    
                    
                    
                    
                    
                    
                    
                    
                    More
      thanTotal
                    
                    
                    1
      year
                    
                    
                    1-3
      years
                    
                    
                    3-5
      years
                    
                    
                    5
      years(In
      thousands)Term
      loans and loans payable
                    
                    $
                    40,200
                    
                    
                    $
                    —
                    
                    
                    $
                    40,200
                    
                    
                    $
                    —
                    
                    
                    $
                    —





There
were no new material changes in operating lease obligations or non-cancellable
purchase obligations since December 31, 2007.





Cautionary Statement for Purposes of the “Safe
Harbor”





Forward-looking
statements in this report are made in reliance upon the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.  Such
forward-looking statements may relate to, but are not limited to, information or
assumptions about our sales and marketing strategy, sales (including pricing),
income, operating income or gross margin improvements, working capital, cash
flow, interest rates, impact of changes in accounting standards, future economic
performance, management’s plans, goals and objectives for future operations,
performance and growth or the assumptions relating to any of the forward-looking
statements.  These statements can be identified by the fact that they
do not relate strictly to historical or current facts.  They use words
such as “aim”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”,
“may”, “plan”, “project”, “should”, “will be”, “will continue”, “will likely
result”, “would” and other words and terms of similar meaning in conjunction
with a discussion of future operating or financial performance.  The
Company cautions that forward-looking statements are not guarantees because
there are inherent difficulties in predicting future results.  Actual
results could differ materially from those expressed or implied in the
forward-looking statements.  The factors listed under “Risk Factors”
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2007, as well as any cautionary language in this report, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking
statements.





Item 3. Quantitative and Qualitative Disclosures about Market
Risk





Interest
Rate Risk





There
have been no material changes from what we reported in the Form 10-K for the
year ended December 31, 2007.





Foreign
Exchange Risk





There
have been no material changes from what we reported in the Form 10-K for the
year ended December 31, 2007.





Item 4. Controls and Procedures





As of
September 30, 2008, an evaluation was performed by the Company’s management,
under the supervision and with the participation of the Company’s chief
executive officer and chief financial officer, of the effectiveness of the
Company’s disclosure controls and procedures.  Based on that
evaluation, the chief executive officer and the chief financial officer
concluded that the Company’s disclosure controls and procedures were
effective.  There were no changes in the Company’s internal control
over financial reporting that occurred during the quarter ended September 30,
2008 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.








Part II. Other Information





Item 1 – Not applicable and has been omitted.





Item 1A.   Risk Factors





There
have been no material changes in our risk factors from those disclosed in the
Form 10-K for the year ended December 31, 2007.


14
 Index


Item 2.   Unregistered Sales of Equity Securities
and Use of Proceeds





The
following table provides information about our purchases of common stock for the
three months ended September 30, 2008 pursuant to the Company’s stock repurchase
program.





Period
                                
                                Total
      number of shares purchased
                                
                                
                                Average
      price paid per share
                                
                                
                                Total
      number of shares purchased as part of publicly announced plans or
      programs (1)
                                
                                
                                Maximum
      dollar value that may yet be used for purchases under the
    planJuly
      1 – 31, 2008
                                
                                
                                —
                                
                                
                                $
                                —
                                
                                
                                
                                —
                                
                                
                                $
                                20,321,551August
      1 – 31, 2008
                                
                                
                                35,300
                                
                                
                                $
                                17.09
                                
                                
                                
                                35,300
                                
                                
                                $
                                19,718,103September
      1 – 30, 2008
                                
                                
                                20,000
                                
                                
                                $
                                16.64
                                
                                
                                
                                20,000
                                
                                
                                $
                                19,385,303Total
                                
                                
                                55,300
                                
                                
                                $
                                16.93
                                
                                
                                
                                55,300


_______


(1)  The
board authorized a stock buyback program of $30 million in August 2007. This
amount was increased to $50 million in September 2007 and to $75 million
effective January 2008. All of the above purchases were made under the Company’s
stock repurchase program.





Item
3 – 5 are not applicable and has been omitted.





Item 6.  Exhibits





(a)
Exhibits required by Item 601 of Regulation S-K.





Exhibit
      Number
                  
                  Document
      Description31.1
                  
                  Certification
      by Charles A. Sorrentino pursuant to Rule 13a-14(a) and 15d-14(a), as
      adopted pursuant to Section 302
                    of
      the Sarbanes-Oxley Act of 2002.31.2
                  
                  Certification
      by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1
                  
                  Certification
      by Charles A. Sorrentino and Nicol G. Graham pursuant to 18 U.S.C. Section
      1350, as adopted pursuant
                    to
      Section 906 of the Sarbanes-Oxley Act of
2002.


15
 Index


Signature





Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.








Date:  November
      10, 2008
                HOUSTON
      WIRE & CABLE COMPANYBY:   /s/ Nicol G.
      GrahamNicol
      G. Graham, Chief Financial
Officer


16
 Index


EXHIBIT
INDEX





Exhibit
      Number
                  
                  Document
      Description31.1
                  
                  Certification
      by Charles A. Sorrentino pursuant to Rule 13a-14(a) and 15d-14(a), as
      adopted pursuant to Section
                    302
      of the Sarbanes-Oxley Act of 2002.31.2
                  
                  Certification
      by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted
      pursuant to Section 302
                    of
      the Sarbanes-Oxley Act of 2002.32.1
                  
                  Certification
      by Charles A. Sorrentino and Nicol G. Graham pursuant to 18 U.S.C. Section
      1350, as adopted pursuant
                    to
      Section 906 of the Sarbanes-Oxley Act of
2002.






17