x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
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)
|
Large
Accelerated Filer ¨
|
Accelerated
Filer x
|
Non-Accelerated
Filer ¨
|
Smaller
Reporting Company
¨
|
PART
I. FINANCIAL INFORMATION
|
2
|
Item
1. Financial Statements (Unaudited)
|
2
|
Consolidated
Balance Sheets
|
2
|
Consolidated
Statements of Income
|
3
|
Consolidated
Statements of Cash Flows
|
4
|
Notes
to Consolidated Financial Statements
|
5
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
7
|
Overview
|
7
|
Results
of Operations
|
9
|
Impact
of Inflation and Commodity Prices
|
12
|
Liquidity
and Capital Resources
|
12
|
Contractual
Obligations
|
13
|
Cautionary
Statement for the Purposes of the “Safe Harbor”
|
13
|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
13
|
Item
4. Controls and Procedures
|
13
|
PART
II. OTHER INFORMATION
|
14
|
Item
1. Legal Proceedings
|
14
|
Item
1A. Risk Factors
|
14
|
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
|
14
|
Item
3. Defaults Upon Senior
Securities
|
14
|
Item
4. Submission of Matters to a Vote of
Security Holders
|
14
|
Item
5. Other Information
|
15
|
Item
6. Exhibits
|
15
|
Signature
Page
|
16
|
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
|
$ | 40,497 | $ | 50,798 | ||||
Inventories,
net
|
72,316 | 73,459 | ||||||
Deferred
income taxes
|
1,475 | 1,384 | ||||||
Prepaid
expenses
|
1,078 | 829 | ||||||
Income
taxes receivable
|
90 | — | ||||||
Total
current assets
|
115,456 | 126,470 | ||||||
Property
and equipment, net
|
3,176 | 3,274 | ||||||
Goodwill
|
2,996 | 2,996 | ||||||
Deferred
income taxes
|
2,196 | 1,926 | ||||||
Other
assets
|
78 | 87 | ||||||
Total
assets
|
$ | 123,902 | $ | 134,753 | ||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$ | 2,030 | $ | 4,933 | ||||
Trade
accounts payable
|
14,253 | 10,091 | ||||||
Accrued
and other current liabilities
|
11,610 | 11,682 | ||||||
Income
taxes payable
|
— | 1,644 | ||||||
Short
term obligations
|
17,343 | — | ||||||
Total
current liabilities
|
45,236 | 28,350 | ||||||
Long
term obligations
|
— | 29,808 | ||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.001 par value; 5,000,000 shares authorized, none issued and
outstanding
|
— | — | ||||||
Common
stock, $0.001 par value; 100,000,000 shares authorized; 20,988,952 shares
issued: 17,649,737 and 17,642,552 outstanding at June 30, 2009 and
December 31, 2008, respectively
|
21 | 21 | ||||||
Additional
paid-in-capital
|
56,946 | 55,901 | ||||||
Retained
earnings
|
76,449 | 75,540 | ||||||
Treasury
stock
|
(54,750 | ) | (54,867 | ) | ||||
Total
stockholders' equity
|
78,666 | 76,595 | ||||||
Total
liabilities and stockholders' equity
|
$ | 123,902 | $ | 134,753 |
Three Months Ended
June
30,
|
Six Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Sales
|
$ | 61,882 | $ | 97,384 | $ | 127,714 | $ | 186,825 | ||||||||
Cost
of sales
|
48,910 | 73,153 | 100,929 | 139,927 | ||||||||||||
Gross
profit
|
12,972 | 24,231 | 26,785 | 46,898 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
5,201 | 6,095 | 10,739 | 12,171 | ||||||||||||
Other
operating expenses
|
4,512 | 5,001 | 9,132 | 9,985 | ||||||||||||
Depreciation
and amortization
|
141 | 129 | 283 | 256 | ||||||||||||
Total
operating expenses
|
9,854 | 11,225 | 20,154 | 22,412 | ||||||||||||
Operating
income
|
3,118 | 13,006 | 6,631 | 24,486 | ||||||||||||
Interest
expense
|
108 | 450 | 263 | 991 | ||||||||||||
Income
before income taxes
|
3,010 | 12,556 | 6,368 | 23,495 | ||||||||||||
Income
taxes
|
1,165 | 4,811 | 2,459 | 9,013 | ||||||||||||
Net
income
|
$ | 1,845 | $ | 7,745 | $ | 3,909 | $ | 14,482 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.10 | $ | 0.44 | $ | 0.22 | $ | 0.81 | ||||||||
Diluted
|
$ | 0.10 | $ | 0.44 | $ | 0.22 | $ | 0.81 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
17,647,982 | 17,760,989 | 17,645,433 | 17,921,399 | ||||||||||||
Diluted
|
17,663,522 | 17,798,403 | 17,656,445 | 17,959,842 | ||||||||||||
Dividends
declared per share
|
$ | 0.085 | $ | 0.085 | $ | 0.17 | $ | 0.17 |
Six
Months Ended
June
30,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$
|
3,909
|
$
|
14,482
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
283
|
256
|
||||||
Amortization
of capitalized loan costs
|
40
|
40
|
||||||
Amortization
of unearned stock compensation
|
1,194
|
1,058
|
||||||
Provision
for doubtful accounts
|
—
|
14
|
||||||
Provision
for returns and allowances
|
(45
|
)
|
27
|
|||||
Provision
for inventory obsolescence
|
238
|
(6
|
)
|
|||||
Deferred
income taxes
|
(415
|
)
|
(363
|
)
|
||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
10,346
|
(5,029
|
)
|
|||||
Inventories
|
905
|
(2,940
|
)
|
|||||
Prepaid
expenses
|
(249
|
)
|
(377
|
)
|
||||
Other
assets
|
(31
|
)
|
(53
|
)
|
||||
Book
overdraft
|
(2,903
|
)
|
(3,854
|
)
|
||||
Trade
accounts payable
|
4,162
|
3,328
|
||||||
Accrued
and other current liabilities
|
(72
|
)
|
(6,817
|
)
|
||||
Income
taxes payable/receivable
|
(1,734
|
)
|
2,209
|
|||||
Net
cash provided by operating activities
|
15,628
|
1,975
|
||||||
Investing
activities
|
||||||||
Expenditures
for property and equipment
|
(186
|
)
|
(211
|
)
|
||||
Net
cash used in investing activities
|
(186
|
)
|
(211
|
)
|
||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
130,433
|
192,696
|
||||||
Payments
on revolver
|
(142,898
|
)
|
(176,797
|
)
|
||||
Proceeds
from exercise of stock options
|
18
|
54
|
||||||
Excess
tax benefit for stock options
|
5
|
255
|
||||||
Payment
of dividends
|
(3,000
|
)
|
(3,040
|
)
|
||||
Purchase
of treasury stock
|
—
|
(13,789
|
)
|
|||||
Net
cash used in financing activities
|
(15,442
|
)
|
(621
|
)
|
||||
Net
change in cash
|
—
|
1,143
|
||||||
Cash
at beginning of period
|
—
|
—
|
||||||
Cash
at end of period
|
$
|
—
|
$
|
1,143
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Weighted
average common shares for basic earnings per share
|
17,647,982 | 17,760,989 | 17,645,433 | 17,921,399 | ||||||||||||
Effect
of dilutive securities
|
15,540 | 37,414 | 11,012 | 38,443 | ||||||||||||
Weighted
average common shares for diluted earnings per share
|
17,663,522 | 17,798,403 | 17,656,445 | 17,959,842 |
2009
|
2008
|
|||||
Expected
volatility
|
81% | 69% | ||||
Expected
life in years
|
2.0
years
|
5.5
years
|
||||
Risk-free
interest rate
|
1.00% | 3.81% | ||||
Dividend
yield
|
3.29% | 2.28% |
·
|
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 (cable 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 (cable 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).
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
79.0 | % | 75.1 | % | 79.0 | % | 74.9 | % | ||||||||
Gross
profit
|
21.0 | % | 24.9 | % | 21.0 | % | 25.1 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
8.4 | % | 6.3 | % | 8.4 | % | 6.5 | % | ||||||||
Other
operating expenses
|
7.3 | % | 5.1 | % | 7.2 | % | 5.3 | % | ||||||||
Depreciation
and amortization
|
0.2 | % | 0.1 | % | 0.2 | % | 0.1 | % | ||||||||
Total
operating expenses:
|
15.9 | % | 11.5 | % | 15.8 | % | 12.0 | % | ||||||||
Operating
income
|
5.0 | % | 13.4 | % | 5.2 | % | 13.1 | % | ||||||||
Interest
expense
|
0.2 | % | 0.5 | % | 0.2 | % | 0.5 | % | ||||||||
Income
before income taxes
|
4.9 | % | 12.9 | % | 5.0 | % | 12.6 | % | ||||||||
Income
taxes
|
1.9 | % | 4.9 | % | 1.9 | % | 4.8 | % | ||||||||
Net
income
|
3.0 | % | 8.0 | % | 3.1 | % | 7.8 | % |
Three
Months Ended
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Sales
|
$ | 61.9 | $ | 97.4 | $ | (35.5 | ) | (36.5 | )% |
Three Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Gross
profit
|
$
|
13.0
|
$
|
24.2
|
$
|
(11.3
|
)
|
(46.5)
|
%
|
|||||||
Gross
profit as a percent of sales
|
21.0
|
%
|
24.9
|
%
|
(3.9
|
)%
|
Three Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$
|
5.2
|
$
|
6.1
|
$
|
(0.9
|
) |
(14.7
|
)%
|
|||||||
Other
operating expenses
|
4.5
|
5.0
|
(0.5
|
) |
(9.8
|
)%
|
||||||||||
Depreciation
and amortization
|
0.1
|
0.1
|
0.0
|
9.3
|
%
|
|||||||||||
Total
operating expenses
|
$
|
9.9
|
$
|
11.2
|
$
|
(1.4
|
) |
(12.2
|
)%
|
|||||||
Operating
expenses as a percent of sales
|
15.9
|
%
|
11.5
|
%
|
4.4
|
%
|
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Sales
|
$
|
127.7
|
$
|
186.8
|
$
|
(59.1
|
)
|
(31.6
|
)%
|
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Gross
profit
|
$ | 26.8 | $ | 46.9 | $ | (20.1 | ) | (42.9 | )% | |||||||
Gross
profit as a percent of sales
|
21.0 | % | 25.1 | % | (4.1 | )% |
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2009
|
2008
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$
|
10.7
|
$
|
12.2
|
$
|
(1.4
|
) |
(11.8
|
)%
|
|||||||
Other
operating expenses
|
9.1
|
10.0
|
(0.9
|
) |
(8.5
|
)%
|
||||||||||
Depreciation
and amortization
|
0.3
|
0.3
|
0.0
|
10.5
|
%
|
|||||||||||
Total
operating expenses
|
$
|
20.2
|
$
|
22.4
|
$
|
(2.3
|
) |
(10.1
|
)%
|
|||||||
Operating
expenses as a percent of sales
|
15.8
|
%
|
12.0
|
%
|
3.8
|
%
|
•
|
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.
|
Total
|
Less
than
1 year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||||||||
(In
thousands)
|
|||||||||||||||||||||
Term
loans and loans payable
|
$ | 17,343 | $ | 17,343 | $ | — | $ | — | $ | — |
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 plan
|
||||||||||||
April
1 – 30, 2009
|
— | $ | — | — | $ | 19,385,303 | ||||||||||
May
1 – 31, 2009
|
— | $ | — | — | $ | 19,385,303 | ||||||||||
June
1 – 30, 2009
|
— | $ | — | — | $ | 19,385,303 | ||||||||||
Total
|
— | $ | — | — |
(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. There were no purchases made under the
Company’s stock repurchase program in the second quarter of
2009.
|
NOMINEES
|
FOR
|
WITHHELD
|
||
Michael
T. Campbell
|
16,463,320
|
103,689
|
||
I.
Stewart Farwell
|
16,470,120
|
96,889
|
||
Peter
M. Gotsch
|
16,126,344
|
440,665
|
||
Wilson
B. Sexton
|
16,467,817
|
99,192
|
||
William
H. Sheffield
|
16,458,993
|
108,016
|
||
Charles
A. Sorrentino
|
16,463,020
|
103,989
|
||
Scott
L. Thompson
|
16,463,020
|
103,989
|
Exhibit
Number
|
Document
Description
|
|
31.1
|
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.
|
Date: August
10, 2009
|
HOUSTON
WIRE & CABLE COMPANY
|
BY: /s/
Nicol G. Graham
|
|
Nicol G. Graham,
Chief Financial Officer
|
Exhibit
Number
|
Document
Description
|
|
31.1
|
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.
|