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): April 15, 2008

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 April 15, 2008, the Company issued a press release regarding its financial results for the second fiscal quarter ended March 29, 2008. 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

Exhibit 99.1 Press release dated April 15, 2008 announcing Company’s second fiscal quarter financial results.

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: April 15, 2008	By:	/s/ H.O. Woltz III
			H.O. Woltz III
			President and Chief Executive Officer
Date: April 15, 2008	By:	/s/ Michael C. Gazmarian
			Michael C. Gazmarian
			Vice President, Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99.1

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 SECOND-QUARTER FINANCIAL RESULTS

MOUNT AIRY, N.C., April 15, 2008 — Insteel Industries, Inc. (Nasdaq: IIIN) today announced financial results for the second quarter ended March 29, 2008. Net earnings for the quarter were $6.9 million, or $0.39 per diluted share compared with $4.9 million, or $0.27 per diluted share for the same period last year. Net sales for the quarter increased 3.3% to $77.3 million from $74.8 million last year. Shipments decreased 6.5% while average selling prices rose 10.6%.

For the six-month period ended March 29, 2008, earnings from continuing operations were $11.1 million, or $0.62 per diluted share compared with $10.9 million, or $0.59 per diluted share in the prior year. Net sales for the six-month period decreased 0.9% to $143.2 million from $144.5 million last year. Shipments decreased 6.3% while average selling prices increased 5.8%.

“Insteel posted strong financial results for the second quarter, particularly in view of the unprecedented escalation in raw material costs and the weak demand that we experienced in certain of our markets,” said H.O. Woltz III, Insteel’s president and chief executive officer. “During the quarter, we implemented price increases sufficient to recover these additional costs and benefited from the consumption of lower cost material from inventory. Our shipment performance continued to be mixed, characterized by relatively strong demand for products primarily used in nonresidential construction and weak demand from customers with greater exposure to the housing market.”

Gross profit for the quarter increased to $15.8 million (20.4% of net sales) from $12.4 million (16.5% of net sales) a year ago due to the higher average selling prices which more than offset higher raw material costs, lower shipments and higher unit conversion costs. Most of the Company’s manufacturing facilities continued to operate on reduced schedules during the quarter in response to the soft demand.

Operating activities of continuing operations provided $6.8 million of cash during the quarter while using $10.0 million a year ago primarily due to the year-over-year changes in net working capital together with the increase in earnings. Net working capital used $3.1 million of cash while using $15.7 million a year ago largely due to the $14.6 million decrease in accounts payable and accrued expenses in the prior year that resulted from the reduction in raw material purchases from the levels earlier in the year. The strong operating cash flow for the quarter enabled the Company to repurchase 697,813 shares or $6.2 million of common stock under its share repurchase authorization, fund $1.3 million of capital expenditures, pay $0.5 million of dividends and end the quarter debt-free with $17.7 million of cash, unchanged from the previous quarter-end. Capital expenditures through the first six months of fiscal 2008 were $6.2 million and are currently expected to total $10.0 million for the year, although the actual amount is subject to change based on adjustments in project timelines or scope, future market conditions, the Company’s financial performance and additional growth opportunities that may arise.

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

Page 2 of 6

Commenting on the outlook for the remainder of fiscal 2008, Woltz said, “We expect business conditions to remain challenging as the ongoing weakness in new home construction and the overall economy begin to have a more pronounced impact on our primary demand driver, nonresidential construction. In addition, we anticipate a continuation of the upward spiral in our raw material costs. Prices for steel wire rod, our primary raw material, have risen to record high levels driven by tight supply conditions in the domestic market resulting from limited import availability together with the continued surge in scrap and other raw material costs for steel producers. Although we have managed thus far to recover these additional costs in our markets, going forward it could become increasingly difficult for us to do so should we experience a significant softening in demand.

“In the face of these challenges, we continue to focus on those factors that we can control: managing our expenses and working capital, closely aligning our operating schedules with customer demand and responding quickly to any changes that occur, and continuing to improve the productivity levels of our manufacturing facilities and our selling and administrative activities. With the significant capital projects we have undertaken essentially complete, we are confident that the investments we have made to upgrade and expand our facilities ideally position us to capitalize on future growth in demand and achieve significant cost reductions as market conditions improve and operating levels rise.”

Conference Call

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

About Insteel

Insteel Industries is one of the nation’s largest manufacturers of steel wire reinforcing products for concrete construction applications. The Company manufactures and markets PC strand and welded wire reinforcement, including concrete pipe reinforcement, 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 are discussed in detail in the Company’s periodic reports, in particular in its report on Form 10-K for the year ended September 29, 2007, filed with the U.S. Securities and Exchange Commission. You should carefully read these risk factors.

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.

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Insteel Industries, Inc.

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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; the continuation of favorable demand trends for the Company’s concrete reinforcing products resulting from increased spending for nonresidential construction; the severity and duration of the downturn in residential construction activity, the impact on those portions of the Company’s business that are correlated with the housing sector and the probable impact on commercial construction; 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; the impact of increased imports of PC strand; 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 timely and successful completion of the expansions of the Company’s ESM and PC strand operations; the actual net proceeds realized and closure costs incurred in connection with the Company’s exit from the industrial wire business; legal, environmental 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 “Risk Factors” discussed in the Company’s Form 10-K for the year ended September 29, 2007.

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

	Three Months Ended						Six Months Ended
	March 29,			March 31,			March 29,			March 31,
	2008			2007			2008			2007
Net sales	$	77,260		$	74,766		$	143,240		$	144,482
Cost of sales		61,473			62,408			116,833			118,500
Gross profit		15,787			12,358			26,407			25,982
Selling, general and administrative expense		5,165			4,593			9,252			8,836
Other income, net		(57	)		(32	)		(76	)		(50	)
Interest expense		152			154			310			296
Interest income		(236	)		(70	)		(443	)		(260	)
Earnings from continuing operations before income taxes		10,763			7,713			17,364			17,160
Income taxes		3,871			2,769			6,241			6,285
Earnings from continuing operations		6,892			4,944			11,123			10,875
Earnings (loss) from discontinued operations net of income taxes of $16, ($20), $12 and ($116)		26			(31	)		19			(183	)
Net earnings	$	6,918		$	4,913		$	11,142		$	10,692
Per share amounts:
Basic:
Earnings from continuing operations	$	0.40		$	0.27		$	0.63		$	0.60
Earnings (loss) from discontinued operations		—			—			—			(0.01	)
Net earnings	$	0.40		$	0.27		$	0.63		$	0.59
Diluted:
Earnings from continuing operations	$	0.39		$	0.27		$	0.62		$	0.59
Earnings (loss) from discontinued operations		—			—			—			(0.01	)
Net earnings	$	0.39		$	0.27		$	0.62		$	0.58
Cash dividends declared	$	0.03		$	0.03		$	0.06		$	0.06
Weighted average shares outstanding
Basic		17,503			18,136			17,762			18,125
Diluted		17,647			18,299			17,918			18,293

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

	(Unaudited)
	March 29,			September 29,
	2008			2007
Assets
Current assets:
Cash and cash equivalents	$	17,652		$	8,703
Accounts receivable, net		33,411			34,518
Inventories		55,308			47,401
Prepaid expenses and other		2,361			4,640
Total current assets		108,732			95,262
Property, plant and equipment, net		70,344			67,147
Other assets		6,467			7,485
Non-current assets of discontinued operations		3,635			3,635
Total assets	$	189,178		$	173,529
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	29,663		$	16,705
Accrued expenses		8,037			7,613
Current liabilities of discontinued operations		180			247
Total current liabilities		37,880			24,565
Other liabilities		5,006			4,862
Long-term liabilities of discontinued operations		235			252
Shareholders’ equity:
Common stock		17,468			18,303
Additional paid-in capital		42,277			48,939
Deferred stock compensation		(1,439	)		(1,132	)
Retained earnings		89,672			79,859
Accumulated other comprehensive loss		(1,921	)		(2,119	)
Total shareholders’ equity		146,057			143,850
Total liabilities and shareholders’ equity	$	189,178		$	173,529

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

	Six Months Ended
	March 29,			March 31,
	2008			2007
Cash Flows From Operating Activities:
Net earnings	$	11,142		$	10,692
Earnings (loss) from discontinued operations		(19	)		183
Earnings from continuing operations		11,123			10,875
Adjustments to reconcile earnings from continuing operations to net cash provided by (used for) operating activities of continuing operations:
Depreciation and amortization		3,473			2,614
Amortization of capitalized financing costs		249			249
Stock-based compensation expense		910			606
Excess tax benefits from stock-based compensation		(15	)		(59	)
Loss on sale of property, plant and equipment		56			—
Deferred income taxes		653			186
Gain from life insurance proceeds		(661	)		—
Increase in cash surrender value of life insurance over premiums paid		—			(59	)
Net changes in assets and liabilities:
Accounts receivable, net		1,107			1,398
Inventories		(7,907	)		(4,503	)
Accounts payable and accrued expenses		12,554			(16,464	)
Other changes		2,512			(590	)
Total adjustments		12,931			(16,622	)
Net cash provided by (used for) operating activities — continuing operations		24,054			(5,747	)
Net cash used for operating activities — discontinued operations		(65	)		(365	)
Net cash provided by (used for) operating activities		23,989			(6,112	)
Cash Flows From Investing Activities:
Capital expenditures		(6,159	)		(7,499	)
Proceeds from sale of property, plant and equipment		83			—
Increase in cash surrender value of life insurance policies		(382	)		(585	)
Proceeds from life insurance claims		1,111			—
Net cash used for investing activities — continuing operations		(5,347	)		(8,084	)
Net cash used for investing activities		(5,347	)		(8,084	)
Cash Flows From Financing Activities:
Proceeds from long-term debt		772			11,873
Principal payments on long-term debt		(772	)		(7,573	)
Cash received from exercise of stock options		38			55
Excess tax benefits from stock-based compensation		15			59
Repurchases of common stock		(8,691	)		—
Cash dividends paid		(1,092	)		(1,087	)
Other		37			189
Net cash provided by (used for) financing activities — continuing operations		(9,693	)		3,516
Net cash provided by (used for) financing activities		(9,693	)		3,516
Net increase (decrease) in cash and cash equivalents		8,949			(10,680	)
Cash and cash equivalents at beginning of period		8,703			10,689
Cash and cash equivalents at end of period	$	17,652		$	9
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	61		$	28
Income taxes		2,557			9,060
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable		650			1,489
Issuance of restricted stock		733			763
Declaration of cash dividends to be paid		524			547
Restricted stock surrendered for withholding taxes payable		76			—

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Insteel Industries, Inc.