1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 2001
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: 0-20278
ENCORE WIRE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2274963
(State of incorporation) (I.R.S. employer identification number)
1410 MILLWOOD ROAD
MCKINNEY, TEXAS 75069
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 562-9473
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 [ ]
Number of shares of Common Stock outstanding as of July 31, 2001: 15,025,472
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\ FORM 10-Q
ENCORE WIRE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2001
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets ............................................... 3
June 30, 2001 (Unaudited) and December 31, 2000
Consolidated Statements of Income (Unaudited) ............................. 5
Quarters and six months ended June 30, 2001 and June 30, 2000
Consolidated Statements of Cash Flows (Unaudited) ......................... 6
Six months ended June 30, 2001 and June 30, 2000
Notes to Consolidated Financial Statements (Unaudited) .................... 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................................... 10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders ....................... 14
ITEM 6. Exhibits and Reports on Form 8-K .......................................... 14
Signatures ................................................................................ 15
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FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
ENCORE WIRE CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
In Thousands of Dollars 2001 2000
(Unaudited) (See Note 1)
- ----------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash.................................................. $ 405 $ 56
Accounts receivable (net of allowance of
$482 and $414)..................................... 54,614 54,003
Inventories (Note 2).................................. 37,138 42,867
Prepaid expenses and other assets..................... 1,247 461
Current taxes receivable.............................. -- --
------------- ---------------
Total current assets............................... 93,404 97,387
Property, plant and equipment-on the basis of cost:
Land.................................................. 3,583 3,583
Construction in Progress.............................. 1,345 2,978
Buildings and improvements............................ 26,159 26,086
Machinery and equipment............................... 79,922 77,013
Furniture and fixtures................................ 2,238 2,021
------------- ---------------
Total property, plant, and equipment............... 113,247 111,681
Accumulated depreciation and
Amortization.................................... 41,977 37,420
------------- ---------------
71,270 74,261
Other assets.................................................. 984 191
------------- ---------------
Total assets.................................................. $ 165,658 $ 171,839
============= =============
See accompanying notes
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FORM 10-Q
ENCORE WIRE CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
June 30, December 31,
2001 2000
In Thousands of Dollars, Except Share Data (Unaudited) (See Note 1)
- -------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable..................................... $ 18,961 $ 18,487
Accrued liabilities........................................ 6,202 8,655
Current income taxes payable............................... 1,884 738
Current deferred income taxes.............................. 960 960
----------- ------------
Total current liabilities.................................. 28,007 28,840
Non-current deferred income taxes.................................. 6,852 6,853
Long term notes payable............................................ 34,000 42,600
Stockholders' equity:
Common stock, $.01 par value:
Authorized shares - 20,000,000
Issued shares - (16,678,572
at June 30, 2001 and 16,637,509 at
December 31, 2000).................................... 167 166
Additional paid-in capital......................................... 32,175 32,162
Treasury stock - 1,653,100 at June 30, 2001 and 1,528,100 at
December 31, 2000.......................................... (13,514) (12,493)
Retained earnings.................................................. 77,971 73,711
----------- ------------
Total stockholders' equity................................. 96,799 93,546
----------- ------------
Total liabilities and stockholders' equity......................... $ 165,658 $ 171,839
=========== ============
Note: The consolidated balance sheet at December 31, 2000, as presented, is
derived from the audited consolidated financial statements at that
date.
See accompanying notes
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FORM 10-Q
ENCORE WIRE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
In Thousands of Dollars, Except Per Share Data 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------
Net sales.................................................. $ 75,007 $ 73,027 $ 144,764 $140,076
Cost of goods sold......................................... 64,765 63,243 124,692 121,105
-------- -------- -------- --------
Gross profit............................................... 10,242 9,784 20,072 18,971
Selling, general, and administrative expense............... 6,273 6,060 12,267 11,840
-------- -------- -------- --------
Operating income........................................... 3,969 3,724 7,805 7,131
Interest expense (net)..................................... 488 1,057 1,149 2,071
-------- -------- -------- --------
Income before income taxes................................. 3,481 2,667 6,656 5,060
Provision for income taxes................................. 1,253 959 2,396 1,821
-------- -------- -------- --------
Net income................................................. $ 2,228 $ 1,708 $ 4,260 $ 3,239
======== ========= ========= =========
Net income per common and common
equivalent share - basic................................ $ .15 $ .11 $ .28 $ .21
======== ========= ========= =========
Weighted average common and common
equivalent shares - basic............................... 15,042 15,264 15,060 15,282
======== ======== ======== ========
Net income per common and common
equivalent share - diluted.............................. $ .15 $ .11 $ .28 $ .21
======== ========= ========= =========
Weighted average common and common
equivalent shares - diluted............................. 15,254 15,475 15,236 15,606
======== ======== ======== ========
Cash dividends declared per share.......................... $ -- $ -- $ -- $ --
======== ========= ========= =========
See accompanying notes
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FORM 10-Q
ENCORE WIRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
In Thousands of Dollars 2001 2001
- ------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income...................................................................... $ 4,260 $ 3,239
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation and amortization............................................. 4,756 4,508
Provision for bad debts................................................... 75 50
Changes in operating assets and liabilities:
Accounts receivable.................................................... (686) (13,486)
Inventory.............................................................. 5,729 10,392
Accounts payable and accrued liabilities............................... (1,979) 4,800
Other assets and liabilities........................................... (740) (460)
Current income taxes payable........................................... 1,146 36
------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES.................... 12,561 9,079
------- --------
INVESTING ACTIVITIES
Purchases of property, plant and equipment...................................... (1,931) (2,481)
Increase (decrease) in Long Term Investments.................................... (793) (24)
Proceeds from Sale of Equipment................................................. 119 55
------- --------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES............................. (2,605) (2,450)
-------- ---------
FINANCING ACTIVITIES
Borrowings (repayments) under notes payable..................................... (8,600) (5,600)
Purchases of Treasury Stock..................................................... (1,020) (2,460)
Proceeds from issuance of common stock.......................................... 13 1,509
------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES............................. (9,607) (6,551)
-------- ---------
NET INCREASE (DECREASE) IN CASH..................................................... 349 78
Cash at beginning of period......................................................... 56 1,256
------- --------
Cash at end of period............................................................... $ 405 $ 1,334
======= ========
See accompanying notes
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FORM 10-Q
ENCORE WIRE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Encore Wire
Corporation have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair presentation have been included. Results of operations for
the periods presented are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001. These financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
NOTE 2 - INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method.
Inventories (in thousands) consisted of the following:
JUNE 30, DECEMBER 31,
2001 2000
---- ----
Raw materials........................ $ 6,542 $ 13,421
Work-in-process...................... 3,101 3,404
Finished goods....................... 23,283 24,694
------------ ------------
32,926 41,519
Increase to LIFO cost................ 5,985 1,348
------------ ------------
38,912 42,867
Lower of Cost or Market Adjustment... (1,773) --
------------ ------------
$ 37,138 $ 42,867
============ ============
An actual valuation of inventory under the LIFO method can be made only
at the end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations are based on management's estimates of
expected year-end inventory levels and costs. Because these are subject to many
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FORM 10-Q
forces beyond management's control, interim results are subject to the final
year-end LIFO inventory valuation.
NOTE 3 - INCOME PER SHARE
Income per common and common equivalent share is computed using the
weighted average number of shares of common stock and common stock equivalents
outstanding during each period. If dilutive, the effect of stock options,
treated as common stock equivalents, is calculated using the treasury stock
method.
The following table sets forth the computation of basic and diluted earnings per
share:
Quarter Ending Quarter Ending
June 30, 2001 June 30, 2000
Numerator:
Net Income $2,227,663 $1,708,000
================================
Denominator:
Denominator for basic earnings per share -
weighted average shares 15,041,560 15,263,652
Effect of dilutive securities:
Employee stock options 212,386 211,262
--------------------------------
Denominator for diluted earnings per share -
weighted average shares 15,253,946 15,474,914
================================
The following table sets forth the computation of basic and diluted earnings per
share:
Six Months Ending Six Months Ending
June 30, 2001 June 30, 2000
Numerator:
Net Income $4,259,989 $3,239,000
================================
Denominator:
Denominator for basic earnings per share -
weighted average shares 15,060,270 15,281,997
Effect of dilutive securities:
Employee stock options 175,300 323,744
--------------------------------
Denominator for diluted earnings per share -
weighted average shares 15,235,570 15,605,742
================================
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FORM 10-Q
NOTE 4 - LONG TERM NOTE PAYABLE
Effective August 31, 1999, the Company through its indirectly wholly
owned subsidiary, Encore Wire Limited, a Texas limited partnership, completed an
unsecured loan facility with a group of banks (the "Financing Agreement"). The
Financing Agreement replaced the Company's existing credit facility, and the
Company is a guarantor of the indebtedness. The Financing Agreement has been
amended once since August 31, 1999, to extend the contract term to May 31, 2003.
The Financing Agreement provides for maximum borrowings of the lesser of $65.0
million or the amount of eligible accounts receivable plus the amount of
eligible finished goods and raw materials, less any available reserves
established by the banks. The calculated maximum borrowing amount available at
June 30, 2001, as computed under the Financing Agreement, was $65.0 million. The
Financing Agreement is unsecured and contains customary covenants and events of
default. The Company was in compliance with these covenants, as amended, as of
June 30, 2001. Pursuant to the Financing Agreement, the Company is prohibited
from declaring, paying or issuing cash dividends. At June 30, 2001, the balance
outstanding under the Financing Agreement was $34.0 million. Amounts outstanding
under the Financing Agreement are payable on May 31, 2003 with interest due
quarterly based on the bank's prime rate or LIBOR Rate options, at the Company's
election.
NOTE 5 - STOCK REPURCHASE AUTHORIZATION
On March 24, 1995, the Company announced that its Board of Directors had
authorized it to purchase up to 900,000 shares, or approximately 5.6%, of its
outstanding common stock dependent upon market conditions. Subsequent Board
actions increased this authorization. As of July 31, 2001, the Company had
repurchased an aggregate of 1,653,100 shares of its common stock in the open
market.
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FORM 10-Q
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company is a low-cost manufacturer of copper electrical building
wire and cable. The Company is a significant supplier of residential wire for
interior wiring in homes, apartments and manufactured housing and commercial
wire for commercial and industrial buildings.
Price competition for electrical wire and cable is intense, and the
Company sells its products in accordance with prevailing market prices. Copper
is the principal raw material used by the Company in manufacturing its products.
Copper accounted for approximately 63.9%, 60.6%, 66.2%, 73.8% and 77.4% of the
Company's cost of goods sold during fiscal 2000, 1999, 1998, 1997 and 1996
respectively. The price of copper fluctuates with general economic conditions
and in relation to supply and demand, causing monthly variations in the cost of
copper purchased by the Company. The Company cannot predict copper prices in the
future or the effect of fluctuations in the cost of copper on the Company's
future operating results.
The following discussion and analysis relates to factors that have
affected the operating results of the Company for the three month and six month
periods ended June 30, 2001 and 2000. Reference should also be made to the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000.
RESULTS OF OPERATIONS
Quarter Ended June 30, 2001 Compared to Quarter Ended June 30, 2000
Net sales for the second quarter of 2001 amounted to $75.0 million
compared with net sales of $73.0 million for the second quarter of 2000. This
increase was due to a 9.5% increase in the pounds of copper shipped during the
period offset by a decrease in the average sales price per copper pound of the
Company's products. The decrease in the average sales price per copper pound of
the Company's products was due to a 6% decrease in the average cost of copper
from the second quarter of 2000 to the same period in 2001, in addition to
competitive pricing pressure for the Company's products. Sales volume increased
due to several factors, including increases in customer acceptance and product
availability. Fluctuations in sales prices are primarily a result of price
competition and changing copper raw material prices.
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FORM 10-Q
Cost of goods sold increased to $64.8 million in the second quarter of
2001 from $63.2 million in the second quarter of 2000. Copper costs as a
percentage of net sales increased to 59.5% in the second quarter of 2001 from
55.9% in the second quarter of 2000. This increase as a percentage of net sales
in the second quarter of 2001 from the comparable quarter in 2000 was due
primarily to a decreased differential between what the Company pays per pound of
copper purchased and the Company's net sales price per copper pound. This
differential decreased in the second quarter of 2001 because the average cost
per copper pound purchased decreased less than the sales price per copper pound.
Other raw material costs as a percentage of net sales decreased to 12.3% in the
second quarter of 2001, compared with 14.8% in the second quarter of 2000. This
decrease is due to the other raw material cost per pound of copper sold
decreasing more than the sales price per copper pound of product sold.
Depreciation, labor and overhead costs as a percentage of net sales increased to
16.2% in the second quarter of 2001, compared with 16.0% in the second quarter
of 2000 due to the lower sales price per copper pound of product sold as
discussed above.
Inventories are stated at the lower of cost, determined by the last in,
first out (LIFO) method, or market. As permitted by generally accepted
accounting principles, the Company maintains its inventory costs and cost of
goods sold on a first in, first out (FIFO) basis and makes a quarterly LIFO
adjustment to adjust total inventory and cost of goods sold to LIFO. As a result
of decreases in the price of copper during the second quarter of 2001 versus
existing LIFO inventory layers and the reduction of current inventory value, the
value of all inventory at June 30, 2001 using the LIFO method was greater than
its FIFO value by approximately $6.0 million, resulting in a corresponding
decrease in the cost of goods sold of $2.0 million. At June 30, 2001, the LIFO
cost basis of the inventory exceeded the market value by $1,773,000, resulting
in a $773,000 addition being made to the lower of cost or market (LCM) reserve
at June 30, 2001. Future reductions in the price of copper could require the
Company to record a LCM adjustment against the related inventory balance, which
would result in a negative impact on net income. Additionally, a reduction in
the quantity of inventory in any period could cause copper that is carried in
inventory at costs different from the cost of copper in that period to be
included at the different price in cost of goods sold for that period.
As a result of the items discussed above, gross profit increased to
$10.2 million, or 13.7% of net sales, for the second quarter of 2001 compared to
$9.8 million, or 13.4% of net sales, for the second quarter of 2000.
Selling expenses for the second quarter of 2001 were $4.5 million, or
6.0% of net sales, compared to $4.5 million, or 6.2% of net sales, in the second
quarter of 2000. General and administrative expenses were $1.7 million, or 2.3%
of net sales, in the second quarter of 2001 compared to $1.5 million, or 2.1% of
net sales, in the second quarter of 2000. The provision for bad debts in the
second quarter of 2001 was $37,500 compared to $50,000 in the second quarter of
2000.
Net interest expense was $500,000 in the second quarter of 2001 compared
to $1.1 million in the second quarter of 2000. The decrease was due to a lower
average debt balance outstanding during the second quarter of 2001 than the
comparable period during 2000, and lower floating interest rates on the debt in
2001 versus 2000.
As a result of the foregoing factors, the Company's net income was $2.2
million in the second quarter of 2001 compared to $1.7 million in the second
quarter of 2000.
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FORM 10-Q
Six Months Ended June 30, 2001 compared to Six Months Ended June 30, 2000
Net sales for the first six months of 2001 amounted to $144.8 million
compared with net sales of $140.1 million for the first six months of 2000. This
increase was due to a 9.6% increase in the pounds of copper shipped during the
period offset by a decrease in the average sales price per copper pound of the
Company's products. The decrease in the average sales price per copper pound of
the Company's products was caused by a 3.2% decrease in the average cost of
copper from the first six months of 2000 to the same period in 2001, in addition
to competitive pricing pressure on the Company's products. Sales volume
increased due to several factors, including increases in customer acceptance and
product availability. Fluctuations in sales prices are primarily a result of
price competition and changing copper raw material prices.
Cost of goods sold was $124.7 million in the first six months of 2001,
compared to $121.1 million in the first six months of 2000. Copper costs as a
percentage of net sales increased to 59.2% in the first six months of 2001
compared to 54.7% in the first six months of 2000. This increase as a percentage
of net sales in the first six months of 2001 from the comparable period in 2000
was due primarily to a decreased differential between what the Company pays per
pound of copper purchased and the Company's net sales price per copper pound.
This differential decreased in the first six months of 2001 because the average
cost per copper pound purchased decreased less than the sales price per copper
pound. Other raw material costs as a percentage of net sales decreased to 12.8%
in the first six months of 2001, compared with 14.9% in the first six months of
2000. This decrease is due to raw materials per pound of copper sold decreasing
more than the sales price per copper pound of product sold. Depreciation, labor
and overhead costs as a percentage of net sales decreased to 16.2% in the first
six months of 2001 compared to 15.9% in the first six months of 2000 due to the
lower sales price per copper pound of product sold as discussed above.
Inventories are stated at the lower of cost, determined by the last in,
first out (LIFO) method, or market. As permitted by generally accepted
accounting principles, the Company maintains its inventory costs and cost of
goods sold on a first in, first out (FIFO) basis and makes a quarterly LIFO
adjustment to adjust total inventory and cost of goods sold to LIFO. As a result
of decreases in the price of copper during the first six months of 2001 versus
existing LIFO inventory layers and the reduction of current inventory value, the
value of all inventory at June 30, 2001 using the LIFO method was greater than
its FIFO value by approximately $6.0 million, resulting in a corresponding
decrease in the cost of goods sold of $4.6 million. At June 30, 2001, the LIFO
cost basis of the inventory exceeded the market value by $1,773,000. Future
reductions in the price of copper could require the Company to record a lower of
cost or market adjustment against the related inventory balance, which would
result in a negative impact on net income. Additionally, a reduction in the
quantity of inventory in any period could cause copper that is carried in
inventory at costs different from the cost of copper in that period to be
included at the different price in cost of goods sold for that period.
Due to the items discussed above, gross profit increased to $20.1
million, or 13.9% of net sales, for the first six months of 2001 compared to
$19.0 million, or 13.5% of net sales, for the first six months of
2000.
Selling expenses for the first six months of 2001 were $8.8 million, or
6.1% of net sales, compared to $8.8 million, or 6.3% of net sales, in the first
six months of 2000. General and administrative expenses were $3.4 million, or
2.4% of net sales, in the first six months of 2001 compared to $3.0 million, or
2.2% of net sales, in the first six months of 2000. There was a $37,500
provision for bad debts in the first six months of 2001 compared to $50,000 in
the first six months of 2000.
Net interest expense decreased to $1.1 million in the first six months
of 2001 compared to $2.1 million in the first six months of 2000. The decrease
was due to a lower average debt balance outstanding during the
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FORM 10-Q
first six months of 2001 than the comparable period during 2000, and lower
floating interest rates on the debt in 2001 versus 2000.
As a result of the foregoing factors, the Company's net income increased
to $4.3 million in the first six months of 2001 from $3.2 million in the first
six months of 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains a substantial inventory of finished products to
satisfy customers' prompt delivery requirements. As is customary in the
industry, the Company provides payment terms to most of its customers that
exceed terms that it receives from its suppliers. Therefore, the Company's
liquidity needs have generally consisted of operating capital necessary to
finance these receivables and inventory. Capital expenditures have historically
been necessary to expand the production capacity of the Company's manufacturing
operations. The Company has satisfied its liquidity and capital expenditure
needs with cash generated from operations, borrowings under its revolving credit
facilities and sales of its common stock.
Note 4 of the Notes to Consolidated Financial Statements in Part I is
incorporated herein by reference as if fully restated herein.
Cash provided by operations was $12.6 million in the first six months of
2001 compared to $9.1 million in the first six months of 2000. This increase of
$3.5 million in cash provided by operations is primarily the result of a $5.7
million reduction of inventory in the first half of 2001. This dollar reduction
is due to a reduction in inventory levels and the drop in copper prices over
that period as previously discussed. Cash used in investing activities increased
slightly from $2.5 million in the first six months of 2000 to $2.6 million in
the first six months of 2001. In both periods, these funds were used primarily
to increase the Company's production capacity. The $9.6 million decrease in cash
provided by financing activities was due primarily to the $8.6 million of debt
the Company was able to pay down in the first six months of 2001.
During 2001, the Company expects to expend more capital for additional
manufacturing equipment than it spent in 2000. During 2001, the Company expects
its capital expenditures will consist of additional building space and
manufacturing equipment for its wire operations. The Company expects to continue
to manage its working capital requirements during 2001. These requirements may
increase as a result of expected continued sales increases. These requirements
will be impacted by the price of copper. The Company believes that the cash flow
from operations and the financing that it expects to receive from its banks
under the Financing Agreement will satisfy working capital and capital
expenditure requirements for the next twelve months.
On March 24, 1995, the Company announced that its Board of Directors had
authorized it to purchase up to 900,000 shares, or approximately 5.6%, of its
outstanding common stock dependent upon market conditions. Subsequent Board
actions increased this authorization. As of July 31, 2001, the Company had
repurchased an aggregate of 1,653,100 shares of its common stock in the open
market.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes from the information provided in
Item 7.A. of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
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FORM 10-Q
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This report contains various forward-looking statements and information
that are based on management's belief as well as assumptions made by and
information currently available to management. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those expected. Among the key factors that may have a direct
bearing on the Company's operating results are fluctuations in the economy and
in the level of activity in the building and construction industry, demand for
the Company's products, the impact of price competition and fluctuations in the
price of copper.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS IN A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the stockholders of the Company was held in
McKinney, Texas at 9:00 a.m., local time, on May 7, 2001.
(b) Proxies were solicited by the Board of Directors of the Company
pursuant to Regulation 14A under the Securities and Exchange Act of
1934 for the election of directors and the approval of Ernst and Young
as auditors. There was no solicitation in opposition to the Board of
Directors' nominees for director as listed in the proxy statement and
all of such nominees were duly elected.
(c) Out of a total of 15,067,772 shares of the Company's common stock
outstanding and entitled to vote, 14,156,149 shares were present in
person or by proxy, representing approximately 94 percent of the
outstanding shares. The first matter voted on by the stockholders, as
fully described in the proxy statement for the annual meeting, was the
election Donald E. Courtney, Joseph M. Brito, Daniel L. Jones, John P.
Pringle, Vincent A. Rego, William R. Thomas and John Wilson as
directors of the Company. No nominee received less than 98% of the
shares voted.
The second matter voted on by the stockholders was a resolution to
approve Ernst & Young as the auditor of the Company's financial
statements for the year ending December 31, 2001. The resolution was
adopted with the holders of 14,144,366 shares voting in favor of the
resolution and 6,475 voting against. Holders of 5,308 abstained from
voting.
(d) Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The information required by Item 6(a) is set forth in the Index to
Exhibits accompanying this Form 10-Q.
(b) No reports on Form 8-K were filed by the Company during the three
months ended June 30, 2001.
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FORM 10-Q
SIGNATURES
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.
ENCORE WIRE CORPORATION
-----------------------------------------
(Registrant)
Date: August 10, 2001 /s/ Vincent A. Rego
-----------------------------------------
Vincent A. Rego,
Chief Executive Officer
Date: August 10, 2001 /s/ Daniel L. Jones
-----------------------------------------
Daniel L. Jones, President
Chief Operating Officer
Date: August 10, 2001 /s/ Frank J. Bilban
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Frank J. Bilban, Vice President - Finance,
Treasurer and Secretary
(Chief Financial Officer)
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FORM 10-Q
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation of Encore Wire Corporation, as amended
(filed as Exhibit 3/1 to the Company's Registration Statement on Form
S-1, as amended (No. 33-47696), and incorporated herein by reference).
3.2 Amended and Restated Bylaws of Encore Wire Corporation (filed as
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by reference).
10.1* Amended and Restated Agreement Not to Compete dated March 8, 1994,
between Encore Wire Corporation and Vincent A. Rego (filed as Exhibit
10.9 to the Company's Registration Statement on Form S-1, as amended
(No. 33-76216), and incorporated herein by reference).
10.2* Amended and Restated Agreement Not to Compete dated March 8, 1994,
between Encore Wire Corporation and Donald M. Spurgin (filed as Exhibit
10.10 to the Company's Registration Statement on Form S-1, as amended
(No. 33-76216), and incorporated herein by reference).
10.3* Employment Agreement dated as of October 1, 1996 between the Company
and Spurgin (filed as Exhibit 10.20 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, and incorporated
reference).
10.4 Financing Agreement by and among Encore Wire Limited, as Borrower, Bank
of America, National Association, as Agent, and Bank of America,
National Association, and Comerica Bank-Texas, as Lenders, dated August
31, 1999 (filed as Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999, and incorporated
herein by reference).
10.5 First amendment to Financing Agreement of August 31, 1999, dated June
27, 2000 by and among Encore Wire Limited, as Borrower, Bank of
America, National Association, as Agent, and Bank of America, National
Association, and Comerica Bank-Texas, as Lenders, as Agent and Bank of
America, National Association and Comerica Bank - Texas as Lenders
(filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000, and incorporated herein by
reference).
21.1 Subsidiaries (filed as Exhibit 21.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, and incorporated herein
by reference).
* Management contract or compensatory plan.
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