<PAGE> 1
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 JULY 3, 1999
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 1-9929
INSTEEL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-0674867
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1373 BOGGS DRIVE, MOUNT AIRY, NORTH CAROLINA 27030
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 336-786-2141
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 [ ]
The number of shares outstanding of the registrant's common stock as of
August 11, 1999 was 8,457,226.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INSTEEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
July 3, October 3,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 517 $ 422
Accounts receivable, net 28,940 28,687
Inventories 31,929 30,566
Prepaid expenses and other 1,686 2,023
-------- --------
Total current assets 63,072 61,698
Property, plant and equipment, net 85,504 80,350
Other assets 11,126 5,083
-------- --------
Total assets $159,702 $147,131
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,452 $ 28,758
Accrued expenses 8,386 6,013
Current portion of long-term debt 620 620
-------- --------
Total current liabilities 36,458 35,391
Long-term debt 39,639 35,743
Deferred income taxes 7,311 5,726
Other liabilities 1,014 1,011
Shareholders' equity:
Common stock 16,914 16,885
Additional paid-in capital 38,314 38,232
Retained earnings 20,052 14,143
-------- --------
Total shareholders' equity 75,280 69,260
-------- --------
Total liabilities and shareholders' equity $159,702 $147,131
======== ========
</TABLE>
<PAGE> 3
INSTEEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except for per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- ----------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $72,676 $69,275 $201,105 $192,190
Cost of sales 61,947 65,258 174,606 185,371
------- ------- -------- --------
Gross profit 10,729 4,017 26,499 6,819
Selling, general and administrative expense 4,764 3,070 12,883 9,488
------- ------- -------- --------
Operating income (loss) 5,965 947 13,616 (2,669)
Interest expense 602 911 1,850 2,928
Other expense (income) (35) 28 103 (2,402)
------- ------- -------- --------
Earnings (loss) before income taxes and
extraordinary item 5,398 8 11,663 (3,195)
Provision (benefit) for income taxes 2,010 3 4,234 (1,134)
------- ------- -------- --------
Earnings (loss) before extraordinary item 3,388 5 7,429 (2,061)
Extraordinary item - loss on early extinguishment of debt -- -- -- (408)
------- ------- -------- --------
Net earnings (loss) $ 3,388 $ 5 $ 7,429 $ (2,469)
======= ======= ======== ========
Weighted average shares outstanding (basic) 8,453 8,443 8,446 8,442
======= ======= ======== ========
Per share (basic and diluted):
Earnings (loss) before extraordinary item $ 0.40 $ -- $ 0.88 $ (0.24)
Extraordinary item - loss on early extinguishment of debt -- -- -- (0.05)
------- ------- -------- --------
Net earnings (loss) $ 0.40 $ -- $ 0.88 $ (0.29)
======= ======= ======== ========
Dividends paid per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
======= ======= ======== ========
</TABLE>
<PAGE> 4
INSTEEL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------
July 3, June 27,
1999 1998
-------- --------
<S> <C> <C>
Cash Flows From Continuing Operating Activities:
Net earnings (loss) $ 7,429 $ (2,469)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 6,766 6,767
Gain on sale of assets (113) (4,704)
Extraordinary loss -- 408
Net changes in assets and liabilities:
Accounts receivable, net (224) (1,091)
Inventories 263 7,082
Accounts payable and accrued expenses 1,055 (4,639)
Other changes 2,196 (2,688)
-------- --------
Total adjustments 9,943 1,135
-------- --------
Net cash provided by (used for) continuing operating activities 17,372 (1,334)
-------- --------
Cash Flows From Discontinued Operating Activities:
Net cash provided by discontinued operating activities -- 1,869
Cash Flows From Investing Activities:
Capital expenditures (5,126) (5,261)
Acquisition of business (8,397) --
Equity investments (3,250) --
Purchases of short-term investments (1,875) --
Proceeds from (issuance of) notes receivable (1,355) 134
Proceeds from sale of property, plant and equipment 239 8,864
-------- --------
Net cash provided by (used for) investing activities (19,764) 3,737
-------- --------
Cash Flows From Financing Activities:
Proceeds from long-term debt 81,142 86,118
Principal payments on long-term debt (77,246) (89,275)
Proceeds from exercise of stock options 111 44
Cash dividends paid (1,520) (1,519)
-------- --------
Net cash provided by (used for) financing activities 2,487 (4,632)
-------- --------
Net increase (decrease) in cash 95 (360)
Cash and cash equivalents at beginning of period 422 1,079
-------- --------
Cash and cash equivalents at end of period $ 517 $ 719
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,898 $ 3,177
Income taxes 2,355 596
</TABLE>
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated unaudited financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. These unaudited consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended October 3, 1998.
The unaudited consolidated financial statements included herein reflect
all adjustments (consisting only of normal recurring accruals) that the Company
considers necessary for a fair presentation of the financial position, results
of operations and cash flows for all periods presented. The results for the
interim periods are not necessarily indicative of the results for the entire
fiscal year.
(2) INVENTORIES
<TABLE>
<CAPTION>
July 3, October 3,
(Amounts in thousands) 1999 1998
------- -------
<S> <C> <C>
Raw materials $13,355 $15,514
Supplies 2,671 2,242
Work in process 1,473 1,525
Finished goods 14,430 11,285
------- -------
Total inventories $31,929 $30,566
======= =======
</TABLE>
(3) EARNINGS PER SHARE
The reconciliation of basic and diluted earnings per share ("EPS") is
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- --------------------
July 3, June 27, July 3, June 27,
(Amounts in thousands, except per share data) 1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings (loss) before extraordinary item $ 3,388 $ 5 $ 7,429 $(2,061)
Extraordinary loss -- -- -- (408)
------- ------- ------- -------
Net earnings (loss) $ 3,388 $ 5 $ 7,429 $(2,469)
======= ======= ======= =======
Weighted average shares outstanding:
Weighted average shares outstanding (basic) 8,453 8,443 8,446 8,442
Dilutive effect of stock options 99 12 24 --
------- ------- ------- -------
Weighted average shares outstanding (diluted) 8,552 8,455 8,470 8,442
======= ======= ======= =======
Earnings (loss) per share (basic and diluted):
Earnings (loss) before extraordinary item $ 0.40 $ -- $ 0.88 $ (0.24)
Extraordinary loss -- -- -- (0.05)
------- ------- ------- -------
Net earnings (loss) $ 0.40 $ -- $ 0.88 $ (0.29)
======= ======= ======= =======
</TABLE>
Options to purchase 58,000 shares and 354,000 shares for the three
months ended July 3, 1999 and June 27, 1998, respectively, were antidilutive and
were not included in the diluted EPS computation.
<PAGE> 6
(4) NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131, which is based on the
management approach to segment reporting, establishes requirements to report
selected information about operating segments and related disclosures about
products and services, major customers and geographic areas. As the statement
only impacts financial statement disclosures, it will not effect the Company's
financial position or results of operations. Management is in the process of
evaluating the effects of this change on its reporting. The Company will adopt
SFAS No. 131 as required in its annual report for 1999.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Management has not yet evaluated the effects of this change on
its financial position or results of operations. The Company will adopt SFAS No.
133 as required in its interim financial statements for the first quarter of
2001.
(5) INVESTMENT IN STRUCTURAL REINFORCEMENT PRODUCTS
In January 1999, the Company acquired a 25% interest in Structural
Reinforcement Products, Inc. ("SRP"), a manufacturer of welded wire fabric
products for the construction industry. Under the terms of the purchase
agreement, the Company acquired 25% of the common stock in SRP for $3.3 million.
In addition, the Company provided SRP with $1.5 million of debt financing and
$1.9 million of collateral to support its existing credit facility in order to
assume a proportionate share of SRP's debt-related obligations. The Company may
be obligated to increase its investment for its equity position by up to $1.0
million depending upon SRP's future financial performance.
The Company is accounting for its investment in SRP on an equity basis
and, accordingly, is including its share of SRP's earnings in its consolidated
earnings. For the second quarter, the Company recorded an equity loss of
$125,000 in other expense on its consolidated statement of earnings.
(6) ACQUISITION OF CONCRETE REINFORCING BUSINESS
In April 1999, the Company acquired the assets of the concrete
reinforcing business of Northwestern Steel and Wire Company ("Northwestern").
Under the terms of the purchase agreement, the Company acquired the inventory,
property, plant and equipment of Northwestern's Hickman, Kentucky facility for
approximately $8.4 million. In addition, the companies entered into a three-year
agreement under which Northwestern will supply Insteel with a portion of its raw
material requirements.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
STATEMENTS OF EARNINGS - SELECTED DATA
($ in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ------------------------------------
July 3, June 27, July 3, June 27,
1999 Change 1998 1999 Change 1998
---- ------ ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Net sales $72,676 5% $69,275 $201,105 5% $192,190
Gross profit 10,729 167% 4,017 26,499 289% 6,819
Percentage of net sales 14.8% 5.8% 13.2% 3.5%
Selling, general and administrative expense $ 4,764 55% $ 3,070 $ 12,883 36% $ 9,488
Percentage of net sales 6.6% 4.4% 6.4% 4.9%
Operating income (loss) $ 5,965 N/M $ 947 $ 13,616 N/M $ (2,669)
Percentage of net sales 8.2% 1.4% 6.8% (1.4%)
Interest expense $ 602 (34%) $ 911 $ 1,850 (37%) $ 2,928
Percentage of net sales 0.8% 1.3% 0.9% 1.5%
Effective income tax rate 37.2% 37.5% 36.3% 35.5%
Earnings (loss) before extraordinary item $ 3,388 N/M $ 5 $ 7,429 N/M $ (2,061)
Percentage of net sales 4.7% .0% 3.7% (1.1%)
</TABLE>
Net sales for the third quarter increased 5% to $72.7 million from
$69.3 million in the year-ago period. For the nine-month period, sales increased
5% from the prior year. The sales increase for the nine-month period was in
spite of the sale of the assets related to the Company's agricultural fencing
product line in February 1998 which reduced current year sales relative to the
prior year. On a comparable basis, sales rose 10% for the nine-month period.
Sales of concrete reinforcing products increased significantly for the
three-month and nine-month periods as a result of strong construction markets,
additional volume generated by the building mesh supply agreement with SRP, and
the Company's recent acquisition of the assets of Northwestern's concrete
reinforcing business. Sales of tire bead wire rose to a new high during the
quarter as the Company continued to gain customer acceptance and further its
market penetration. Industrial wire sales declined for the three-month and
nine-month periods compared to the same periods in fiscal 1998, primarily due to
a significant increase in the proportion of wire consumed internally to
manufacture higher value products.
Gross margins for the third quarter increased to 14.8% of sales
compared with 5.8% in the prior year. For the nine-month period, gross margins
rose to 13.2% of sales from 3.5% a year ago. The margin improvement was
primarily caused by strong market conditions and widening spreads between
selling values and raw material costs for most products together with lower
per-unit manufacturing costs and additional building mesh sales provided by SRP.
Gross margins were also favorably impacted by the higher sales of tire bead wire
as the Company increased the capacity utilization of the Virginia manufacturing
facility.
Selling, general and administrative expense ("SG&A expense") rose 55%
for the third quarter, increasing to 6.6% of sales from 4.4% in the prior year.
For the nine-month period, SG&A expense increased 36%, rising to 6.4% of sales
from 4.9% a year ago. The increase in SG&A expense was primarily caused by
higher incentive plan and profit-sharing plan expenses resulting from the
significant improvement in the Company's financial results together with legal
fees related to acquisition activities and employment-related issues.
Interest expense fell sharply for the third quarter and nine-month
periods compared with a year ago due to lower borrowing levels and rates on the
Company's revolving credit facility. The reduction in debt was primarily due to
the significant improvement in the Company's earnings relative to the year-ago
loss.
The nine-month results for the prior year reflect a pre-tax gain of
$2.5 million in other income related to the February 1998 sale of the assets
associated with the Company's agricultural fencing product line.
The nine-month results for the prior year reflect an extraordinary loss
of $408,000 after income taxes, or approximately five cents per share, related
to the early extinguishment of debt. In March 1998, the Company retired its
$10.0 million 8.25% senior secured notes due 2002, funding the prepayment under
its unsecured revolving credit facility.
<PAGE> 8
FINANCIAL CONDITION
SELECTED FINANCIAL DATA
($ in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
July 3, June 27,
1999 1998
-------- --------
<S> <C> <C>
Net cash provided by (used for) continuing operating activities $ 17,372 $ (1,334)
Net cash provided by (used for) investing activities (19,764) 3,737
Net cash provided by (used for) financing activities 2,487 (4,632)
Total long-term debt 40,259 49,118
Percentage of total capital 35% 42%
Shareholders' equity $ 75,280 $ 67,378
Percentage of total capital 65% 58%
Total capital (total long-term debt + shareholders' equity) $115,539 $116,496
</TABLE>
Operating activities generated $17.4 million of cash for nine-month
period while using $1.3 million a year ago. The year-to-year change was
primarily related to the significant improvement in the Company's financial
results and increases in accrued expenses and deferred taxes.
Investing activities used $19.8 million of cash for the nine-month
period while providing $3.7 million a year ago. The year-to-year change was
principally due to the current year investments related to SRP and the
acquisition of the assets of Northwestern's concrete reinforcing business
compared with the prior year proceeds from the sale of agricultural fencing
equipment. Capital expenditures were primarily for equipment replacements and
upgrades together with the tire bead wire expansion.
Financing activities provided $2.5 million of cash for the nine-month
period while using $4.6 million a year ago. The increase in financing
requirements primarily resulted from the investments related to SRP and the
acquisition of the assets of Northwestern's concrete reinforcing business.
The Company's debt to capital ratio decreased to 35% at July 3, 1999
compared with 42% at June 27, 1998. At July 3, 1999, approximately $23.7 million
was available under the Company's revolving credit facility which provided for
maximum availability of $60.0 million. The Company currently expects to fund its
capital expenditure requirements and liquidity needs from a combination of
internally generated funds, the revolving credit facility and additional
long-term sources of financing.
YEAR 2000
The "Year 2000" issue refers to older computer systems and other
equipment operating on software that uses only two digits to represent the year,
rather than four digits. As a result, these older systems and equipment may not
process information or otherwise function properly when using the year "2000",
since that year will be indistinguishable from the year "1900".
The Company has initiated a Year 2000 program to assess and develop
plans to resolve the issue both internally and externally. During 1996, the
Company began developing a plan to upgrade its business and operating systems to
Year 2000 compliant software. In addition to addressing the Year 2000 issue, the
systems upgrade is expected to enhance the performance of the Company's customer
service, manufacturing and administrative processes. Implementation of the
upgrade began in 1997 with the initial testing of the system on a limited basis
prior to converting all of the Company's locations. As of July 3, 1999, the
implementation had been completed at all but one of the Company's facilities.
The remaining location is expected to complete the implementation in September
1999.
In order to identify potential Year 2000 problems at key suppliers and
customers, the Company initiated external surveys to assess their level of
compliance. As of July 3, 1999, the Company had received responses back from
approximately 80% of its critical suppliers indicating that they were either
already in compliance or planned on being in compliance by December 31, 1999.
The Company is in the process of following up with those suppliers who have not
responded that are considered to be critical to the Company's operations.
Alternative suppliers will be identified and
<PAGE> 9
evaluated by October 31, 1999 for those vendors who have not indicated that they
will be Year 2000 compliant by December 31, 1999.
The Company also is in the process of reviewing embedded software in
its equipment and facilities to identify potential Year 2000 issues. Equipment
manufacturers are being requested to certify their compliance and assist the
Company in developing solutions where they are currently non-compliant. As of
July 3, 1999, approximately 90% of the Company's critical manufacturing
equipment had been certified by vendors as being Year 2000 compliant. The
Company expects to complete the assessment and testing process by September
1999. Any critical equipment that is non-compliant will be upgraded or replaced
as necessary.
The Company's efforts to date have been concentrated on mitigating Year
2000 disturbances. As the Company proceeds forward with its assessment,
remediation and testing programs and evaluates the reasonable potential risks,
it will determine the appropriate contingency plans and resources. Any such
contingency actions and resources would be planned to be in place in sufficient
time for the Year 2000.
While reasonable actions have been taken to address the Year 2000
problem and will continue to be taken in the future to mitigate such disruption,
the magnitude of all Year 2000 disturbances cannot be predicted. Failure to
complete these programs as planned could result in the corruption of data,
hardware or equipment failures or the inability to manufacture products or
conduct other business activities, all of which could have a material impact on
the Company's business, consolidated financial position or results of
operations. Management believes that past or expected future capital
requirements related to Year 2000 compliance issues will not have a material
impact on its consolidated financial position or results of operations.
OUTLOOK
The Company's operating results are impacted by seasonal factors,
particularly in the first quarter of the fiscal year, which has historically
represented the lowest quarterly sales volume. Shipments typically increase in
the second quarter and reach a high point in the third or fourth quarter,
reflecting the buying patterns of the Company's customers.
Market conditions for hot-rolled wire rod, the Company's primary raw
material, continued to be favorable through the third quarter. Recent expansions
in domestic production capacity together with changes in the global market
environment significantly increased supplier competition. In January 1999,
domestic wire rod producers initiated a Section 201 filing with the U.S.
International Trade Commission ("ITC") alleging that rising import levels had
resulted in serious injury. The domestic producers are pursuing trade relief on
a worldwide basis against all countries other than NAFTA nations through duties,
quotas or other measures intended to reduce import competition. In May 1999,
three ITC commissioners found that the domestic wire rod industry had not been
injured by imports. Two commissioners found that the industry had been injured
by imports, and the sixth commissioner found that the industry had not been
injured, but that a threat of injury existed. The investigation is now in the
remedy phase. President Clinton is scheduled to make a determination on relief
for the industry by September 27, 1999. Domestic rod producers have recently
implemented price increases in response to strong market conditions. The future
impact of these actions on the Company's financial results is difficult to
predict, depending upon the resolution of the trade filings together with the
Company's ability to recover any raw material price increases in its markets.
The Company's business strategy continues to be focused on (1) further
expansion into higher value products that offer the potential to generate
returns that exceed the Company's cost of capital and (2) improving the
financial performance of the Company's traditional businesses to acceptable
levels. During 1994 - 1997, the Company built two new production facilities and
reconfigured an existing operation in order to develop the manufacturing
capabilities required to enter the markets for PC strand, collated fasteners and
tire bead wire. Sales of these new products are expected to increase from $39.6
million in 1998 to $100.0 million when fully operational.
The Company expects that the recently enacted federal highway spending
legislation ("TEA-21") will have a favorable impact on the demand for its
concrete reinforcing products. As customer requirements rise, the Company
expects to gradually increase the operating volumes of its recently expanded PC
strand manufacturing facility to its full design capacity. During the third
quarter, sales of the Company's most recent product addition, tire bead wire,
rose to a new high as the Company continued to make progress towards completing
the qualification process and establishing itself as a credible supplier. As the
Company is currently incurring substantially all of the anticipated operating
costs required to support its new business, the incremental impact of projected
increases in sales is expected to have a significant favorable impact on its
financial performance.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that reflect
management's current assumptions and estimates of future performance and
economic conditions. Such statements are made in reliance upon the safe harbor
provisions of the
<PAGE> 10
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
subject to various risks and uncertainties that could cause actual results to
differ materially from those projected, stated or implied by the statements.
Such risks and uncertainties include, but are not limited to, general economic
conditions in the markets in which the Company operates; unanticipated changes
in customer demand, order patterns and inventory levels; fluctuations in the
cost and availability of the Company's primary raw material, hot rolled steel
wire rod; the Company's ability to raise selling prices in order to recover
increases in wire rod prices; the impact of the resolution of the Section 201
filing with the U.S International Trade Commission on the cost and availability
of wire rod; legal, environmental or regulatory developments that significantly
impact the Company's operating costs; increased demand for the Company's
concrete reinforcing products resulting from increased federal funding levels
provided for in the TEA-21 highway spending legislation; the financial impact of
the acquisition of the 25% interest in SRP and the Hickman, KY manufacturing
facility; the success of the Company's new product initiatives, including the PC
strand, collated fastener and tire bead wire expansions; the inability of the
Company to expedite the qualification process with prospective customers for
tire bead wire; and the failure of the Company to receive regular and
substantial orders for its new products.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 26, 1999, the Board of Directors of the Company declared a
dividend distribution of one Preferred Stock Purchase Right on each share of the
Company's Common Stock to shareholders of record on May 17, 1999. One right will
also be issued for each share of Common Stock issued after May 17, 1999. The
Company issued the rights pursuant to a Rights Agreement dated as of April 27,
1999 between the Company and First Union National Bank, as Rights Agent. The
issuance of the rights did not constitute a sale of securities for the purpose
of Section 5 of the Securities Act of 1933. The rights and the Rights Agreement
are described in the Company's Current Report on Form 8-K dated April 26, 1999,
which is incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
27 - Financial Data Schedule
b. Reports on Form 8-K
The Company filed a report on Form 8-K, dated May 7, 1999. The
Item reported was "Item 5. Other Events".
<PAGE> 11
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.
INSTEEL INDUSTRIES, INC.
Registrant
Date: August 11, 1999 By /s/ H.O. WOLTZ III
- ------------------------------ --------------------------------
H.O. Woltz III
President and Chief Executive
Officer
Date: August 11, 1999 By /s/ MICHAEL C. GAZMARIAN
- ------------------------------ --------------------------------
Michael C. Gazmarian
Chief Financial Officer and
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INSTEEL INDUSTRIES, INC. FOR THE NINE MONTHS ENDED JULY
3, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-02-1999
<PERIOD-END> JUL-03-1999
<CASH> 517
<SECURITIES> 0
<RECEIVABLES> 28,940
<ALLOWANCES> 0
<INVENTORY> 31,929
<CURRENT-ASSETS> 63,072
<PP&E> 85,504
<DEPRECIATION> 0
<TOTAL-ASSETS> 159,702
<CURRENT-LIABILITIES> 36,458
<BONDS> 0
16,914
0
<COMMON> 0
<OTHER-SE> 58,366
<TOTAL-LIABILITY-AND-EQUITY> 159,702
<SALES> 201,105
<TOTAL-REVENUES> 201,105
<CGS> 174,606
<TOTAL-COSTS> 174,606
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,850
<INCOME-PRETAX> 11,663
<INCOME-TAX> 4,234
<INCOME-CONTINUING> 7,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,429
<EPS-BASIC> 0.88
<EPS-DILUTED> 0.88
</TABLE>
