8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 16, 2009

Commission File Number 1-9929

Insteel Industries, Inc.

(Exact name of registrant as specified in its charter)

North Carolina	56-0674867
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1373 Boggs Drive, Mount Airy, North Carolina	27030
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (336) 786-2141

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

     On July 16, 2009, Insteel Industries, Inc. issued a press release regarding its financial results for the third fiscal quarter ended June 27, 2009. A copy of this release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information in Item 2.02 of this Current Report on Form 8-K, including the related information in Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit 99.1  Press release dated July 16, 2009 announcing third fiscal quarter 2009 financial results of Insteel Industries, Inc.

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: July 16, 2009	By:	/s/ Michael C. Gazmarian
		Michael C. Gazmarian
		Vice President, Chief Financial Officer and Treasurer

EXHIBIT INDEX

Exhibit
Number	Description
99.1	Press release dated July 16, 2009 announcing third fiscal quarter 2009 financial results of Insteel Industries, Inc.

EX-99.1

Exhibit 99.1

Insteel Industries, Inc.

NEWS RELEASE

FOR IMMEDIATE RELEASE	Contact:	Michael C. Gazmarian
		Vice President, Chief Financial
		Officer and Treasurer
		Insteel Industries, Inc.
		336-786-2141, Ext. 3020

INSTEEL INDUSTRIES REPORTS THIRD-QUARTER FINANCIAL RESULTS

MOUNT AIRY, N.C., July 16, 2009 — Insteel Industries, Inc. (NasdaqGS: IIIN) today reported a net loss of $1.7 million ($0.10 per share) for the third quarter ended June 27, 2009 compared with net earnings of $16.9 million ($0.97 per diluted share) for the same period last year. The net loss for the current year quarter includes a pre-tax charge of $2.9 million ($0.10 per share after-tax) for inventory write-downs to reduce the carrying value of inventory to the lower of cost or market. Net sales for the third quarter decreased 45.4% to $57.0 million from $104.3 million in the same year-ago period. Shipments decreased 28.7% while average selling prices decreased 23.4% from the same period last year.

For the nine-month period ended June 27, 2009, the net loss was $23.8 million ($1.37 per share) compared with net earnings of $28.1 million ($1.58 per diluted share) for the same period last year. The net loss for the current year includes a pre-tax charge of $25.9 million ($0.94 per share after-tax) for inventory write-downs to reduce the carrying value of inventory to the lower of cost or market. Net sales for the nine-month period decreased 31.7% to $169.2 million from $247.6 million in the same year-ago period. Shipments decreased 37.3% while average selling prices increased 9.0% from the same period last year.

Insteel’s financial results for the third quarter were unfavorably impacted by the reductions in shipments and selling prices, the consumption of higher cost inventory purchased prior to the collapse in steel prices during the current fiscal year and the escalation in unit conversion costs resulting from reduced operating schedules. Selling prices and margins for prestressed concrete strand (“PC strand”) continued to be adversely affected by exorbitantly low-priced imports from China. The Company’s overall capacity utilization for the quarter dropped to 42% from 67% in the same period last year.

Operating activities provided $23.1 million of cash during the third quarter compared with $2.5 million during the same period last year primarily due to the year-over-year changes in net working capital, which more than offset the loss in the current year quarter. Net working capital provided $20.7 million of cash during the current year quarter primarily due to the Company’s inventory reduction initiatives while using $17.3 million during the same year-ago period largely due to increases in inventories and accounts receivable resulting from the escalation in raw material costs and selling prices. Capital expenditures for the nine-month period were $1.7 million compared with $8.4 million for the same period last year and are expected to total less than $3.0 million for fiscal 2009. Insteel ended the quarter debt-free with $21.6 million of cash and cash equivalents.

Commenting on the results for the third quarter, Insteel’s president and CEO, H.O. Woltz III said, “Although we have seen some improvement in demand during the quarter, the increase appears to be primarily a function of seasonal factors and the completion of customer inventory destocking rather than a recovery in our markets. We made considerable progress in realigning our inventories and working through the remainder of the higher cost inventory that has negatively impacted our financial results

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1373 BOGGS DRIVE / MOUNT AIRY, NORTH CAROLINA 27030 / 336-786-2141/ FAX 336-786-2144

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since the beginning of our fiscal year.”

PC Strand Trade Actions

On July 10, 2009, the U.S. International Trade Commission (“ITC”) reached a preliminary determination that imports of PC strand from China threatened to injure the domestic PC strand industry. The ITC’s unanimous ruling was in response to antidumping and countervailing duty petitions filed by a coalition of domestic PC strand producers, including Insteel, on May 27, 2009. These petitions allege that imports of PC strand from China were being “dumped” or sold in the U.S. at a price that was lower than its fair value and that subsidies were being provided to Chinese PC strand producers by the Chinese government. The petitioners are alleging dumping margins ranging from 140% to 315%, with an average margin of 223%. The entire investigative process is anticipated to take one year, with the final determinations of injury, dumping and subsidies expected to occur in mid-2010. While PC strand imports as reflected in recent government statistics have declined, the market continues to be adversely affected by unsold quantities of strand that entered the U.S. during the last half of 2008.

“Over the past three years, imports of PC strand from China have surged to where they represented 92% of total imports entering the U.S. in 2008, or 41% of the domestic market,” said Woltz. “The tactics employed by the Chinese to undersell domestic producers have severely impacted Insteel’s shipping volumes and selling prices, resulting in significant margin erosion. The trade cases are intended to level the competitive playing field and ensure that all competitors are adhering to U.S. trade laws. We believe that our manufacturing costs for PC strand compare favorably with any other producer, domestic or foreign.”

Outlook

Looking ahead to the remainder of the calendar year, Woltz said, “Despite recent signs of stabilization in our markets, we expect business conditions to remain challenging. Private nonresidential construction, particularly for commercial projects, is expected to soften in view of the recessionary environment and financing constraints. Infrastructure-related spending under the American Recovery and Reinvestment Act, which has been negligible up to this point, should begin to accelerate later in the year and serve to at least partially offset the anticipated decline in other construction categories.

Prices for our products as well as for wire rod appear to have bottomed out following the extended downturn that began last September. In view of the recent up tick in scrap prices and announced closures of two U.S. mills representing over 20% of domestic capacity, we expect that wire rod prices will rise in the coming months, although the magnitude of the increase and the impact on the prices for our products are uncertain at this time.

“As we navigate our way through the difficult business environment that is likely to persist over the next few quarters, we will continue to focus on maintaining our market position, managing our costs and preserving liquidity. We remain hopeful that these ongoing challenges in our industry will serve as a catalyst for attractive growth opportunities to develop in the near future.”

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its third quarter financial results. A live webcast of this call can be accessed on Insteel’s website at http://investor.insteel.com/ and will be archived for replay until its next quarterly conference call.

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About Insteel

Insteel is one of the nation’s largest manufacturers of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets PC strand and welded wire reinforcement, including concrete pipe reinforcement, engineered structural mesh (“ESM”) and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. Headquartered in Mount Airy, North Carolina, Insteel operates six manufacturing facilities located in the United States.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” “may,” “should” and similar expressions are intended to identify forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and the Company can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in the Company’s periodic and other reports and statements that it files with the U.S. Securities and Exchange Commission (the “SEC”), in particular in its Annual Report on Form 10-K for the year ended September 27, 2008. You should carefully review these risks and uncertainties.

All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and the Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

It is not possible to anticipate and list all risks and uncertainties that may affect the Company’s future operations or financial performance; however, they include, but are not limited to, the following: general economic and competitive conditions in the markets in which the Company operates; credit market conditions and the impact of the measures that have been taken by the federal government on the relative availability of financing for the Company, its customers and the construction industry as a whole; the timing and magnitude of the impact of the additional federal infrastructure-related funding provided for under the American Recovery and Reinvestment Act; the anticipated reduction in spending for nonresidential construction, particularly commercial construction, and the impact on demand for the Company’s concrete reinforcing products; the severity and duration of the downturn in residential construction and the impact on those portions of the Company’s business that are correlated with the housing sector; the cyclical nature of the steel and building material industries; fluctuations in the cost and availability of the Company’s primary raw material, hot-rolled steel wire rod from domestic and foreign suppliers; the Company’s ability to raise selling prices in order to recover increases in wire rod costs; changes in U.S. or foreign trade policy affecting imports or exports of steel wire rod or the Company’s products, including the outcome of the trade cases that have been filed by domestic producers of PC strand regarding imports of PC strand from China; unanticipated changes in customer demand, order patterns and inventory levels; the impact of weak demand and reduced capacity utilization levels on the Company’s unit manufacturing costs; the Company’s ability to further develop the market for ESM and expand its shipments of ESM; the actual net proceeds realized and closure costs incurred in

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connection with the Company’s exit from the industrial wire business; legal, environmental, economic or regulatory developments that significantly impact the Company’s operating costs; unanticipated plant outages, equipment failures or labor difficulties; continued escalation in certain of the Company’s operating costs; and the other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for the year ended September 27, 2008 and in other filings made by the Company with the SEC.

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
(Unaudited)

	Three Months Ended						Nine Months Ended
	June 27,			June 28,			June 27,			June 28,
	2009			2008			2009			2008
Net sales	$	56,963		$	104,332		$	169,166		$	247,572
Cost of sales		52,889			73,447			167,453			190,280
Inventory write-downs		2,898			—			25,853			—
Gross profit (loss)		1,176			30,885			(24,140	)		57,292
Selling, general and administrative expense		4,016			4,496			13,117			13,748
Other income, net		(1	)		(12	)		(50	)		(88	)
Interest expense		147			150			484			460
Interest income		(16	)		(125	)		(118	)		(568	)
Earnings (loss) from continuing operations before income taxes		(2,970	)		26,376			(37,573	)		43,740
Income taxes		(1,233	)		9,428			(13,855	)		15,669
Earnings (loss) from continuing operations		(1,737	)		16,948			(23,718	)		28,071
Loss from discontinued operations net of income taxes of ($6), ($12), ($37) and $-		(12	)		(21	)		(61	)		(2	)
Net earnings (loss)	$	(1,749	)	$	16,927		$	(23,779	)	$	28,069
Per share amounts:
Basic:
Earnings (loss) from continuing operations	$	(0.10	)	$	0.98		$	(1.37	)	$	1.59
Loss from discontinued operations		—			—			—			—
Net earnings (loss)	$	(0.10	)	$	0.98		$	(1.37	)	$	1.59
Diluted:
Earnings (loss) from continuing operations	$	(0.10	)	$	0.97		$	(1.37	)	$	1.58
Loss from discontinued operations		—			—			—			—
Net earnings (loss)	$	(0.10	)	$	0.97		$	(1.37	)	$	1.58
Cash dividends declared	$	0.03		$	0.03		$	0.09		$	0.09
Weighted average shares outstanding:
Basic		17,392			17,330			17,364			17,618
Diluted		17,392			17,482			17,364			17,773

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

	(Unaudited)
	June 27,			March 28,			September 27,
	2009			2009			2008
Assets
Current assets:
Cash and cash equivalents	$	21,569		$	8		$	26,493
Accounts receivable, net		24,635			23,353			49,581
Inventories		35,169			55,073			71,220
Prepaid expenses and other		18,284			16,774			3,122
Total current assets		99,657			95,208			150,416
Property, plant and equipment, net		65,396			67,056			69,105
Other assets		3,722			4,046			5,064
Non-current assets of discontinued operations		3,635			3,635			3,635
Total assets	$	172,410		$	169,945		$	228,220
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	16,346		$	11,094		$	23,581
Accrued expenses		4,434			4,794			29,081
Current liabilities of discontinued operations		217			225			188
Total current liabilities		20,997			16,113			52,850
Long-term debt		—			400			—
Other liabilities		5,245			5,422			5,306
Long-term liabilities of discontinued operations		191			200			217
Shareholders’ equity:
Common stock		17,526			17,526			17,507
Additional paid-in capital		44,640			44,439			43,202
Deferred stock compensation		(1,427	)		(1,668	)		(1,456	)
Retained earnings		87,123			89,398			112,479
Accumulated other comprehensive loss		(1,885	)		(1,885	)		(1,885	)
Total shareholders’ equity		145,977			147,810			169,847
Total liabilities and shareholders’ equity	$	172,410		$	169,945		$	228,220

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended						Nine Months Ended
	June 27,			June 28,			June 27,			June 28,
	2009			2008			2009			2008
Cash Flows From Operating Activities:
Net earnings (loss)	$	(1,749	)	$	16,927		$	(23,779	)	$	28,069
Loss from discontinued operations		12			21			61			2
Earnings (loss) from continuing operations		(1,737	)		16,948			(23,718	)		28,071
Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization		1,826			1,864			5,395			5,337
Amortization of capitalized financing costs		125			125			374			374
Stock-based compensation expense		441			372			1,426			1,282
Excess tax benefits from stock-based compensation		(1	)		(12	)		(3	)		(27	)
Inventory write-downs		2,898			—			25,853			—
Loss on sale of property, plant and equipment		4			(1	)		24			55
Deferred income taxes		(258	)		49			81			702
Gain from life insurance proceeds		—			—			—			(661	)
Net changes in assets and liabilities:
Accounts receivable, net		(1,282	)		(12,246	)		24,946			(11,139	)
Inventories		17,006			(17,688	)		10,198			(25,595	)
Accounts payable and accrued expenses		5,024			12,654			(23,138	)		25,208
Other changes		(959	)		494			(14,842	)		3,006
Total adjustments		24,824			(14,389	)		30,314			(1,458	)
Net cash provided by operating activities — continuing operations		23,087			2,559			6,596			26,613
Net cash used for operating activities — discontinued operations		(30	)		(28	)		(58	)		(93	)
Net cash provided by operating activities		23,057			2,531			6,538			26,520
Cash Flows From Investing Activities:
Capital expenditures		(302	)		(2,238	)		(1,684	)		(8,397	)
Proceeds from sale of property, plant and equipment		—			10			13			93
Decrease (increase) in cash surrender value of life insurance policies		(269	)		17			85			(365	)
Proceeds from surrender of life insurance policies		—			—			413			—
Proceeds from life insurance claims		—			—			—			1,111
Net cash used for investing activities — continuing operations		(571	)		(2,211	)		(1,173	)		(7,558	)
Net cash used for investing activities		(571	)		(2,211	)		(1,173	)		(7,558	)
Cash Flows From Financing Activities:
Proceeds from long-term debt		2,322			105			22,796			877
Principal payments on long-term debt		(2,722	)		(105	)		(22,796	)		(877	)
Cash received from exercise of stock options		—			82			66			120
Excess tax benefits from stock-based compensation		1			12			3			27
Repurchases of common stock		—			—			—			(8,691	)
Cash dividends paid		(526	)		(524	)		(10,330	)		(1,616	)
Other		—			(70	)		(28	)		(33	)
Net cash used for financing activities — continuing operations		(925	)		(500	)		(10,289	)		(10,193	)
Net cash used for financing activities		(925	)		(500	)		(10,289	)		(10,193	)
Net increase (decrease) in cash and cash equivalents		21,561			(180	)		(4,924	)		8,769
Cash and cash equivalents at beginning of period		8			17,652			26,493			8,703
Cash and cash equivalents at end of period	$	21,569		$	17,472		$	21,569		$	17,472
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	22		$	25		$	110		$	86
Income taxes		109			4,320			11,442			6,877
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable		(131	)		(378	)		39			272
Issuance of restricted stock		—			—			—			733
Declaration of cash dividends to be paid		526			524			526			524
Restricted stock surrendered for withholding taxes payable		—			—			9			76

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Insteel Industries, Inc.