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)
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(Zip
Code)
|
Large
Accelerated Filer ¨
|
Accelerated
Filer x
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Non-Accelerated
Filer ¨
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Smaller
Reporting Company ¨
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PART
I. FINANCIAL INFORMATION
|
||
Item
1. Financial Statements (Unaudited)
|
2
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|
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
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8
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|
Overview
|
8
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|
Results
of Operations
|
10
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|
Impact
of Inflation and Commodity Prices
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13
|
|
Liquidity
and Capital Resources
|
14
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|
Contractual
Obligations
|
15
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|
Cautionary
Statement for Purposes of the “Safe Harbor”
|
15
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|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
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15
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Item
4. Controls and Procedures
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15
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PART
II. OTHER INFORMATION
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||
Item
1.
|
Legal
Proceedings
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16
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Item 1A.
|
Risk
Factors
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16
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
16
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Item
3.
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Defaults
Upon Senior Securities
|
16
|
Item
4.
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(Removed
and reserved)
|
16
|
Item
5.
|
Other
Information
|
16
|
Item
6.
|
Exhibits
|
17
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Signature
Page
|
18
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June 30,
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December 31,
|
|||||||
2010
|
2009
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
|
$
|
58,096
|
$
|
46,859
|
||||
Inventories,
net
|
66,127
|
61,325
|
||||||
Deferred
income taxes
|
2,299
|
1,776
|
||||||
Prepaids
|
711
|
3,649
|
||||||
Total
current assets
|
127,233
|
113,609
|
||||||
Property
and equipment, net
|
6,790
|
3,169
|
||||||
Intangibles,
net
|
5,384
|
—
|
||||||
Goodwill
|
32,173
|
2,362
|
||||||
Deferred
income taxes
|
1,780
|
2,855
|
||||||
Other
assets
|
105
|
19
|
||||||
Total
assets
|
$
|
173,465
|
$
|
122,014
|
||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$
|
1,036
|
$
|
907
|
||||
Trade
accounts payable
|
21,244
|
11,610
|
||||||
Accrued
and other current liabilities
|
9,543
|
10,924
|
||||||
Income
taxes payable
|
16
|
281
|
||||||
Total
current liabilities
|
31,839
|
23,722
|
||||||
Debt
|
59,016
|
17,479
|
||||||
Other
long term obligations
|
144
|
—
|
||||||
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: 17,758,362 and 17,732,737 outstanding at June 30, 2010 and
December 31, 2009, respectively
|
21
|
21
|
||||||
Additional
paid-in-capital
|
57,361
|
56,609
|
||||||
Retained
earnings
|
78,052
|
77,571
|
||||||
Treasury
stock
|
(52,968
|
)
|
(53,388
|
)
|
||||
Total
stockholders' equity
|
82,466
|
80,813
|
||||||
Total
liabilities and stockholders' equity
|
$
|
173,465
|
$
|
122,014
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Sales
|
$ | 63,269 | $ | 61,882 | $ | 124,437 | $ | 127,714 | ||||||||
Cost
of sales
|
50,516 | 48,910 | 99,177 | 100,929 | ||||||||||||
Gross
profit
|
12,753 | 12,972 | 25,260 | 26,785 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
5,171 | 5,201 | 10,290 | 10,739 | ||||||||||||
Other
operating expenses
|
4,424 | 4,512 | 8,819 | 9,132 | ||||||||||||
Depreciation
and amortization
|
154 | 141 | 296 | 283 | ||||||||||||
Total
operating expenses
|
9,749 | 9,854 | 19,405 | 20,154 | ||||||||||||
Operating
income
|
3,004 | 3,118 | 5,855 | 6,631 | ||||||||||||
Interest
expense
|
72 | 108 | 148 | 263 | ||||||||||||
Income
before income taxes
|
2,932 | 3,010 | 5,707 | 6,368 | ||||||||||||
Income
taxes
|
1,155 | 1,165 | 2,225 | 2,459 | ||||||||||||
Net
income
|
$ | 1,777 | $ | 1,845 | $ | 3,482 | $ | 3,909 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.10 | $ | 0.10 | $ | 0.20 | $ | 0.22 | ||||||||
Diluted
|
$ | 0.10 | $ | 0.10 | $ | 0.20 | $ | 0.22 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
17,655,370 | 17,647,982 | 17,654,133 | 17,645,433 | ||||||||||||
Diluted
|
17,707,273 | 17,663,522 | 17,705,620 | 17,656,445 | ||||||||||||
Dividend
declared per share
|
$ | 0.085 | $ | 0.085 | $ | 0.17 | $ | 0.17 |
Six Months
Ended June 30,
|
||||||||
2010
|
2009
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$ | 3,482 | $ | 3,909 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
296 | 283 | ||||||
Amortization
of capitalized loan costs
|
18 | 40 | ||||||
Amortization
of unearned stock compensation
|
1,138 | 1,194 | ||||||
Provision
for doubtful accounts
|
60 | — | ||||||
Provision
for returns and allowances
|
(160 | ) | (45 | ) | ||||
Provision
for inventory obsolescence
|
357 | 238 | ||||||
Deferred
income taxes
|
(461 | ) | (415 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
73 | 10,346 | ||||||
Inventories
|
2,663 | 905 | ||||||
Prepaids
|
3,006 | (249 | ) | |||||
Other
assets
|
(59 | ) | (31 | ) | ||||
Book
overdraft
|
(351 | ) | (2,903 | ) | ||||
Trade
accounts payable
|
4,066 | 4,162 | ||||||
Accrued
and other current liabilities
|
(2,102 | ) | (72 | ) | ||||
Income
taxes payable
|
(265 | ) | (1,734 | ) | ||||
Net
cash provided by operating activities
|
11,761 | 15,628 | ||||||
Investing
activities
|
||||||||
Expenditures
for property and equipment
|
(331 | ) | (186 | ) | ||||
Cash
paid for acquisition
|
(50,000 | ) | — | |||||
Net
cash used in investing activities
|
(50,331 | ) | (186 | ) | ||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
170,848 | 130,433 | ||||||
Payments
on revolver
|
(129,311 | ) | (142,898 | ) | ||||
Proceeds
from exercise of stock options
|
30 | 18 | ||||||
Excess
tax benefit for stock options
|
4 | 5 | ||||||
Payment
of dividends
|
(3,001 | ) | (3,000 | ) | ||||
Net
cash provided by (used in) financing activities
|
38,570 | (15,442 | ) | |||||
Net
change in cash
|
— | — | ||||||
Cash
at beginning of period
|
— | — | ||||||
Cash
at end of period
|
$ | — | $ | — |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Denominator:
|
||||||||||||||||
Weighted
average common shares for basic earnings per share
|
17,655,370
|
17,647,982
|
17,654,133
|
17,645,433
|
||||||||||||
Effect
of dilutive securities
|
51,903
|
15,540
|
51,488
|
11,012
|
||||||||||||
Weighted
average common shares for diluted earnings per share
|
17,707,273
|
17,663,522
|
17,705,620
|
17,656,445
|
At June 25, 2010
|
||||
Accounts receivable
|
$ | 11,210 | ||
Inventories
|
7,822 | |||
Deferred
income taxes
|
451 | |||
Prepaids
|
68 | |||
Property
and equipment
|
3,580 | |||
Intangibles,
net
|
5,390 | |||
Goodwill
|
29,811 | |||
Other
assets
|
99 | |||
Total
assets acquired
|
58,431 | |||
Book
overdraft
|
480 | |||
Trade
accounts payable
|
5,568 | |||
Accrued
and other current liabilities
|
721 | |||
Deferred
income taxes
|
1,518 | |||
Long
term obligations
|
144 | |||
Total
liabilities assumed
|
8,431 | |||
Net
assets purchased
|
$ | 50,000 |
Six Months ended June 30,
|
||||||||
2010
|
2009
|
|||||||
Sales
|
$ | 159,095 | $ | 176,047 | ||||
Net
income
|
4,818 | 5,540 | ||||||
Basic
earnings per share
|
0.27 | 0.31 | ||||||
Diluted
earnings per share
|
0.27 | 0.31 |
2010
|
2009
|
|||||||
Expected
volatility
|
82 | % | 81 | % | ||||
Expected
life in years
|
2.0
years
|
2.0
years
|
||||||
Risk-free
interest rate
|
0.83 | % | 1.00 | % | ||||
Dividend
yield
|
2.74 | % | 3.29 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
79.8 | % | 79.0 | % | 79.7 | % | 79.0 | % | ||||||||
Gross
profit
|
20.2 | % | 21.0 | % | 20.3 | % | 21.0 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
8.2 | % | 8.4 | % | 8.3 | % | 8.4 | % | ||||||||
Other
operating expenses
|
7.0 | % | 7.3 | % | 7.1 | % | 7.2 | % | ||||||||
Depreciation
and amortization
|
0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||
Total
operating expenses:
|
15.4 | % | 15.9 | % | 15.6 | % | 15.8 | % | ||||||||
Operating
income
|
4.7 | % | 5.0 | % | 4.7 | % | 5.2 | % | ||||||||
Interest
expense
|
0.1 | % | 0.2 | % | 0.1 | % | 0.2 | % | ||||||||
Income
before income taxes
|
4.6 | % | 4.9 | % | 4.6 | % | 5.0 | % | ||||||||
Income
taxes
|
1.8 | % | 1.9 | % | 1.8 | % | 1.9 | % | ||||||||
Net
income
|
2.8 | % | 3.0 | % | 2.8 | % | 3.1 | % |
Three
Months Ended
|
|||||||||||||||
June
30,
|
|||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
||||||||||||
Sales
|
$
|
63.3
|
$
|
61.9
|
$
|
1.4
|
2.2
|
%
|
Three
Months Ended
|
|||||||||||||||
June
30,
|
|||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
||||||||||||
Gross
profit
|
$
|
12.8
|
$
|
13.0
|
$
|
(0.2
|
)
|
(1.7
|
)%
|
||||||
Gross
profit as a percent of sales
|
20.2
|
%
|
21.0
|
%
|
(0.8
|
)%
|
Three Months Ended
|
|||||||||||||||
June 30,
|
|||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
||||||||||||
Operating
expenses:
|
|||||||||||||||
Salaries
and commissions
|
$ | 5.2 | $ | 5.2 | $ | (0.0 | ) | (0.6 | )% | ||||||
Other
operating expenses
|
4.4 | 4.5 | (0.1 | ) | (2.0 | )% | |||||||||
Depreciation
and amortization
|
0.2 | 0.1 | 0.0 | 9.2 | % | ||||||||||
Total
operating expenses
|
$ | 9.7 | $ | 9.9 | $ | (0.1 | ) | (1.1 | )% | ||||||
Operating
expenses as a percent of sales
|
15.4 | % | 15.9 | % | (0.5 | )% |
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Sales
|
$
|
124.4
|
$
|
127.7
|
$
|
(3.3
|
)
|
(2.6)
|
%
|
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Gross
profit
|
$
|
25.3
|
$
|
26.8
|
$
|
(1.5
|
)
|
(5.7
|
)%
|
|||||||
Gross
profit as a percent of sales
|
20.3
|
%
|
21.0
|
%
|
(0.7
|
)%
|
Six Months Ended
|
||||||||||||||||
June 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ | 10.3 | $ | 10.7 | $ | (0.4 | ) | (4.2 | )% | |||||||
Other
operating expenses
|
8.8 | 9.1 | (0.3 | ) | (3.4 | )% | ||||||||||
Depreciation
and amortization
|
0.3 | 0.3 | 0.0 | 4.6 | % | |||||||||||
Total
operating expenses
|
$ | 19.4 | $ | 20.2 | $ | (0.7 | ) | (3.7 | )% | |||||||
Operating
expenses as a percent of sales
|
15.6 | % | 15.8 | % | (0.2 | )% |
•
|
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)
|
||||||||||||||||||||
Total
debt
|
$
|
59,016
|
$
|
—
|
$
|
—
|
$
|
59,016
|
$
|
—
|
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, 2010
|
—
|
$
|
—
|
—
|
$
|
19,385,303
|
||||||||||
May
1 – 31, 2010
|
—
|
—
|
|
—
|
19,385,303
|
|||||||||||
June
1 – 30, 2010
|
—
|
—
|
—
|
$
|
19,385,303
|
|||||||||||
Total
|
—
|
$
|
—
|
—
|
(1)
|
The board authorized a stock
repurchase 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
2010.
|
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
9, 2010
|
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.
|