10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

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: 000-20278

ENCORE WIRE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	75-2274963
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1329 Millwood Road McKinney, Texas	75069
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (972) 562-9473

N/A

(Former name, former address and former fiscal year, if changed since last report)

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of shares of Common Stock, par value $0.01, outstanding as of August 1, 2013: 20,673,452

ENCORE WIRE CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013

	Page No.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets June 30, 2013 (Unaudited) and December 31, 2012		1
Consolidated Statements of Income (Unaudited) Quarters and Six Months ended June 30, 2013 and June  30, 2012		3
Consolidated Statements of Cash Flows (Unaudited) Six Months ended June 30, 2013 and June 30, 2012		4
Notes to Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		17
Item 4. Controls and Procedures.		17
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.		18
Item 1A. Risk Factors.		18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		18
Item 6. Exhibits.		18
Signatures		19

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ENCORE WIRE CORPORATION

CONSOLIDATED BALANCE SHEETS

In Thousands of Dollars	June 30, 2013 (Unaudited)			December 31, 2012 (See Note)
ASSETS
Current assets:
Cash and cash equivalents	$	1,234		$	33,883
Accounts receivable, net of allowance of $2,065 and $2,064		236,172			197,980
Inventories		64,503			63,656
Income taxes receivable		—			—
Deferred income taxes		2,156			5,790
Prepaid expenses and other		3,846			5,541
Total current assets		307,911			306,850
Property, plant and equipment—at cost:
Land and land improvements		44,217			18,466
Construction-in-progress		9,206			25,434
Buildings and improvements		90,949			90,790
Machinery and equipment		218,630			196,838
Furniture and fixtures		8,466			8,426
Total property, plant and equipment		371,468			339,954
Accumulated depreciation		(181,847	)		(175,030	)
Property, plant and equipment – net		189,621			164,924
Other assets		543			693
Total assets	$	498,075		$	472,467

Note: The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

See accompanying notes.

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ENCORE WIRE CORPORATION

CONSOLIDATED BALANCE SHEETS (continued)

In Thousands of Dollars, Except Share Data	June 30, 2013 (Unaudited)			December 31, 2012 (See Note)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	25,298		$	20,112
Accrued liabilities		20,803			23,438
Income taxes payable		2,263			1,807
Total current liabilities		48,364			45,357
Non-current deferred income taxes		18,081			16,946
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value:
Authorized shares – 2,000,000; none issued		—			—
Common stock, $.01 par value:
Authorized shares – 40,000,000; Issued shares – 26,607,603 and 26,597,753		266			266
Additional paid-in capital		48,694			48,298
Treasury stock, at cost – 5,934,651 and 5,934,651 shares		(88,134	)		(88,134	)
Retained earnings		470,804			449,734
Total stockholders’ equity		431,630			410,164
Total liabilities and stockholders’ equity	$	498,075		$	472,467

Note: The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

See accompanying notes.

2

ENCORE WIRE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Quarter Ended June 30,						Six Months Ended June 30,
In Thousands, Except Per Share Data	2013			2012			2013			2012
Net sales	$	289,460		$	264,730		$	554,811		$	545,196
Cost of goods sold		249,309			245,339			490,359			501,344
Gross profit		40,151			19,391			64,452			43,852
Selling, general, and administrative expenses		16,213			15,327			31,360			30,404
Operating income		23,938			4,064			33,092			13,448
Net interest and other (income) expenses		(18	)		(8	)		(35	)		(28	)
Income before income taxes		23,956			4,072			33,127			13,476
Provision for income taxes		8,454			1,702			11,230			4,413
Net income	$	15,502		$	2,370		$	21,897		$	9,063
Net income per common and common equivalent share – basic	$	0.75		$	0.11		$	1.06		$	0.40
Weighted average common and common equivalent shares – basic		20,669			21,997			20,667			22,712
Net income per common and common equivalent share – diluted	$	0.75		$	0.11		$	1.06		$	0.40
Weighted average common and common equivalent shares – diluted		20,738			22,037			20,736			22,757
Cash dividends declared per share	$	0.02		$	0.02		$	0.04		$	0.04

See accompanying notes.

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ENCORE WIRE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
In Thousands of Dollars	2013			2012
OPERATING ACTIVITIES
Net income	$	21,897		$	9,063
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		7,052			7,236
Deferred income taxes		4,769			(2,910	)
Other		154			372
Changes in operating assets and liabilities:
Accounts receivable		(38,193	)		(6,168	)
Inventories		(847	)		10,986
Trade accounts payable and accrued liabilities		2,551			10,197
Other assets and liabilities		1,822			380
Current income taxes receivable / payable		486			(2,183	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(309	)		26,973
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(31,712	)		(24,042	)
Proceeds from sale of assets		—			11
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(31,712	)		(24,031	)
FINANCING ACTIVITIES
Proceeds from issuances of common stock		169			56
Purchase of treasury stock		—			(66,638	)
Dividends paid		(827	)		(937	)
Excess tax benefits of options exercised		30			6
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(628	)		(67,513	)
Net increase (decrease) in cash and cash equivalents		(32,649	)		(64,571	)
Cash and cash equivalents at beginning of period		33,883			112,298
Cash and cash equivalents at end of period	$	1,234		$	47,727

See accompanying notes.

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ENCORE WIRE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

June 30, 2013

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of Encore Wire Corporation (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Results of operations for interim periods presented do not necessarily indicate the results that may be expected for the entire year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

NOTE 2 – INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories consist of the following:

	June 30,			December 31,
In Thousands of Dollars	2013			2012
Raw materials	$	15,174		$	26,013
Work-in-process		30,719			22,309
Finished goods		82,441			88,750
Total		128,334			137,072
Adjust to LIFO cost		(63,831	)		(73,416	)
Lower of cost or market adjustment		—			—
Inventory, net	$	64,503		$	63,656

LIFO pools are established at the end of each fiscal year. During the first three quarters of every year, LIFO calculations are based on the inventory levels and costs at that time. Accordingly, interim LIFO balances will fluctuate up and down in tandem with inventory levels and costs.

During the first quarter of 2013, the Company liquidated a portion of the layer established in 2011 and built some of that layer back in the second quarter of 2013. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs. This activity impacted net income positively in the second quarter of 2013 by $481,000 and negatively by $903,000 for the first six months of 2013. During the first six months of 2012, the Company liquidated a portion of the

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layer established in 2011. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs, which negatively impacted net income for the second quarter and the first six months of 2012 by $383,000.

NOTE 3 – ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	June 30,		December 31,
In Thousands of Dollars	2013		2012
Sales volume discounts payable	$	13,274	$	13,940
Property taxes payable		1,490		2,937
Commissions payable		2,243		1,768
Accrued salaries		3,169		4,235
Other accrued liabilities		627		558
Total accrued liabilities	$	20,803	$	23,438

NOTE 4 – INCOME TAXES

Income taxes were accrued at an effective rate of 35.3% in the second quarter of 2013 versus 41.8% in the second quarter of 2012, consistent with the Company’s estimated liabilities. The decrease in the effective rate was due to a moderate change in the proportional effects of permanent items on the effective rate. For the six months ended June 30, the Company’s effective tax rate was approximately 33.9% in 2013 and 32.7% in 2012.

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NOTE 5 – EARNINGS PER SHARE

Net earnings (loss) per common and common equivalent share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. If dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Quarters Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	15,502	$	2,370
Denominator:
Denominator for basic earnings per share – weighted average shares		20,669		21,997
Effect of dilutive securities:
Employee stock options		69		40
Denominator for diluted earnings per share – weighted average shares		20,738		22,037

The number of weighted average employee stock options excluded from the determination of diluted earnings per share for the second quarter was 191,000 in 2013 and 193,000 in 2012. Such options were anti-dilutive for the respective periods.

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Six Months Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	21,897	$	9,063
Denominator:
Denominator for basic earnings per share – weighted average shares		20,667		22,712
Effect of dilutive securities:
Employee stock options		69		45
Denominator for diluted earnings per share – weighted average shares		20,736		22,757

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The number of weighted average employee stock options excluded from the determination of diluted earnings per share for the six months ended June 30 was 191,000 in 2013 and 166,000 in 2012. Such options were anti-dilutive for the respective periods.

NOTE 6 – DEBT

The Company is party to a Credit Agreement with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent (the “Credit Agreement”). The Credit Agreement extends through October 1, 2017, and provides for maximum borrowings of the lesser of $150.0 million or the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. Additionally, at our request and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. The calculated maximum borrowing amount available at June 30, 2013, as computed under the Credit Agreement, was $149.5 million. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At June 30, 2013, there were no borrowings outstanding under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company.

Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of June 30, 2013.

NOTE 7 – STOCKHOLDERS’ EQUITY

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 1,000,000 shares of its common stock through December 31, 2007 on the open market or through privately negotiated transactions at prices determined by the President of the Company. The Company’s Board of Directors has subsequently authorized increases and annual extensions of this stock repurchase program. As of June 30, 2013, the repurchase authorization had 1,225,750 shares remaining authorized through March 31, 2014. The Company did not repurchase any shares of its stock in the first six months of 2013. On May 14, 2012, the Company repurchased 2,774,250 shares of common stock owned by Capital Southwest Venture Corporation at an aggregate purchase price of $66,637,485, based on a price of $24.02 per share. Appropriate consents to the repurchase were also obtained from lenders under the Company’s Financing Agreement. The repurchase represented approximately 11.8% of the outstanding shares of the Company as of the purchase date and was the only repurchase in the first six months of 2012. Other than net income, there was no material change in stockholders equity during the quarter and six months ended June 30, 2013.

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NOTE 8 – CONTINGENCIES

On July 7, 2009, Southwire Company, a Delaware corporation (“Southwire”), filed a complaint for patent infringement against the Company and Cerro Wire, Inc. (“Cerro”) in the United States District Court for the Eastern District of Texas. In the complaint, Southwire alleged that the Company infringed one or more claims of United States Patent No. 7,557,301 (the “’301 patent”), entitled “Method of Manufacturing Electrical Cable Having Reduced Required Force for Installation,” by making and selling electrical cables, including the Company’s Super Slick cables. The case has been transferred to the Northern District of Georgia and the parties have agreed to stay it pending reexamination of the ’301 patent by the United States Patent and Trademark Office (the “USPTO”). On June 23, 2011, the USPTO issued an office action in the reexamination finally rejecting all the claims of the ’301 patent. Southwire responded to these final rejections on August 8, 2011 by submitting substantially amended claims. The examiner determined that the amended claims captured patentable subject matter and on September 21, 2011 issued a notice that a reexamination certificate would be issued evidencing the patentability of the amended claims. The reexamination certificate was issued on the ‘301 patent on December 27, 2011. Subsequent to the issuance of the ‘301 reexamination certificate, a new inter partes reexamination proceeding was instituted by Cerro Wire against the reexamined ‘301 patent. At this time all of the claims of the reexamined ‘301 patent have been rejected by the USPTO. This decision is not final.

On July 2, 2010, the Company filed a complaint against Southwire in the Northern District of Georgia. The complaint alleged that Southwire was using a deceptively misdescriptive trademark on its SimPull products, and that Southwire had made false statements about the Company’s Slick Wire products. Southwire’s United States Patent No. 7,749,024 (“the ’024 patent”) issued on July 6, 2010. The morning the patent issued, the Company amended its complaint to seek a declaratory judgment that the Company’s Slick Wire products do not infringe the ’024 patent. Later that same day, Southwire filed a separate complaint against the Company and Cerro Wire in the Eastern District of Texas alleging infringement of the ’024 patent. The Company’s complaint against Southwire was stayed by agreement on April 11, 2011. The case will remain stayed until the USPTO issues a certificate of reexamination of the ‘024 patent. The complaint filed by Southwire in the Eastern District of Texas has been voluntarily dismissed and Southwire will have the option to pursue its claims against the Company in the Northern District of Georgia, once the reexamination is completed. On October 8, 2010, the Company filed a request with the USPTO for an inter partes reexamination of the ’024 patent. On November 9, 2010, the USPTO ordered the reexamination of the ’024 patent. In ordering reexamination of Southwire’s ’024 patent, the USPTO determined that the Company’s submission of prior art raised a substantial new question of patentability of the claims of the ’024 patent. On December 3, 2010, the USPTO issued a non-final office action rejecting all of the claims of the ’024 Patent. Southwire filed a response to the non-final office action on February 3, 2011, which included legal arguments and supporting technical declarations. The Company filed its comments to the Southwire response on March 3, 2011, including points and authorities, legal arguments, and supporting technical declarations. On July 9, 2012, the Examiner issued an Action Closing Prosecution (“ACP”) finally rejecting patent claims 4-7 and 9-12 in the reexamination of the ‘024 patent. On August 15, 2012, Southwire filed a response to the ACP, which included extensive proposed claim amendments and arguments supporting the patentability of the proposed amended claims. The Company filed its comments to

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the Southwire response to the ACP on September 13, 2012, including points and authorities, legal arguments, and a supporting technical declaration. The Examiner refused entry of Southwire’s proposed amendments and maintained the rejection of all the claims under reexamination in a Right of Appeal Notice mailed September 28, 2012. On October 17, 2012 Southwire filed two petitions requesting that the reexamination be reopened or, in the alternative, that the proposed amendments presented in its September 13, 2012 response to ACP be entered into the record. These petitions were denied by the USPTO in a decision mailed April 5, 2013. Southwire filed a Notice of Appeal on October 29, 2012 and its Appellant’s Brief on December 31, 2012, followed by the Company filing its Respondent’s Brief on January 25, 2013. The Examiner’s Brief was mailed on July 16, 2013. Southwire now has one month to file its Rebuttal Brief, after which the reexamination proceeds to the Patent Trial and Appeal Board for a decision.

The ‘024 patent was also subject to parallel Inter Partes Reexamination Control No. 95/000,594, instituted by Cerro on November 11, 2010 (“the ‘594 reexamination”). The ‘024 patent exam proceeded with the ‘594 reexamination and ultimately all the claims were finally rejected by the Examiner in an Action Closing Prosecution (“ACP”) mailed August 10, 2012. In response to a right of appeal notice mailed by the Examiner on October 25, 2012, Southwire filed a notice of appeal on November 26, 2012 and filed an appeal brief on January 28, 2013. Southwire’s appeal brief exceeded the page limitations allowed for patent owner’s appeal briefs during reexaminations, and therefore the USPTO mailed a notice of defective appeal brief on February 20, 2013. Even though Southwire was given at least one month to file a corrected appeal brief, Southwire failed to do so. Instead, Southwire filed a petition with the Patent Trial and Appeal Board (“PTAB”) on March 5, 2013, requesting a waiver of the page limit on appeal brief length. On June 24, 2013, the PTAB denied the petition to waive the appeal brief page limit and, since the time limit to file a corrected appeal brief had expired, also dismissed Southwire’s appeal. On July 12, 2013, the Examiner mailed a Notice of Intent to Issue Inter Partes Reexamination Certificate, cancelling all claims of the ‘024 patent.

Southwire’s complaints sought unspecified damages and injunctive relief. At this time, all pending litigation between Encore and Southwire has been dismissed or stayed by agreement of the parties.

The parties convened on March 21, 2012 and August 27, 2012 for settlement conferences regarding the ‘301 patent lawsuit. Such settlement conferences did not result in any negotiation, agreement, decision or other development that the Company believed is material to such lawsuit. Settlement discussions continue between the parties.

The potentially applicable factual and legal issues related to the above claims asserted against the Company have not been resolved. The Company disputes all of Southwire’s claims and alleged damages and intends to vigorously defend the lawsuits and vigorously pursue its own claims against Southwire if and when the litigation resumes.

The Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of the probability of a loss and the determination as to whether a loss is

10

reasonably estimable. Any such accruals are reviewed at least quarterly and adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and technical experts and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility (within the meaning of ASC 450) that probable losses could exceed amounts already accrued, if any, and the additional loss or range of loss is able to be estimated, management discloses the additional loss or range of loss.

For matters where the Company has evaluated that a loss is not probable, but is reasonably possible, the Company will disclose an estimate of the possible loss or range of loss or make a statement that such an estimate cannot be made. In some instances, for reasonably possible losses, the Company cannot estimate the possible loss or range of loss. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have on the Company. There are many reasons that the Company cannot make these assessments, including, among others, one or more of the following: the early stages of a proceeding; damages sought that are unspecified, unsupportable, unexplained or uncertain; discovery is incomplete; the complexity of the facts that are in dispute; the difficulty of assessing novel claims; the parties not having engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and/or the often slow pace of litigation.

At this time, given the status of the proceedings, the complexities of the facts in dispute and the multiple claims involved, the Company has not concluded that a probable loss exists with respect to the Southwire litigation. Accordingly, no accrual has been made. Additionally, given the aforementioned uncertainties, the Company is unable to estimate any possible loss or range of losses for disclosure purposes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Encore is a low-cost manufacturer of electrical building wire and cable. The Company is a significant supplier of building wire for interior electrical wiring in commercial and industrial buildings, homes, apartments, and manufactured housing.

The Company’s operating results in any given time period are driven by several key factors, including the volume of product produced and shipped, the cost of copper and other raw materials, the competitive pricing environment in the wire industry and the resulting influence on gross margins and the efficiency with which the Company’s plants operate during the period, among others. Price competition for electrical wire and cable is intense, and the Company sells its products in accordance with prevailing market prices. Copper, a commodity product, is the principal raw material used by the Company in manufacturing its products. Copper accounted for approximately 79.0%, 86.1% and 81.1% of the Company’s cost of goods sold during fiscal 2012, 2011 and 2010, respectively. The price of copper fluctuates, depending on general economic conditions and in relation to supply and demand and other factors, which causes monthly variations in the cost of copper purchased by the Company. Additionally, the SEC has recently issued an order amending a rule to allow shares of certain physically backed copper exchange traded funds (“ETFs”) to be listed and publicly traded. Such funds and other copper ETFs like it hold copper cathode as collateral against their shares. The acquisition of copper cathode by copper ETFs may materially decrease or

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interrupt the availability of copper for immediate delivery in the United States, which could materially increase the Company’s cost of copper. In addition to rising copper prices and potential supply shortages, we believe that ETFs and similar copper-backed derivative products could lead to increased price volatility for copper. The Company cannot predict copper prices in the future or the effect of fluctuations in the cost of copper on the Company’s future operating results. Wire prices can, and frequently do change on a daily basis. This competitive pricing market for wire does not always mirror changes in copper prices, making margins highly volatile. With the Company’s expansion into aluminum conductors in some of its building wire products, the Company expects that aluminum will slowly grow its percentage share of the raw materials cost for the Company. The Company built a plant to expand the production of aluminum building wire as previously announced. The building was completed in mid-2012, while the installation of all the machinery and equipment was completed in the second quarter of 2013. Production ramped up considerably in the first quarter of 2013, and the plant is now fully operational. In 2012, aluminum wire sales constituted less than 4% of total net sales. Historically, the cost of aluminum has been much less than copper and also less volatile. With the volatility of both raw material prices and wire prices in the Company’s end market, hedging raw materials can be risky. Historically, the Company has not engaged in hedging strategies for raw material purchases. The tables below highlight the range of closing prices of copper on the Comex exchange for the periods shown.

COMEX COPPER CLOSING PRICE 2013

	April 2013		May 2013		June 2013		Quarter Ended June 30, 2013		Year-to-Date June 30, 2013
High	$	3.44	$	3.38	$	3.37	$	3.44	$	3.78
Low		3.09		3.08		3.03		3.03		3.03
Average		3.28		3.30		3.18		3.25		3.42

COMEX COPPER CLOSING PRICE 2012

	April 2012		May 2012		June 2012		Quarter Ended June 30, 2012		Year-to-Date June 30, 2012
High	$	3.92	$	3.84	$	3.49	$	3.92	$	3.97
Low		3.62		3.36		3.28		3.28		3.28
Average		3.72		3.57		3.35		3.54		3.66

The following discussion and analysis relates to factors that have affected the operating results of the Company for the quarters ended June 30, 2013 and 2012. Reference should also be made to the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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Results of Operations

Quarter Ended June 30, 2013 Compared to Quarter Ended June 30, 2012

Net sales for the second quarter of 2013 were $289.5 million compared with net sales of $264.7 million for the second quarter of 2012. This dollar increase was primarily the result of an 8.1% increase in the unit volume of copper wire shipped offset slightly by a 2.1% decrease in the average price of copper wire sold. Unit volume is measured in pounds of copper contained in the wire shipped during the period. Fluctuations in sales prices are primarily a result of changing copper raw material prices and product price competition. The average cost per pound of raw copper purchased decreased 8.3% in the second quarter of 2013 compared to the second quarter of 2012, and was the principal driver of the decreased average sales price of wire. In the second quarter of 2013, aluminum wire constituted 6.6% of the Company’s net sales dollars compared to 3.5% in the second quarter of 2012.

Cost of goods sold increased to $249.3 million, or 86.1% of net sales, in the second quarter of 2013, compared to $245.3 million, or 92.7% of net sales, in the second quarter of 2012. Gross profit increased to $40.2 million, or 13.9% of net sales, in the second quarter of 2013 versus $19.4 million, or 7.3% of net sales, in the second quarter of 2012.

The increased gross margins were driven primarily by the increased spread between the average selling price of wire containing a pound of copper and the average cost per pound of copper purchased during the quarter. As noted above, the cost of raw copper purchased per pound declined 8.3% in the second quarter of 2013 versus the second quarter of 2012, but average sales prices declined only 2.1% per copper pound sold, resulting in an 18.1% increase in the spread.

Inventories are stated at the lower of cost, using the last-in, first out (LIFO) method, or market. The Company maintains two inventory pools for LIFO purposes. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and makes a monthly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market (LCM) test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper, aluminum and finished wire prices as of the end of each reporting period. The Company performs a lower of cost or market calculation quarterly. As of June 30, 2013, no LCM adjustment was required. However, decreases in copper and other material prices could necessitate establishing an LCM reserve in future periods. Additionally, future reductions in the quantity of inventory on hand could cause copper or other raw materials that are carried in inventory at costs different from the cost of copper and other raw materials in the period in which the reduction occurs to be included in costs of goods sold for that period at the different price. Due primarily to decreases in copper costs and an increase in copper inventory quantities on hand, lower overhead costs per pound of production and price and volume movements of other materials during the second quarter of 2013, a LIFO adjustment was recorded decreasing cost of sales by $12.0 million during the quarter. A portion of the second quarter LIFO adjustment was due to increased aluminum production activity which enabled enhanced overhead allocations that favorably impacted quarterly results. As discussed in Note 2 to the Company’s consolidated financial statements included in Item 1 to this report, during the first quarter

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of 2013, the Company liquidated a portion of the layer established in 2011, and then built back some of that layer in the second quarter at historical costs that were higher than current costs, which positively impacted net income for the second quarter of 2013.

Selling expenses, consisting of commissions and freight, for the second quarter of 2013 were $12.1 million, or 4.2% of net sales, compared to $11.2 million, or 4.2% of net sales, in the second quarter of 2012. Commissions paid to independent manufacturers’ representatives are paid as a relatively stable percentage of sales dollars, and therefore, exhibited little change. Freight costs were also flat as a percentage of net sales. General and administrative expenses remained steady at $4.1 million in the second quarters of 2013 and 2012. The provision for bad debts was $0 for the second quarters of 2013 and 2012.

Net interest and other (income) expense was virtually zero in the second quarters of 2013 and 2012. Income taxes were accrued at an effective rate of 35.3% in the second quarter of 2013, versus an effective rate of 41.8% in the second quarter of 2012. The decrease in the effective rate was due to a moderate change in the proportional effects of permanent items on the effective rate.

As a result of the foregoing factors, the Company’s net income increased to $15.5 million in the second quarter of 2013 from $2.4 million in the second quarter of 2012.

Six Months Ended June 30, 2013 compared to Six Months Ended June 30, 2012

Net sales for the first six months of 2013 were $554.8 million compared with net sales of $545.2 million for the first half of 2012. This dollar increase was primarily the result of a 97.3% increase in aluminum building wire sales offset somewhat by a 1.4% decrease in copper building wire sales. Aluminum wire sales constituted 6.1% of net sales in the first six months of 2013 versus 3.2% in the first six months of 2012. Copper unit sales for the first six months of 2013, measured in pounds of copper contained in the wire were up 2.6% compared to the first six months of 2012, but were offset by a 3.9% decrease in the average price of copper wire sold. The average cost per pound of raw copper purchased decreased 6.8% in the first six months of 2013 compared to the first six months of 2012. In comparing the first half of 2013 to the first half of 2012, the average sales price of wire that contained a pound of copper decreased less than the average price of copper purchased during the period. Margins expanded in the first six months of 2013 as the spread between the price of wire sold and the cost of raw copper purchased increased by 5.1%, due primarily to improved industry pricing discipline. Fluctuations in sales prices are primarily a result of changing copper raw material prices and product price competition.

Cost of goods sold decreased to $490.4 million in the first six months of 2013, compared to $501.3 million in the first six months of 2012. Gross profit increased to $64.5 million, or 11.6% of net sales, in the first six months of 2013 versus $43.9 million, or 8.0% of net sales, in the first six months of 2012. The increased gross profit dollars were primarily the result of the increased copper spreads in the first six months of 2013 versus the same period in 2012 as discussed above.

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As a result of decreasing copper costs in the second quarter of 2013 and a small decrease in the amount of inventory on hand during the first six months of 2013, a LIFO adjustment was recorded decreasing cost of sales by $9.6 million during the six month period. Based on the current copper prices, there is no LCM adjustment necessary. Future reductions in the price of copper could require the Company to record an LCM adjustment against the related inventory balance, which would result in a negative impact on net income.

Selling expenses for the first six months of 2013 increased to $23.1 million, or 4.2% of net sales, compared to $22.2 million, or 4.1% of net sales, in the same period of 2012. Commissions paid to independent manufacturers’ representatives are calculated as a percentage of sales, and therefore, increased $0.5 million in concert with the increased sales dollars. Freight costs for the first six months of 2013 increased $0.5 million to $10.4 million or 1.9% of net sales versus $9.9 million or 1.8% of net sales for the first six months of 2012. Commissions were 2.3% and 2.2% of net sales in the first six months of 2013 and 2012, respectively. General and administrative expenses remained steady at $8.2 million, or 1.5% of net sales, in the first half of both 2013 and 2012. The provision for bad debts was zero in the first six months of 2013 and 2012, respectively.

Net interest and other expense (income) was $35,000 of income in the first six months of 2013 compared to $28,000 of income in the first half of 2012. Income taxes were accrued at an effective rate of 33.9% in the first six months of 2013 versus 32.7% in the first six months of 2012, consistent with the Company’s estimated liabilities.

As a result of the foregoing factors, the Company’s net income increased to $21.9 million in the first half of 2013 from $9.1 million in the first half of 2012.

Liquidity and Capital Resources

The Company maintains a substantial inventory of finished products to satisfy customers’ prompt delivery requirements. As is customary in the building wire industry, the Company provides payment terms to most of its customers that exceed terms that it receives from its suppliers. Copper suppliers generally give very short payment terms, (less than 15 days) while the Company and the building wire industry give customers much longer terms. In general, the Company’s standard payment terms result in the collection of a significant majority of net sales within approximately 75 days of the date of invoice. As a result of this timing difference, building wire companies must have sufficient cash and access to capital resources to finance their working capital needs, thereby creating a barrier to entry for companies who do not have sufficient liquidity and capital resources. The two largest components of working capital, receivables and inventory, and to some extent, capital expenditures are the primary drivers of the Company’s liquidity needs. Generally, this will cause the Company’s cash balance to rise and fall inversely to the receivables and inventory balances. The Company’s receivables and inventories will rise and fall in concert with several factors, most notably the price of copper and other raw materials and the level of unit sales. Receivables will go up at the end of quarters with strong dollar sales and down as those sales decline. Inventory balances will rise and fall with the raw material price fluctuations and the level of units on hand at the end of any given quarter. Capital expenditures have historically been necessary to expand and update the production capacity of the Company’s manufacturing operations. The Company has historically satisfied its liquidity and capital expenditure needs with cash generated from operations, borrowings under its various debt arrangements and sales of its common stock. The Company historically uses its revolving credit facility to manage day to day operating cash needs as required by daily fluctuations in working capital, and has the facility in place should such a need arise in the future.

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For more information on the Company’s revolving credit facility, see Note 6 to the Company’s consolidated financial statements included in Item 1 to this report, which is incorporated herein by reference.

Cash used in operating activities was $0.3 million in the first six months of 2013 compared to cash provided of $27.0 million in the first six months of 2012. The following changes in components of cash flow from operations were notable. The Company had net income of $21.9 million in the first six months of 2013 versus net income of $9.1 million in the first six months of 2012. Accounts receivable increased in the first six months of 2013 and 2012, although at much different amounts, resulting in a use of cash of $38.2 million and $6.2 million, respectively, driving a $32.0 million higher use of cash in 2013 versus 2012. Accounts receivable generally increase in proportion to dollar sales and to a lesser extent are affected by the timing of when sales occur during a given quarter. Accounts receivable increased in the first six months of both years, primarily due to the timing of sales in the quarters. With an average of 60 to 75 days of sales outstanding, quarters in which sales are more back-end loaded will have higher accounts receivable balances outstanding at quarter-end. Inventory dollars increased in the first six months of 2013, resulting in a use of cash of $0.8 million, while inventory decreased in the first six months of 2012, generating an $11.0 million source of cash, driving an $11.8 million higher use of cash in the first six months of 2013 versus the first six months of 2012. Trade accounts payable and accrued liabilities resulted in a $7.6 million increase in cash used in the first six months of 2013 versus the first six months of 2012 due primarily to the decrease in accounts payable in 2013, attributable primarily to the timing of inventory receipts at quarter end. In 2013, changes in current and deferred taxes provided cash of $5.3 million versus cash used of $5.1 million in 2012. These changes in cash flow were the primary drivers of the $27.3 million decrease in cash used in operations in the first six months of 2013 versus the first six months of 2012.

Cash used in investing activities increased to $31.7 million in the first six months of 2013 from $24.0 million in the first six months of 2012. The funds invested in 2013 were used primarily to purchase 201 acres of land adjacent to the Company’s existing campus in McKinney, Texas for $25.7 million. In 2012, the funds were used primarily for the construction of the new aluminum wire plant. Cash used in financing activities was $0.6 million in the first six months of 2013 versus $67.5 million in the first six months of 2012. In May of 2012, the Company repurchased 2,774,250 shares of its common stock from Capital Southwest Venture Corporation for $66.6 million. As of June 30, 2013, the Company’s revolving line of credit remained at $0. The Company’s cash balance was $1.2 million at June 30, 2013, versus $47.7 million at June 30, 2012.

During the remainder of 2013, the Company expects its capital expenditures will consist primarily of expenditures related to the purchases of manufacturing equipment throughout its facilities as well as the aforementioned land purchase. The total capital expenditures for all of 2013 associated with these projects are currently estimated to be between $42 million and $45 million. The Company also expects its future working capital requirements may fluctuate as a result of changes in unit sales volumes and the price of copper and other raw materials. The Company believes that the current cash balance, cash flow from operations, and the financing available from its revolving credit facility will satisfy working capital and capital expenditure requirements during 2013.

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Information Regarding Forward Looking Statements

This quarterly report on Form 10-Q contains various “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information that is based on management’s belief as well as assumptions made by and information currently available to management. The words “believes”, “estimates”, “anticipates”, “plans”, “seeks”, “expects”, “intends” and similar expressions identify some of the forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Among the key factors that may have a direct bearing on the Company’s operating results are fluctuations in the economy and in the level of activity in the building and construction industry, demand for the Company’s products, the impact of price competition and fluctuations in the price of copper. For more information regarding “forward looking statements” see “Information Regarding Forward Looking Statements” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, which is hereby incorporated by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes from the information provided in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 4. Controls and Procedures.

The Company maintains controls and procedures designed to ensure that information required to be disclosed by it in the reports it files with or submits to the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure. Based on an evaluation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report conducted by the Company’s management, with the participation of the Chief Executive and Chief Financial Officers, the Chief Executive and Chief Financial Officers concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files with or submits to the SEC is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure.

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There have been no changes in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period covered by this report.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For information on the Company’s legal proceedings, see Note 8 to the Company’s consolidated financial statements included in Item 1 to this report and incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes to the Company’s risk factors as disclosed in Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Note 7 to the Company’s consolidated financial statements included in Item 1 to this report is hereby incorporated herein by reference.

Item 6. Exhibits.

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Form 10-Q and incorporated herein by reference.

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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.

	ENCORE WIRE CORPORATION
	(Registrant)
Dated: August 2, 2013	/s/ DANIEL L. JONES
	Daniel L. Jones, President and
	Chief Executive Officer
Dated: August 2, 2013	/s/ FRANK J. BILBAN
	Frank J. Bilban, Vice President – Finance,
	Chief Financial Officer, Treasurer and Secretary

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INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Certificate of Incorporation of Encore Wire Corporation and all amendments thereto (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, and incorporated herein by reference).
3.2	Third Amended and Restated Bylaws of Encore Wire Corporation, as amended through February 27, 2012 (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference).
4.1	Form of certificate for Common Stock (filed as Exhibit 1 to the Company’s registration statement on Form 8-A, filed with the SEC on June 4, 1992, and incorporated herein by reference).
4.2	Registration Rights Agreement dated February 29, 2012 among the Company, Capital Southwest Corporation and Capital Southwest Venture Corporation (filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference).
10.1	Commercial Contract of Sale dated June 18, 2013 by and among the Company, VTCR, LP, MADMT, LP and Prairie Flight, LP.
31.1	Certification by Daniel L. Jones, President and Chief Executive Officer of the Company, dated August 2, 2013 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Frank J. Bilban, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated August 2, 2013 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification by Daniel L. Jones, President and Chief Executive Officer of the Company, dated August 2, 2013 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Frank J. Bilban, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer, dated August 2, 2013 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

EX-10.1

EXHIBIT 10.1

NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS^®

COMMERCIAL CONTRACT OF SALE

[Check all boxes applicable to this Contract – Boxes not checked do not apply to this Contract]

In consideration of the agreements contained in this Commercial Contract of Sale (the “Contract”), Seller shall sell and convey to Purchaser, and Purchaser shall buy and pay for, the Property (defined below) pursuant to the provisions, and subject to the conditions, of this Contract.

1. PARTIES. The parties to this Contract are:

Seller: VTCR, LP, MADMT, LP, PRAIRIE FLIGHT, LP

Address: 3850 TPC Drive, Suite 104, McKinney, Texas 75070

Phone: 972-529-1371	Fax: 927-529-5709
Email: dcraig@craigintl.com

Purchaser: ENCORE WIRE CORPORATION, and/or its Assigns

Address: 1329 Millwood Road, McKinney, Texas 75069, Attn: Daniel L. Jones;

Copy: Norman Medlen

Phone: 972-562-9473, Ext. 315 Fax: 972-562-3644

Email: Daniel.jones@encorewire.com; n.medlen@encorewire.com

2. PROPERTY. The address of the Property is:

Approximate northeast corner of Industrial Blvd. and Airport Road in McKinney, Collin County, Texas.

The Property is located in Collin County, Texas, the land portion of which is further described as:

A 200.993 acre tract, more or less, with Industrial Blvd. on the south and Airport Road on the west, and generally described in the attached Exhibit “A” and “A-1”.

The Property includes, all and singular, all improvements and fixtures situated thereon, and all rights and appurtenances pertaining thereto, including any right, title and interest of Seller in and to adjacent streets, alleys, or rights-of-way (such land, improvements, fixtures, rights and appurtenances being collectively herein referred to as the “Property”).

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3. PURCHASE PRICE.

A. Amount and Payable. The purchase price for the Property is Twenty Five Million Seven Hundred and Seven Thousand Three Hundred Fifty Dollars and no/100 ($25,707,350.00) (the “Purchase Price”), payable at the Closing as follows (with the Earnest Money to be applied to the Purchase Price) [Check only one]:

x (1) All in cash (meaning Good Funds, as defined in Section 4F below). If this Contract is subject to approval for Purchaser to obtain financing from a third party, then Addendum B-1, THIRD PARTY FINANCING is attached.

(2) Part in cash (Good Funds), in the following amount or percentage [Check only one]:

(a) $            

(b)                     percent (    %) of the Purchase Price.

If only part of the Purchase Price is to be paid in cash, then the balance of the Purchase Price will be paid according to the provisions in Addendum B -2, SELLER FINANCING. If part of the Purchase Price is to be paid by Purchaser assuming an existing promissory note secured by the Property, or taking the Property subject to an existing promissory note secured by the Property, then Addendum B -3, EXISTING LOAN, is attached.

B. Adjustment. The Purchase Price will be adjusted up or down based upon the land area of the Property as determined by the Survey. The land area will be multiplied by the following amount per acre or square foot, as applicable , and the product will become the Purchase Price at the Closing [Check only one]: $ N/A              per acre; or      N/A     per square foot. The land area for purposes of determining the Purchase Price will be the gross land area of the Property unless this box      is checked, in which case the land area for purposes of determining the Purchase Price will be the Net Land Area [as defined in Section 5A (Survey)] of the Property. Notwithstanding the foregoing, the Purchase Price will not be reduced under this Section 3B to less than $        N/A    

4. EARNEST MONEY AND TITLE COMPANY ESCROW.

A. Title Company. The Title Company to serve as escrow agent for this Contract is (the “Title Company”): Reunion Title Company, 1700 Redbud Blvd., Suite 300, McKinney, Texas 75069, Attn: Loretta Boddy.

B. Effective Date. The “Effective Date” is the date the Title Company acknowledges receipt of this fully executed Contract as indicated by the signature block for the Title Company.

C. Earnest Money. Within two (2) Business Days after the Effective Date, Purchaser shall deliver an earnest money deposit in the amount of $10,000.00 (the “Earnest Money”) payable to the Title Company, in its capacity as escrow agent, to be held in escrow pursuant to the terms of this Contract. Seller’s acceptance of this Contract is expressly conditioned upon Purchaser’s timely deposit of the Earnest Money with the Title Company. If Purchaser fails to timely deposit the Earnest Money with the Title Company, then Seller may, at Seller’s option, terminate this Contract by delivering a written termination notice to Purchaser at any time until Purchaser deposits the Earnest Money with the Title Company.

The Title Company shall deposit the Earnest Money in one or more fully insured accounts in one or more federally insured banking or savings institutions. Purchaser hereby instructs the Title Company to promptly deposit the check upon receipt (which instruction may not be retracted without Seller’s written consent). After receipt of necessary tax forms from Purchaser, the Title Company will deposit the Earnest Money in an interest bearing account unless this box      is checked, in which case the

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Title Company will not be required to deposit the Earnest Money in an interest bearing account. Any interest earned on the Earnest Money will become a part of the Earnest Money. At the Closing, the Earnest Money will be applied to the Purchase Price or, at Purchaser’s option, will be returned to Purchaser upon full payment of the Purchase Price.

D. Independent Consideration. Notwithstanding anything in this Contract to the contrary, a portion of the Earnest Money in the amount of $100.00 will be non-refundable and will be distributed to Seller upon any termination of this Contract as independent consideration for Seller’s performance under this Contract. If this Contract is properly terminated by Purchaser pursuant to a right of termination granted to Purchaser by any provision of this Contract, the Earnest Money will be promptly returned to Purchaser. Any provision of this Contract that states that the Earnest Money is to be returned to Purchaser means that the Earnest Money, less the non-refundable portion, is to be returned to Purchaser.

E. Escrow. The Earnest Money is deposited with the Title Company with the understanding that the Title Company is not: (1) responsible for the performance or non-performance of any party to this Contract; or (2) liable for interest on the funds except to the extent interest has been earned after the funds have been deposited in an interest bearing account.

F. Definition of Good Funds. “Good Funds” means currently available funds, in United States dollars, paid in the form of a certified check, cashier’s check, official bank check or wire transfer acceptable to the Title Company, such that the payment may not be stopped by the paying party. Any reference in this Contract to “cash” means Good Funds.

5. SURVEY AND TITLE.

A. Survey. Within twenty (20) days after the Effective Date [Check only one]:

Seller shall deliver to Purchaser a new survey (the “Survey”) of the Property prepared at Seller’s expense.

Seller shall deliver to Purchaser a new survey (the “Survey”) of the Property prepared at Purchaser’s expense.

x Seller shall deliver to Purchaser a new survey (the “Survey”) of the Property prepared at Purchaser’s expense, and Seller will give a credit to Purchaser against the Purchase Price at the Closing for the cost of the Survey in an amount not to exceed $            

x Seller shall deliver to Purchaser a copy of the most recent existing survey (the “Survey”) of the Property in Seller’s possession. Seller shall also deliver an Affidavit to the Title Company, in form and substance reasonably satisfactory to the Title Company, stating that none of the improvements on the Property and other matters shown by the existing Survey have changed since the existing Survey was prepared. If Purchaser, Purchaser’s lender or the Title Company requires a new survey for any reason, then Purchaser shall pay for the cost of the new Survey, and [check only one]: Seller will not be required to pay for any portion of the cost of the new Survey; or x Seller will give a credit to Purchaser against the Purchase Price at the Closing for the cost of the new Survey in an amount not to exceed $5,000.00.

Any new Survey must:

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(1) be prepared by a Registered Professional Land Surveyor;

(2) be in a form reasonably acceptable to Purchaser and the Title Company;

(3) set forth a legal description of the Property by metes and bounds or by reference to a platted lot or lots;

(4) show that the Survey was made on the ground with corners marked with monuments either found or placed;

(5) show any discrepancies or conflicts in boundaries, and any visible encroachments;

(6) contain the surveyor’s certificate that the Survey is true and correct; and

(7) show the location and size of all of the following on or immediately adjacent to the Property, if any, if recorded or visible and apparent:

(a) buildings,

(b) building set back lines (as shown on any recorded plat, but not as may be described in any restrictive covenants or zoning ordinances),

(c) streets and roads,

(d) 100-year flood plain (approximate location),

(e) improvements,

(f) encroachments,

(g) easements,

(h) recording information of recorded easements,

(i) pavements,

(j) protrusions,

(k) fences,

(l) rights-of-way, and

(m) any markers or other visible evidence of utilities.

Any area of the Property within the 100-year flood plain will be shown on the Survey as the approximate location of the 100-year flood plain as defined by the Federal Emergency Management Agency or other applicable governmental authority. If the area within any 100-year flood plain is to be deducted for the purpose of determining Net Land Area (defined below), then the Sur vey must show the area of the Property covered by the 100-year flood plain, and that area, as reasonably determined by the surveyor, will be conclusive for purposes of this Contract, even though the surveyor may qualify that determination as approximate.

After the delivery of the Survey, the legal description of the Property set forth in the Survey will be incorporated in this Contract as the legal description of the Property, and will be used in the deed and any other documents requiring a legal description of the Property.

The Survey must show the gross land area of the Property, and if the Purchase Price is based upon the Net Land Area then the Survey must also show the Net Land Area, expressed in both acres and square feet. The term “Net Land Area” means the gross land area of the Property less the area within any of the following (if recorded or visible and apparent, but excluding those within set back areas) [Check all that apply]:

x utility easements;

x drainage easements;

x access easements;

x rights-of-way;

x 100-year flood plain; and

x any encroachments on the Property.

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B. Title Commitment. Within twenty (20) days after the Effective Date, Seller shall deliver or cause to be delivered to Purchaser:

(1) A title commitment (the “Title Commitment”) covering the Property binding the Title Company to issue a Texas Owner Policy of Title Insurance (the “Title Policy”) on the standard form prescribed by the Texas Department of Insurance at the Closing, in the full amount of the Purchase Price, insuring Purchaser’s fee simple title to the Property to be good and indefeasible, subject only to the Permitted Exceptions (defined below); and

(2) the following (collectively, the “Title Documents”):

(a) true and legible copies of all recorded instruments affecting the Property and recited as exceptions in the Title Commitment;

(b) a current tax certificate;

(c) any written notices required by applicable statutes, including those referenced in Section 17; and

(d) if the Property includes any personal property, UCC search reports pertaining to the Seller.

6. REVIEW OF SURVEY AND TITLE.

A. Title Review Period. Purchaser will have five (5) days (the “Title Review Period”) after receipt of the last of the Survey, Title Commitment and Title Documents to review them and to deliver a written notice to Seller stating any objections Purchaser may have to them or any item disclosed by them. Purchaser’s failure to object within the time provided will be a waiver of the right to object. Any item to which Purchaser does not object will be deemed a “Permitted Exception.” The items set forth on Schedule C of the Title Commitment, and any other items the Title Company identifies to be released upon the Closing, will be deemed objections by Purchaser. Zoning ordinances and the lien for current taxes are deemed to be Permitted Exceptions.

B. Cure Period. If Purchaser delivers any written objections to Seller within the Title Review Period, then Seller shall make a good faith attempt to cure the objections within ten (10) days (the “Cure Period”) after receipt of the objections. However, Seller is not required to incur any cost to do so. If Seller cannot cure the objections within the Cure Period, Seller may deliver a written notice to Purchaser, before expiration of the Cure Period, stating whether Seller is committed to cure the objections at or before the Closing. If Seller does not cure the objections within the Cure Period, or does not timely deliver the notice, or does not commit in the notice to fully cure all of the objections at or before the Closing, then Purchaser may terminate this Contract by delivering a written notice to Seller on or before the earlier to occur of: (1) the date that is seven (7) days after the expiration of the Cure Period; or (2) the scheduled Closing Date.

C. New Items. If any new items are disclosed by any updated Survey, updated Title Commitment, or any new Title Documents, that were not disclosed to Purchaser when the Survey, Title Commitment, and Title Documents were first delivered to Purchaser, then Purchaser will have fifteen (15) days to review the new items and to deliver a written notice to Seller stating any objections Purchaser may have to the new items. If Purchaser timely delivers any written objections as to the new items to Seller, then Seller shall make a good faith attempt to cure the objections to the new items within ten (10) days (the “Additional Cure Period”) after receipt of the objections as to the new items. However, Seller is not required to incur any cost to do so. If Seller does not cure the objections as to the new items within the Additional Cure Period, or does not deliver a written notice to Purchaser before the expiration of the Additional Cure Period stating whether Seller is committed to cure the objections as to the new items at

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or before the Closing, then Purchaser may terminate this Contract by delivering a written notice to Seller on or before the earlier to occur of: (1) that date that is seven (7) days after the expiration of the Additional Cure Period; or (2) the scheduled Closing Date.

D. Return of Earnest Money or Waiver. If Purchaser properly and timely terminates this Contract, the Earnest Money will be returned to Purchaser. If Purchaser does not properly and timely terminate this Contract, then Purchaser will be deemed to have waived any uncured objections and must accept title at the Closing subject to the uncured objections and other Permitted Exceptions. Seller’s failure to cure Purchaser’s objections under this Section 6 does not constitute a default by Seller.

7. SELLER’S REPRESENTATIONS.

A. Statements. Seller represents to Purchaser, to the best of Seller’s knowledge, as follows:

(1) Title. At the Closing, Seller will convey to Purchaser good and indefeasible fee simple title to the Property free and clear of any and all liens, assessments, easements, security interests and other encumbrances except the Permitted Exceptions. Delivery of the Title Policy pursuant to Section 12 (the Closing) will be deemed to satisfy the obligation of Seller as to the sufficiency of title required under this Contract. However, delivery of the Title Policy will not release Seller from the warranties of title set forth in the warranty deed.

(2) Leases. There are no parties in possession of any portion of the Property as lessees, tenants at sufferance or trespassers except tenants under written leases delivered to Purchaser pursuant to this Contract.

(3) Liens and Debts. There are no mechanic’s liens, Uniform Commercial Code liens or unrecorded liens against the Property, and Seller shall not allow any such liens to attach to the Property before the Closing that will not be satisfied out of the Closing proceeds. All obligations of Seller arising from the ownership and operation of the Property and any business operated on the Property, including, but not limited to, taxes, leasing commissions, salaries, contracts, and similar agreements, have been paid or will be paid before the Closing. Except for obligations for which provisions are made in this Contract for prorating at the Closing and any indebtedness taken subject to or assumed, there will be no obligations of Seller with respect to the Property outstanding as of the Closing.

(4) Litigation. There is no pending or threatened litigation, condemnation, or assessment affecting the Property. Seller shall promptly advise Purchaser of any litigation, condemnation or assessment affecting the Property that is instituted after the Effective Date.

(5) Material Defects. Seller has disclosed to Purchaser any and all known conditions of a material nature with respect to the Property which may affect the health or safety of any occupant of the Property. Except as disclosed in writing by Seller to Purchaser, the Property has no known latent structural defects or construction defects of a material nature, and none of the improvements have been constructed with materials known to be a potential health hazard to occupants of the Property.

(6) Hazardous Materials. Except as otherwise disclosed in writing by Seller to Purchaser, the Property (including any improvements) does not contain any Hazardous Materials (defined below) other than lawful quantities properly stored in containers in compliance with applicable laws.

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B. Remedies. If Purchaser discovers, before the Closing, that any of Seller’s representations has been misrepresented in a material respect, Purchaser may notify Seller of the misrepresentation in writing, and Seller shall attempt to correct the misrepresentation. If the misrepresentation is not corrected by Seller before the Closing, Purchaser may: (1) proceed to Closing, without waiving any claim for misrepresentation; or (2) terminate this Contract by delivering a written termination notice to Seller, in which case the Earnest Money will be returned to Purchaser.

C. Negative Covenants. After the Effective Date, Seller shall not, without Purchaser’s prior written approval: (1) further encumber the Property or allow an encumbrance upon the title to the Property, or modify the terms of any existing encumbrance, if the encumbrance would still be in effect after Closing; or (2) enter into any lease or contract affecting the Property, if the lease or contract would still be in effect after Closing. However, Seller may enter into a lease or contract with an independent third party, in the ordinary course of business, without Purchaser’s consent, if Purchaser will be entitled to terminate the lease or contract after Closing, without incurring any termination charge, by delivering a termination notice thirty (30) days in advance of the termination date. If Seller enters into any lease or contract affecting the Property after the Effective Date, then Seller shall immediately deliver a photocopy of the signed document to Purchaser.

8. NONCONFORMANCE. Purchaser has or will independently investigate and verify to Purchaser’s satisfaction the extent of any limitations of uses of the Property. Purchaser acknowledges that the current use of the Property or the improvements located on the Property (or both) may not conform to applicable Federal, State or municipal laws, ordinances, codes or regulations. Zoning, permitted uses, height limitations, setback requirements, minimum parking requirements, limitations on coverage of improvements to total area of land, Americans with Disabilities Act requirements, wetlands restrictions and other matters may have a significant economic impact upon the intended use of the Property by Purchaser. However, if Seller is aware of pending zoning changes and/or current nonconformance with any Federal, State or local laws, ordinances, codes or regulations, Seller shall disclose same to Purchaser.

9. INSPECTION. [Check only one]

x

A.     Inspection Desired. Purchaser desires to inspect the Property and Seller grants to Purchaser the right to inspect the Property as described in Addendum C, INSPECTION.

B.     Inspection Not Necessary. Purchaser acknowledges that Purchaser has inspected the Property, including all buildings and improvements, and is thoroughly familiar with their condition. Purchaser accepts the Property in its present “AS IS” condition, and any changes caused by normal wear and tear before the Closing, but without waiving Purchaser’s rights by virtue of Seller’s representations expressed in this Contract.

10. CASUALTY LOSS AND CONDEMNATION.

A. Damage or Destruction. All risk of loss to the Property will remain upon Seller before the Closing. If the Property is damaged or destroyed by fire or other casualty to a Material Extent (defined below), then Purchaser may terminate this Contract by delivering a written termination notice to Seller within ten (10) days after the date the casualty occurred (and in any event before the Closing), in which case the Earnest Money will be returned to Purchaser. If the Property is damaged by fire or other casualty to less than a Material Extent, the parties shall proceed to the Closing as provided in this Contract. If the transaction is to proceed to the Closing, despite any damage or destruction, there will be no reduction in the Purchase Price and Seller shall either: (1) fully repair the damage before the Closing, at Seller’s expense; or (2) give a credit to Purchaser at the Closing for the entire cost of repairing the Property. The term “Material Extent” means damage or destruction where the cost of repair exceeds ten percent (10%) of the Purchase Price. If the repairs cannot be completed before the Closing Date, or the cost of repairing the Property cannot be determined before the Closing Date, then either party may postpone the Closing Date by delivering a written notice to the other party specifying an extended Closing Date that is not more than thirty (30) days after the previously scheduled Closing Date.

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B. Condemnation. If condemnation proceedings are commenced before the Closing against any portion of the Property, then Seller shall immediately notify Purchaser in writing of the condemnation proceedings, and Purchaser may terminate this Contract by delivering a written notice to Seller within ten (10) days after Purchaser receives the notice (and in any event before the Closing), in which case the Earnest Money will be returned to Purchaser. If this Contract is not terminated, then any condemnation award will (a) if known on the Closing Date, belong to Seller and the Purchase Price will be reduced by the same amount, or (b) if not known on the Closing Date, belong to Purchaser and the Purchase Price will not be reduced.

11. ASSIGNMENT. [Check only one]

x	A.     Assignment Permitted. Purchaser may assign this Contract provided the assignee assumes in writing all obligations and liabilities of Purchaser under this Contract, in which event Purchaser will be relieved of any further liability under this Contract.
	B.     Limited Assignment Permitted. Purchaser may assign this Contract only to a related party, defined as: (1) an entity in which Purchaser is an owner, partner or corporate officer; (2) an entity which is owned or controlled by the same person or persons that own or control Purchaser; or (3) a member or members of the immediate family of Purchaser, or a trust in which the beneficiary or beneficiaries is or are a member or members of the immediate family of Purchaser. Purchaser will remain liable under this Contract after any assignment.
	C.     Assignment Prohibited. Purchaser may not assign this Contract without Seller’s prior written consent.

12. CLOSING.

A. Closing Date. The closing of the transaction described in this Contract (the “Closing”) will be held at the offices of the Tit le Company at its address stated below, on the date (the “Closing Date”) that is [complete only one]:

             days after the expiration of the Inspection Period (defined in Addendum C); days

             after the Effective Date; or June 28, 2013

However, if any objections that were timely made by Purchaser in writing pursuant to Section 6 (Review of Survey and Title ) have not been cured, then either party may postpone the Closing Date by delivering a written notice to the other party specifying an extended Closing Date that is not more than thirty (30) days after the previously scheduled Closing Date.

B. Seller’s Closing Obligations . At the Closing, Seller shall deliver to Purchaser, at Seller’s expense:

(1) A duly executed [check only one] General Warranty Deed x Special Warranty Deed (with vendor’s lien retained if financing is given by Seller or obtained from a third party) conveying the Property in fee simple according to the legal description prepared by the surveyor as shown on the Survey, subject only to the Permitted Exceptions;

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(2) An updated Title Commitment committing the underwriter for the Title Company to issue promptly after the Closing, at Seller’s expense, the Title Policy pursuant to the Title Commitment, subject only to the Permitted Exceptions, in the full amount of the Purchase Price, dated as of the date of the Closing, and (at an additional premium cost) [check only one if applicable] with the survey exception modified at Seller’s expense to read “any shortages in area,” or x with the survey exception modified at Purchaser’s expense to read “any shortages in area;”

(3) A Bill of Sale conveying the personal property, if any, including, but not limited to, any described on Addendum A, IMPROVED PROPERTY, free and clear of liens, security interests and encumbrances, subject only to the Permitted Exceptions (to the extent applicable);

(4) Possession of the Property, subject to valid existing leases disclosed by Seller to Purchaser and other applicable Permitted Exceptions;

(5) An executed assignment of all leases, if there are any leases affecting the Property;

(6) A current rent roll certified by Seller to be complete and accurate, if there are any leases affecting the Property;

(7) Evidence of Seller’s authority and capacity to close this transaction; and

(8) All other documents reasonably required by the Title Company to close this transaction.

C. Purchaser’s Closing Obligations. At the Closing, Purchaser shall deliver to Seller, at Purchaser’s expense:

(1) The cash portion of the Purchase Price (with the Earnest Money being applied to the Purchase Price);

(2) The Note and the Deed of Trust, if Addendum B-2, SELLER FINANCING, is attached;

(3) An Assumption Agreement in recordable form agreeing to pay all commissions payable under any lease affecting the Property;

(4) Evidence of Purchaser’s authority and capacity to close this transaction; and

(5) All other documents reasonably required by the Title Company to close this transaction.

D. Closing Costs. Each party shall pay its share of the closing costs which are customarily paid by a seller or purchaser in a transaction of this character in the county where the Property is located, or as otherwise agreed.

E. Prorations. Rents, lease commissions, interest on any assumed loan, insurance premiums on any transferred insurance policies, maintenance expenses, operating expenses, standby fees, and ad valorem taxes for the year of the Closing will be prorated at the Closing effective as of the date of the Closing. Seller shall give a credit to Purchaser at the Closing in the aggregate amount of any security deposits deposited by tenants under leases affecting the Property. If the Closing occurs before the tax rate is fixed for the year of the Closing, the apportionment of the taxes will be upon the basis of the tax rate

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for the preceding year applied to the latest assessed valuation, but any difference between actual and estimated taxes for the year of the Closing actually paid by Purchaser will be adjusted equitably between the parties upon receipt of a written statement of the actual amount of the taxes. This provision will survive the Closing.

F. Rollback Taxes. If any Rollback Taxes are due before the Closing due to a change in use of the Property by Seller or a denial of any special use valuation of the Property before the Closing, then Seller shall pay those Rollback Taxes (including any interest and penalties) at or before the Closing. If this sale or a change in use of the Property or denial of any special use valuation of the Property after the Closing would result in the assessment after the Closing of additional taxes and interest applicable to the period of time before the Closing (“Rollback Taxes”), then: (1) Purchaser shall pay the Rollback Taxes (including any interest and penalties) if and when they are assessed, without receiving any credit from Seller; unless (2) this box is checked, in which case Seller shall give a credit to Purchaser at the Closing for the amount of the Rollback Taxes (including interest and penalties) that may be assessed after the Closing as reasonably estimated by the Title Company, and Purchaser shall pay the Rollback Taxes (including any interest and penalties) if and when they are assessed after the Closing. If Seller gives a credit to Purchaser for the estimated amount of Rollback Taxes, and the actual Rollback Taxes assessed after the Closing are different from the estimate used at the Closing, then there will be no subsequent adjustment between Seller and Purchaser.

G. Loan Assumption. If Purchaser assumes an existing mortgage loan, or takes the Property subject to an existing lien, at the Closing, Purchaser shall pay: (1) to the lender, any assumption fee charged by the lender; (2) to the lender, reasonable attorney’s fees charged by the lenders’ attorney; and (3) to Seller, a sum equal to the amount of any reserve accounts held by the lender for the payment of taxes, insurance and any other expenses applicable to the Property for which reserve accounts are held by the lender, and Seller shall transfer the reserve accounts to Purchaser. Purchaser shall execute, at the option and expense of Seller, a Deed of Trust to Secure Assumption with a trustee named by Seller. If consent to the assumption is required by the lender, Seller shall obtain the lender’s consent in writing and deliver the consent to Purchaser at the Closing. If Seller does not obtain the lender’s written consent (if required) and deliver it to Purchaser at or before the Closing, Purchaser may terminate this Contract by delivering a written termination notice to Seller, and the Earnest Money will be returned to Purchaser.

H. Foreign Person Notification. If Seller is a Foreign Person, as defined by the Internal Revenue Code, or if Seller fails to deliver to Purchaser a non-foreign affidavit pursuant to §1445 of the Internal Revenue Code, then Purchaser may withhold from the sales proceeds an amount sufficient to comply with applicable tax law and deliver the withheld proceeds to the Internal Revenue Service, together with appropriate tax forms. A non-foreign affidavit from Seller must include: (1) a statement that Seller is not a foreign person; (2) the U. S. taxpayer identification number of Seller; and (3) any other information required by §1445 of the Internal Revenue Code.

13. DEFAULT.

A. Purchaser’s Remedies. If Seller fails to close this Contract for any reason except Purchaser’s default or the termination of this Contract pursuant to a right to terminate set forth in this Contract, Seller will be in default and Purchaser may elect to either: (1) enforce specific performance of this Contract (force Seller to sell the Property to Purchaser pursuant to this Contract); or (2) terminate this Contract by delivering a written notice to Seller. If Purchaser elects to terminate this Contract due to Seller’s default, then Purchaser will be deemed to have waived any other remedies available to Purchaser and the Earnest Money will be returned to Purchaser.

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The foregoing will be Purchaser’s sole and exclusive remedies for Seller’s default unless this box is checked, in which case Purchaser may sue Seller for damages. If the box is checked to allow Purchaser to sue Seller for damages, then Purchaser must elect to pursue either specific performance or a claim for damages at the beginning of any legal action initiated by Purchaser.

B. Seller’s Remedies. If Purchaser fails to close this Contract for any reason except Seller’s default or the termination of this Contract pursuant to a right to terminate set forth in this Contract, Purchaser will be in default and Seller may terminate this Contract and receive the Earnest Money as liquidated damages for Purchaser’s breach of this Contract, thereby releasing Purchaser from this Contract. If Seller terminates this Contract due to Purchaser’s default, then the Earnest Money will be paid to Seller.

The right to receive the Earnest Money will be Seller’s sole and exclusive remedy for Purchaser’s default unless one of the following remedies is selected, in which case Seller may sue Purchaser: to enforce specific performance (force Purchaser to purchase the Property pursuant to this Contract); or for damages. If one or both of the boxes is checked to allow Seller to sue Purchaser to enforce specific performance or for damages, then Seller must elect to either receive the Earnest Money as liquidated damages or pursue one of the other selected remedies at the beginning of any legal action initiated by Seller.

14. AGENCY DISCLOSURE.

A. Agency Relationships. The term “Brokers” refers to the Principal Broker and the Cooperating Broker, if applicable, as set forth on the signature page. Each Broker has duties only to the party the Broker represents as identified below. If either Broker is acting as an intermediary, then that Broker will have only the duties of an intermediary, and the intermediary disclosure and consent provisions apply as set forth below. [Each broker check only one]

(1) The Principal Broker is:    x agent for Seller only; or     agent for Purchaser only; or an intermediary.

(2) The Cooperating Broker is:     agent for Seller only; x agent for Purchaser only; or an intermediary.

B. Other Brokers. Seller and Purchaser each represent to the other that they have had no dealings with any person, firm, agent or finder in connection with the negotiation of this Contract or the consummation of the purchase and sale contemplated by this Contract, other than the Brokers named in this Contract, and no real estate broker, agent, attorney, person, firm or entity, other than the Brokers, is entitled to any commission or finder’s fee in connection with this transaction as the result of any dealings or acts of the representing party. Each party agrees to indemnify, defend, and hold the other party harmless from and against any costs, expenses or liability for any compensation, commission, fee, or charges that may be claimed by any agent, finder or other similar party, other than the Brokers, by reason of any dealings or acts of the indemnifying party.

C. Fee Sharing. Seller and Purchaser agree that the Brokers may share the Fee (defined below) among themselves, their sales associates, and any other licensed brokers involved in the sale of the Property. The parties authorize the Title Company to pay the Fee directly to the Principal Broker and, if applicable, the Cooperating Broker, in accordance with Section 15 (Professional Service Fee) or any other agreement pertaining to the Fee. Payment of the Fee will not alter the fiduciary relationships between the parties and the Brokers.

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D. Intermediary Relationship. If either of the Brokers has indicated in Section 14A (Agency Relationships) that the Broker is acting as an intermediary in this transaction, then Purchaser and Seller hereby consent to the intermediary relationship, authorize such Broker or Brokers to act as an intermediary in this transaction, and acknowledge that the source of any expected compensation to the Brokers will be Seller, and the Brokers may also be paid a fee by Purchaser. A broker is required to treat each party honestly and fairly and to comply with the Texas Real Estate License Act. A broker who acts as an intermediary in a transaction:

(1) shall treat all parties honestly;

(2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner;

(3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and

(4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by the Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property.

Broker is authorized to appoint, by providing written notice to the parties, one or more licensees associated with Broker to communicate with and carry out instructions of one party, and one or more other licensees associated with Broker to communicate with and carry out instructions of the other party or parties. During negotiations, an appointed licensee may provide opinions and advice to the party to whom the licensee is appointed.

15. PROFESSIONAL SERVICE FEE.

A. Payment of Fee. Seller agrees to pay the Brokers a professional service fee (the “Fee”) for procuring the Purchaser and for assisting in the negotiation of this Contract as follows: Seller will pay Principal Broker at Closing a commission in accordance with a separate written agreement. Principal Broker will pay, or cause to be paid, a one percent (1%) commission of the Purchase Price to the Cooperating Broker at Closing.

The Fee will be earned upon the execution of this Contract and will be paid at the Closing of a sale of the Property by Seller pursuant to this Contract (as may be amended or assigned). The Fee will be paid by Seller to the Brokers in the county in which the Property is located. Seller shall pay any applicable sales taxes on the Fee. The Title Company or other escrow agent is authorized and directed to pay the Fee to the Brokers out of the Closing proceeds. A legal description of the Property, as set forth in this Contract and any Survey delivered pursuant to this Contract, is incorporated by reference in the agreement pertaining to the Fee set forth or referenced in this Section.

The Fee is earned notwithstanding: (1) any subsequent termination of this Contract (except a termination by Seller or Purchaser pursuant to a right of termination in this Contract); or (2) any default by Seller. If the Closing does not occur due to Purchaser’s default, and Seller does not elect to enforce specific performance, the Fee will not exceed one-half of the Earnest Money. If either party defaults under this Contract, then the Fee will be paid within ten (10) days after the scheduled Closing Date, and the Title Company is authorized to pay the fee out of the Earnest Money or any other escrow deposit made pursuant to this Contract. If Seller defaults, then Seller’s obligation to pay the Fee will not be affected if Purchaser chooses the remedy of terminating this Contract, and the amount of the Fee will not be limited to the amount of the Earnest Money or any other escrow deposit made pursuant to this Contract.

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B. Consent Required. Purchaser, Seller and Title Company agree that the Brokers are third party beneficiaries of this Contract with respect to the Fee, and that no change may be made by Purchaser, Seller or Title Company as to the time of payment, amount of payment or the conditions for payment of the Fee without the written consent of the Brokers.

C. Right to Claim a Lien. Pursuant to Chapter 62 of the Texas Property Code, the Brokers hereby disclose their right to claim a lien based on the commission agreement set forth in this Section 15 and any other commission agreements referenced in this Contract or applicable to the transaction contemplated by this Contract. This disclosure is hereby incorporated in any such commission agreements.

16. MISCELLANEOUS PROVISIONS.

A. Definition of Hazardous Materials. “Hazardous Materials” means any pollutants, toxic substances, oils, hazardous wastes, hazardous materials or hazardous substances as defined in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Clean Water Act, as amended, or any other Federal, State or local environmental law, ordinance, rule, or regulation, whether existing as of the Effective Date or subsequently enacted.

B. Notices. All notices and other communications required or permitted under this Contract must be in writing and will be deemed delivered on the earlier of: (1) actual receipt, if delivered in person or by courier, with evidence of delivery; (2) receipt of an electronic facsimile (“Fax”) transmission with confirmation of delivery to the Fax numbers specified in this Contract, if any; or (3) upon deposit with the United States Postal Service, certified mail, return receipt requested, postage prepaid, and properly addressed to the intended recipient at the address set forth in this Contract. Any party may change its address for notice purposes by delivering written notice of its new address to all other parties in the manner set forth above. Copies of all written notices should also be delivered to the Brokers and to the Title Company, but failure to notify the Brokers or the Title Company will not cause an otherwise properly delivered notice to be ineffective.

C. Termination. If this Contract is terminated for any reason, the parties will have no further rights or obligations under this Contract, except that: (1) Purchaser shall pay the costs to repair any damage to the Property caused by Purchaser or Purchaser’s agents; (2) Purchaser shall return to Seller any reports or documents delivered to Purchaser by Seller; and (3) each party shall perform any other obligations that, by the explicit provisions of this Contract, expressly survive the termination of this Contract. The obligations of this Section 16C will survive the termination of this Contract. The terms of any mutual termination agreement will supersede and control over the provisions of this Section 16C to the extent of any conflict.

D. Forms. In case of a dispute as to the form of any document required under this Contract, the most recent form prepared by the State Bar of Texas will be used, modified as necessary to conform to the terms of this Contract.

E. Attorneys ’ Fees. The prevailing party in any proceeding brought to enforce this Contract, or brought relating to the transaction contemplated by this Contract, will be entitled to recover, from the non-prevailing party, court costs, reasonable attorneys’ fees and all other reasonable related expenses.

F. Integration. This Contract contains the complete agreement between the parties with respect to the Property and cannot be varied except by written agreement. The parties agree that there are no oral agreements, understandings, representations or warranties made by the parties that are not

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expressly set forth in this Contract. Any prior written agreements, understandings, representations or warranties between the parties will be deemed merged into and superceded by this Contract, unless it is clear from the written document that the intent of the parties is for the previous written agreement, understanding, representation or warranty to survive the execution of this Contract.

G. Survival. Any representation or covenant contained in this Contract not otherwise discharged at the Closing will survive the Closing.

H. Binding Effect. This Contract will inure to the benefit of, and will be binding upon, the parties to this Contract and their respective heirs, legal representatives, successors and assigns.

I. Time for Performance. Time is of the essence under each provision of this Contract. Strict compliance with the times for performance is required.

J. Business Day. If any date of performance under this Contract falls on a Saturday, Sunday or Texas legal holiday, such date of performance will be deferred to the next day that is not a Saturday, Sunday or Texas legal holiday.

K. Right of Entry. After reasonable advance notice and during normal business hours, Purchaser, Purchaser’s representatives and the Brokers have the right to enter upon the Property before the Closing for purposes of viewing, inspecting and conducting studies of the Property, so long as they do not unreasonably interfere with the use of the Property by Seller or any tenants, or cause damage to the Property.

L. Governing Law. This Contract will be construed under and governed by the laws of the State of Texas, and unless otherwise provided in this Contract, all obligations of the parties created under this Contract are to be performed in the county where the Property is located.

M. Severability. If any provision of this Contract is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the invalid, illegal, or unenforceable provision will not affect any other provisions, and this Contract will be construed as if the invalid, illegal, or unenforceable provision is severed and deleted from this Contract.

N. Broker Disclaimer. The Brokers will disclose to Purchaser any material factual knowledge the Brokers may possess about the condition of the Property. Purchaser understands that a real estate broker is not an expert in matters of law, tax, financing, surveying, hazardous materials, engineering, construction, safety, zoning, land planning, architecture, or the Americans with Disabilities Act. Purchaser should seek expert assistance on such matters. The Brokers do not investigate a property’s compliance with building codes, governmental ordinances, statutes and laws that relate to the use or condition of the Property or its construction, or that relate to its acquisition. Purchaser is not relying upon any representations of the Brokers concerning permitted uses of the Property or with respect to any nonconformance of the Property. If the Brokers provide names of consultants or sources for advice or assistance, the Brokers do not warrant the services of the advisors or their products. The Brokers cannot warrant the suitability of property to be acquired. Purchaser acknowledges that current and future federal, state and local laws and regulations may require any Hazardous Materials to be removed at the expense of those persons who may have had or continue to have any interest in the Property. The expense of such removal may be substantial. Purchaser agrees to look solely to experts and professionals selected or approved by Purchaser to advise Purchaser with respect to the condition of the Property and will not hold the Brokers responsible for any condition relating to the Property. The Brokers do not warrant that Seller will disclose any or all property defects or other matters pertaining to the Property or its condition. Seller and Purchaser agree to hold the Brokers harmless from any damages, claims, costs and expenses including, but not limited to, reasonable attorneys’ fees and court costs, resulting from or related to any

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person furnishing any false, incorrect or inaccurate information with respect to the Property, Seller’s concealing any material information with respect to the condition of the Property, or matters that should be analyzed by experts. To the extent permitted by applicable law, the Brokers’ liability for errors or omissions, negligence, or otherwise, is limited to the return of the Fee, if any, paid to the responsible Broker pursuant to this Contract. The parties agree that they are not relying upon any oral statements that the Brokers may have made. Purchaser is relying solely upon Purchaser’s own investigations and the representations of Seller, if any, and Purchaser acknowledges that the Brokers have not made any warranty or representation with respect to the condition of the Property or otherwise.

O. Counterparts. This Contract may be executed in a number of identical counterparts. Each counterpart is deemed an original and all counterparts will, collectively, constitute one agreement.

P. Patriot Act Representation. Seller and Purchaser each represent to the other that: (1) its property interests are not blocked by Executive Order No. 13224, 66 Fed. Reg. 49079; (2) it is not a person listed on the Specially Designated Nationals and Blocked Persons list of the Office of Foreign Assets Control of the United States Department of the Treasury; and (3) it is not acting for or on behalf of any person on that list.

Q. Exchange. Seller and Purchaser shall cooperate with each other in connection with any tax deferred exchange that either party may be initiating or completing in connection with Section 1031 of the Internal Revenue Code, so long as neither party will be required to pay any expenses related to the other party’s exchange and the Closing is not delayed. Notwithstanding any other provision that may prohibit the assignment of this Contract, either party may assign this Contract to a qualified intermediary or exchange accommodation title holder, if the assignment is required in connection with the exchange. The parties agree to cooperate with each other, and sign any reasonable documentation that may be required, to effectuate any such exchange.

17. STATUTORY NOTICES.

A. Abstract or Title Policy. At the time of the execution of this Contract, Purchaser acknowledges that the Brokers have advised and hereby advise Purchaser, by this writing, that Purchaser should have the abstract covering the Property examined by an attorney of Purchaser’s own selection or that Purchaser should be furnished with or obtain a policy of title insurance.

B. Notice Regarding Unimproved Property Located in a Certificated Service Area. If the Property is unimproved and is located in a certificated service area of a utility service, then Seller shall give to Purchaser a written notice in compliance with §13.257 of the Texas Water Code, and Purchaser agrees to acknowledge receipt of the notice in writing. The notice must set forth the correct name of utility service provider authorized by law to provide water or sewer service to the Property, and must comply with all other applicable requirements of the Texas Water Code.

C. Special Assessment Districts. If the Property is situated within a utility district or flood control district subject to the provisions of §49.452 of the Texas Water Code, then Seller shall give to Purchaser the required written notice and Purchaser agrees to acknowledge receipt of the notice in writing. The notice must set forth the current tax rate, the current bonded indebtedness and the authorized indebtedness of the district, and must comply with all other applicable requirements of the Texas Water Code.

D. Property Owners’ Association. If the Property is subject to mandatory membership in a property owners’ association, Seller shall notify Purchaser of the current annual budget of the property owners’ association, and the current authorized fees, dues and/or assessments relating to the Property. In addition, Seller shall give to Purchaser the written notice required under §5.012 of the Texas Property

15

Code, if applicable, and Purchaser agrees to acknowledge receipt of the notice in writing. Also, Seller shall give to Purchaser the resale certificate required under Chapter 207 of the Texas Property Code, if applicable, and Purchaser agrees to acknowledge receipt of the resale certificate in writing.

E. Notice Regarding Possible Annexation. If the Property that is the subject of this Contract is located outside the limits of a municipality, the Property may now or later be included in the extraterritorial jurisdiction of the municipality and may now or later be subject to annexation by the municipality. Each municipality maintains a map that depicts its boundaries and extraterritorial jurisdiction. To determine if the Property is located within a municipality’s extraterritorial jurisdiction or is likely to be located within a municipality’s extraterritorial jurisdiction, contact all municipalities located in the general proximity of the Property for further information.

F. Notice Regarding Coastal Area Property. If the Property adjoins or shares a common boundary with the tidally influenced submerged lands of the state, then Seller shall give to Purchaser a written notice regarding coastal area property, in compliance with §33.135 of the Texas Natural Resources Code, and Purchaser agrees to acknowledge receipt of the notice in writing.

G. Gulf Intracoastal Waterway Notice. If the Property is located seaward of the Gulf Intracoastal Waterway, then Seller shall give to Purchaser a written notice regarding the seaward location of the Property, in compliance with §61.025 of the Texas Natural Resources Code, and Purchaser agrees to acknowledge receipt of the notice in writing.

H. Notice for Property Located in an Agricultural Development District. If the Property is located in an agricultural development district, then in accordance with §60.063 of the Texas Agricultural Code: (1) Seller shall give to Purchaser a written notice that the Property is located in such a district; (2) Purchaser agrees to acknowledge receipt of the notice in writing; and (3) at the Closing, a separate copy of the notice with current information about the district will be executed by Seller and Purchaser and recorded in the deed records of the county in which the Property is located.

I. Disclosure of Dual Capacity as Broke r and Principal. [Complete if applicable].

                                          is a licensed Texas real estate broker and is acting in a dual capacity as broker for the Purchaser and as a principal in this transaction, as he or she may be the Purchaser (or one of the owners of the Purchaser after any assignment of this Contract).

                                          is a licensed Texas real estate broker and is acting in a dual capacity as broker for the Seller and as a principal in this transaction, as he or she may be the Seller (or one of the owners of the Seller).

18. DISPUTE RESOLUTION.

A. Mediation. If any dispute (the “Dispute”) arises between any of the parties to this Contract including, but not limited to, payment of the Fee, then any party (including any Broker) may give written notice to the other parties requiring all involved parties to attempt to resolve the Dispute by mediation. Except in those circumstances where a party reasonably believes that an applicable statute of limitations period is about to expire, or a party requires injunctive or equitable relief, the parties are obligated to use this mediation procedure before initiating arbitration or any other action. Within seven (7) days after receipt of the mediation notice, each party must deliver a written designation to all other parties stating the names of one or more individuals with authority to resolve the Dispute on such party’s behalf. Within fourteen (14) days after receipt of the mediation notice, the parties shall make a good faith effort to select a qualified mediator to mediate the Dispute. If the parties are unable to timely agree upon a mutually acceptable mediator, any party may request any state or federal judge to appoint a mediator.

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In consultation with the mediator, the parties shall promptly designate a mutually convenient time and place for the mediation that is no later than thirty (30) days after the date the mediator is selected. In the mediation, each party must be represented by persons with authority and discretion to negotiate a resolution of the Dispute, and may be represented by counsel. The mediation will be governed by applicable provisions of Chapter 154 of the Texas Civil Practice and Remedies Code, and such other rules as the mediator may prescribe. The fees and expenses of the mediator will be shared equally by all parties included in the Dispute.

B. Arbitration. If the parties are unable to resolve any Dispute by mediation, then the parties (including the Brokers) shall submit the Dispute to binding arbitration before a single arbitrator. The Dispute will be decided by arbitration in accordance with the applicable arbitration statute and any rules selected by the arbitrator. After an unsuccessful mediation, any party may initiate the arbitration procedure by delivering a written notice of demand for arbitration to the other parties. Within fourteen (14) days after the receipt of the written notice of demand for arbitration, the parties shall make a good faith effort to select a qualified arbitrator acceptable to all parties. If the parties are unable to agree upon the selection of an arbitrator, then any party may request any state or federal judge to appoint an arbitrator. This agreement to arbitrate will be specifically enforceable under the prevailing arbitration law.

19. CONSULT AN ATTORNEY. This Contract is a legally binding agreement. The Brokers cannot give legal advice. The parties to this Contract acknowledge that they have been advised to have this Contract reviewed by legal counsel before signing this Contract.

Purchaser’s		Seller’s
attorney is:	Greg Curry	attorney is:	Randy Hullett
	Thompson & Knight LLP		Abernathy, Roeder, Boyd & Joplin, P.C.
	One Arts Plaza		1700 Redbud Blvd., Suite 300
	1722 Routh Street, Suite 1500		McKinney, Texas 75069
	Dallas, Texas 75201-2533		Phone: 214-544-4000
	Phone: 214-969-1252		Fax: 214-54404044
	Fax: 214-880-3228

20. EXHIBITS AND ADDENDA. All Exhibits and Addenda attached to this Contract are incorporated herein by reference and made a part of this Contract for all purposes [check all that apply]:

x	Exhibit “A”	Legal Description
x	Exhibit “A-1”	Survey Plats
	Exhibit “B”	Site Plan
	Exhibit “C”
	Addendum A	Improved Property
	Addendum B-1	Third Party Financing
	Addendum B-2	Seller Financing
	Addendum B-3	Existing Loan
x	Addendum C	Inspection
	Addendum D	Disclosure Notice
	Addendum E	Lead Based Paint
	Addendum F	Information About Brokerage Services
	Addendum G	Additional Provisions
x	Addendum H	Special

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21. CONTRACT AS OFFER. The execution of this Contract by the first party to do so constitutes an offer to purchase or sell the Property. If the other party does not accept that offer by signing this Contract and delivering a fully executed copy to the first party within         5         days after the date this Contract is executed by the first party, then the first party may withdraw that offer by delivering a written notice to the other party at any time before the other party accepts that offer, in which case the Earnest Money, if any, will be returned to Purchaser.

22. ADDITIONAL PROVISIONS. [Additional provisions may be set forth below or on any attached Addendum].

Purchaser’s obligation to close is further contingent upon the approval of this purchase by its Board of Directors prior to the expiration of the Inspection Period. Purchaser shall request this approval following the Purchaser’s receipt and approval of the Survey, Title Commitment, inspection results and the hazardous materials survey; however, this condition shall not extend beyond the expiration of the Inspection Period, or cause the Inspection Period to be extended.

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This Contract is executed to be effective as of the date the Title Company acknowledges receipt of this fully executed Contract as indicated by the signature block for the Title Company (the Effective Date).

SELLER:		PURCHASER:
VTCR, LP		ENCORE WIRE CORPORATION
By: (Signature)	/s/ Robert J. Holcomb	By: (Signature)	/s/ Daniel L. Jones
Name:	Robert J. Holcomb	Name:	Daniel L. Jones
Title:	Treasurer	Title:	President & CEO
Tax I.D. No.:		Tax I.D. No.:	75-2274963
Date of Execution:	5/15/13	Date of Execution:	6.18.2013
MADMT, LP
By: (Signature)	/s/ Darrell McCutcheon
Name:	Darrell McCutcheon
Title:	5/15/13
Tax I.D. No.:
Date of Execution:
PRAIRIE FLIGHT, LP
By: (Signature)	/s/ David H. Craig
Name:	David H. Craig
Title:	Owner
Tax I.D. No.:
Date of Execution:

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PRINCIPAL BROKER:		COOPERATING BROKER:
By: (Signature)	/s/ Jones Lang LaSalle	By: (Signature)	/s/ Norman R. Medlen
Name:	Jones Lang LaSalle	Name:	Norman R. Medlen
Title:	Broker-Tom McElroy	Title:	Broker
Address:	8343 Douglas Avenue Dallas, Texas 75225	Address:	2601 Graphic Place or 1329 Millwood Rd., #315 Plano, Texas 75075 or McKinney, Texas 75069
Telephone:	214-438-6189         Fax:	Telephone:	214-801-4536         Fax: 972-562-3644
Email:	tom.mcelroy@am.jll.com	Email:	n.medlen@encorewire.com
TREC License No.:		TREC License No.:	0385718

TITLE COMPANY RECEIPT: The Title Company acknowledges receipt of this Contract on (the Effective Date). Upon receipt of and the Earnest Money, the Title Company accepts the Earnest Money subject to the terms and conditions set forth in this Contract.

TITLE COMPANY:

REUNION TITLE COMPANY

By: (Signature)	/s/ Loretta Boddy
Name:	Loretta Boddy
Title:	Escrow Officer
Address:	1700 Reunion Blvd.
	Suite 300
	McKinney, Texas 75069
Telephone:	214-544-4000     Fax: 214-544-4044
Email:	lboddy@reuniontitle.com

PERMISSION TO USE: This form is provided for use by members of the North Texas Commercial Association of Realtors^®, Inc. (“NTCAR”) and members of the North Texas Commercial Association of Real Estate Professionals, Inc. Permission is given to make limited copies of the current version of this form for use in a particular Texas real estate transaction. Please contact the NTCAR office to confirm you are using the current version of this form. Mass production, or reproduction for resale, is not allowed without express permission. Any changes to this form must be made in a manner that is obvious. If any words are deleted, they must be left in the form with a line drawn through them. If changes are made that are not obvious, they are not enforceable.

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EXHIBIT A

Legal Description

The Property is a portion of two tracts of property containing 200.993 acres, more or less, as shown on the attached Exhibit A-1.

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EXHIBIT A-1

Survey Plats

22

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NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS^®

ADDENDUM C TO COMMERCIAL CONTRACT OF SALE

INSPECTION

Property address or description: Northeast corner of Industrial Blvd. and Airport Road in McKinney, Collin County, Texas

1. Inspection Period. Purchaser will have a period of ten (10) days after the Effective Date (the “Inspection Period”) to inspect the Property and conduct studies regarding the Property. Purchaser’s studies may include, without limitation: (1) permitted use and zoning of the Property; (2) core borings; (3) environmental and architectural tests and investigations; (4) physical inspections of improvements, fixtures, equipment, subsurface soils, structural members, and personal property; and (5) examination of agreements, manuals, plans, specifications and other documents relating to the construction and condition of the Property. Purchaser and Purchaser’s agents, employees, consultants and contractors will have the right of reasonable entry onto the Property during normal business hours, and upon reasonable advance notice to Seller and any tenants on the Property, for purposes of inspections, studies, tests and examinations deemed necessary by Purchaser. The inspections, studies, tests and examinations will be at Purchaser’s expense and risk. Purchaser shall defend and indemnify Seller against any claims that arise due to any actions by Purchaser or Purchaser’s agents, employees, consultants and contractors. Purchaser may also use the Inspection Period to perform feasibility studies, obtain equity funding, seek financing, and satisfy other conditions unrelated to the condition of the Property.

2. Reports.

¨ A. Within              days after the Effective Date, Seller shall deliver to Purchaser a written “Phase I” report of an environmental assessment of the Property. The report will be prepared, at Seller’s expense, by an environmental consultant reasonably acceptable to Purchaser. The environmental assessment must include an investigation into the existence of Hazardous Materials (as defined in Section 16A of this Contract) in, on or around the Property. The environmental assessment must also include a land use history search, engineering inspections, research and studies that may be necessary to discover the existence of Hazardous Materials.

x B. Within five (5) days after the Effective Date, Seller shall deliver to Purchaser copies of all reports in Seller’s possession or control of engineering investigations, tests and environmental studies that have been made with respect to the Property within the three year period before the Effective Date.

x C. If Purchaser terminates this Contract, Purchaser shall deliver to Seller, at Purchaser’s expense and contemporaneously with the termination, copies of all written reports, inspections, plats, drawings and studies that relate to the condition of the Property made by Purchaser’s agents, consultants and contractors. This provision will survive the termination of this Contract.

3. Termination. If Purchaser determines, in Purchaser’s sole discretion, no matter how arbitrary, that Purchaser chooses not to purchase the Property for any reason, then Purchaser may terminate this Contract by delivering a written notice to Seller on or before the last day of the Inspection Period, in which case the Earnest Money will be returned to Purchaser. Purchaser’s reason for choosing to terminate this Contract does not need to be related to the condition of the Property, and Purchaser is not required to justify Purchaser’s decision to terminate this Contract.

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4. Acceptance. If Purchaser does not properly and timely terminate this Contract before the expiration of the Inspection Period (or if Purchaser accepts the Property in writing) then Purchaser will be deemed to have waived all objections to the Property, except for any title objections that may be outstanding pursuant to Section 6 (Review of Survey and Title) of this Contract. In that event, except as may be expressly stated otherwise in this Contract, Purchaser agrees to purchase the Property in its current “AS IS” condition without any further representations of Seller, this Contract will continue in full force and effect, and the parties shall proceed to the Closing. This provision does not, however, limit or invalidate any express representations Seller has made in this Contract.

5. Reimbursement. If Seller defaults and Purchaser does not elect to enforce specific performance of this Contract, then Seller shall reimburse Purchaser for Purchaser’s actual, out-of-pocket expenses paid by Purchaser to independent third parties in connection with this Contract including, but not limited to, reasonable fees and expenses for engineering assessments, environmental assessments, architectural plans, surveys and legal work (but excluding any indirect, punitive or consequential damages, such as a claim for lost profits) in an amount not to exceed $     0.00     .

6. Restoration. If the transaction described in this Contract does not close through no fault of Seller, and the condition of the Property was altered due to inspections, studies, tests or examinations performed by Purchaser or on Purchaser’s behalf, then Purchaser must restore the Property to its original condition at Purchaser’s expense.

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ADDENDUM H TO NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS COMMERCIAL CONTRACT OF SALE

This Addendum H to North Texas Commercial Association of Realtors Commercial Contract of Sale (“Addendum”) is incorporated into and shall amend and supplement the North Texas Commercial Association of Realtors Commercial Contract of Sale to which it is attached (the “Contract”), between the Seller and the Purchaser concerning the Property. The Seller and Purchaser agree that the following provisions are made a part of the Contract and that if anything contained in this Addendum conflicts with or contradicts any of the terms in the Contract or any other addendum thereto, this Addendum shall control:

1. Defined Terms. All capitalized terms that are defined in the Contract shall have the same meanings in this Addendum that are given to them in the Contract.

2. Rollback Taxes. Seller shall pay when due all Additional Taxes (defined below) assessed for those years prior to the year in which the Closing is held; Seller and Purchaser shall each pay when due their prorata share of Additional Taxes assessed for the year in which the Closing is held (the “Closing Year”); and Purchaser shall pay when due all Additional Taxes assessed for those years following the Closing Year. Each party hereto shall indemnify and save the other party harmless from and against all claims, liabilities, losses, costs and expenses (including attorney’s fees) relating to those Additional Taxes for which it is responsible to pay hereunder. Purchaser shall cause KE Andrews (the “Tax Consultant”) to estimate the amount of unpaid Additional Taxes attributable to the Property for the five calendar years preceding the Closing Year that would be due and payable on or before January 31 of the year following the Closing if a change in the usage of the Property occurred after the Closing and prior to the Rollback Date (the “Estimated Rollback Taxes”), and such amount shall be retained from the proceeds paid by Purchaser at the Closing and held in escrow by the Title Company subject to the terms hereof and pursuant to an escrow agreement reasonably acceptable to Title Company, Purchaser and Seller. Further, Purchaser shall cause the Tax Consultant to estimate the amount of unpaid Additional Taxes attributable to the Property for the Closing Year that would be due and payable if a change in the usage of the Property occurred after the Closing and prior to the Rollback Date (the “Estimated Market Value Taxes”). Seller’s prorata share of the Estimated Market Value Taxes shall also be retained from the proceeds paid by Purchaser at the Closing and held in escrow by the Title Company subject to the terms hereof in the same account as the account and pursuant to the same escrow agreement established hereunder for Estimated Rollback Taxes. At such time or times as the actual liability of Seller is determined with respect to such Additional Taxes and the same are due and payable, the Title Company shall promptly apply the escrowed funds to the payment of such Additional Taxes, and, after Seller’s liability is finally determined or it is determined that Seller has no liability, any excess funds remaining in such escrow account, plus accrued interest thereon, shall be promptly withdrawn from escrow and paid to Seller. If additional funds are required to cover Seller’s obligation, Seller shall be obligated to pay such amount to the Title Company on demand by either the Title Company or Purchaser, in which event the Title Company shall promptly apply such funds to the payment of such Additional Taxes. If a change in use of the Property occurs prior to the Closing, Seller shall provide Purchaser with written notice thereof promptly upon receipt of notice or rendition thereof from the applicable taxing authority, together with a copy of the applicable assessment or statement from such taxing authority. If a change in use of the Property occurs after the Closing Date, Purchaser shall provide Seller with written notice thereof promptly upon receipt of notice or rendition thereof from the applicable taxing authority, together with a copy of the applicable assessment or statement from such taxing authority. As used herein, (i) the term “Additional Taxes” shall mean any ad valorem taxes and personal property taxes, which for the purposes hereof include penalties and interest, becoming due upon Closing or thereafter because of a change in ownership or land usage of the Property (or any portion thereof) or the loss of a tax exemption, including without limitation rollback taxes, and (ii) the term “Rollback Date” shall mean January 1 of the year following the Closing

3. Impact Fees. At Closing, Seller shall assign to Purchaser any and all Impact Fees (defined below). As used herein, “Impact Fees” means any amounts due and payable , if any, under that certain Roadway Impact Fee Credit/Right-of-Way Dedication Agreement recorded in Volume 5915, Page 4652, Real Property Records Collin County, Texas (as such document was affected by Assignment recorded under cc# 20070214000210970, Real Property Records Collin County, Texas), to the extent the same apply to the Property. Such assignment shall be incorporated into the deed executed by Seller at Closing.

4. Arbitration. Section 18B is hereby deleted from the Contract.

5. Closing. Closing shall occur on or before June 28, 2013 provided Purchaser has had five (5) days prior thereto to review the Title Commitment.

6. Counterparts. This addendum may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.

[signature page follows]

SELLER:
VTCR, LP
By:	/s/ Robert J. Holcomb
Name:	Robert J. Holcomb
Title:	Treasurer
MADMT, LP
By:	/s/ Darrell McCutcheon
Name:	Darrell McCutcheon
Title:
PRAIRIE FLIGHT, LP
By:	/s/ David H. Craig
Name:	David H. Craig
Title:	Owner
PURCHASER:
ENCORE WIRE CORPORATION
By:	/s/ Daniel L. Jones
Name:	Daniel L. Jones
Title:	President & CEO        6.18.13

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Daniel L. Jones, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2013

/s/ DANIEL L. JONES

Daniel L. Jones

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Frank J. Bilban, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2013

/s/ FRANK J. BILBAN

Frank J. Bilban

Vice President – Finance, Chief Financial

Officer, Treasurer and Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION FURNISHED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel L. Jones, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 2, 2013

/s/ DANIEL L. JONES

Daniel L. Jones

President and

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION FURNISHED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank J. Bilban, Vice-President—Finance, Chief Financial Officer, Treasurer and Secretary of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 2, 2013

/s/ FRANK J. BILBAN

Frank J. Bilban

Vice President – Finance, Chief Financial

Officer, Treasurer and Secretary

XML

Inventories - Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventory Net [Abstract]
Raw materials	$ 15,174	$ 26,013
Work-in-process	30,719	22,309
Finished goods	82,441	88,750
Total	128,334	137,072
Adjust to LIFO cost	(63,831)	(73,416)
Lower of cost or market adjustment
Inventory, net	$ 64,503	$ 63,656	[1]

[1] The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Net sales	$ 289,460	$ 264,730	$ 554,811	$ 545,196
Cost of goods sold	249,309	245,339	490,359	501,344
Gross profit	40,151	19,391	64,452	43,852
Selling, general, and administrative expenses	16,213	15,327	31,360	30,404
Operating income	23,938	4,064	33,092	13,448
Net interest and other (income) expenses	(18)	(8)	(35)	(28)
Income before income taxes	23,956	4,072	33,127	13,476
Provision for income taxes	8,454	1,702	11,230	4,413
Net income	$ 15,502	$ 2,370	$ 21,897	$ 9,063
Net income per common and common equivalent share - basic	$ 0.75	$ 0.11	$ 1.06	$ 0.40
Weighted average common and common equivalent shares - basic	20,669	21,997	20,667	22,712
Net income per common and common equivalent share - diluted	$ 0.75	$ 0.11	$ 1.06	$ 0.40
Weighted average common and common equivalent shares - diluted	20,738	22,037	20,736	22,757
Cash dividends declared per share	$ 0.02	$ 0.02	$ 0.04	$ 0.04

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 5 – EARNINGS PER SHARE

Net earnings (loss) per common and common equivalent share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. If dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Quarters Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	15,502	$	2,370
Denominator:
Denominator for basic earnings per share – weighted average shares		20,669		21,997
Effect of dilutive securities:
Employee stock options		69		40
Denominator for diluted earnings per share – weighted average shares		20,738		22,037

The number of weighted average employee stock options excluded from the determination of diluted earnings per share for the second quarter was 191,000 in 2013 and 193,000 in 2012. Such options were anti-dilutive for the respective periods.

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Six Months Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	21,897	$	9,063
Denominator:
Denominator for basic earnings per share – weighted average shares		20,667		22,712
Effect of dilutive securities:
Employee stock options		69		45
Denominator for diluted earnings per share – weighted average shares		20,736		22,757

The number of weighted average employee stock options excluded from the determination of diluted earnings per share for the six months ended June 30 was 191,000 in 2013 and 166,000 in 2012. Such options were anti-dilutive for the respective periods.

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Stockholders' Equity - Additional Information (Detail) (USD $)	1 Months Ended	6 Months Ended
	May 14, 2012	Jun. 30, 2013	Nov. 10, 2006
Equity [Abstract]
Stock authorized to be repurchased under share repurchase program			1,000,000
Repurchase of common stock authorized remaining		1,225,750
Repurchased shares	2,774,250	0
Aggregate purchase price of repurchased shares	$ 66,637,485
Share repurchased per share price	$ 24.02
Share repurchased, Percentage of Outstanding Stock	11.80%

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Inventories - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Inventory Disclosure [Abstract]
Negative impact of net income under inventory valuation LIFO method	$ 481,000	$ (383,000)	$ (903,000)	$ (383,000)

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of Encore Wire Corporation (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Results of operations for interim periods presented do not necessarily indicate the results that may be expected for the entire year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2013

Payables And Accruals [Abstract]

ACCRUED LIABILITIES

NOTE 3 – ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	June 30,		December 31,
In Thousands of Dollars	2013		2012
Sales volume discounts payable	$	13,274	$	13,940
Property taxes payable		1,490		2,937
Commissions payable		2,243		1,768
Accrued salaries		3,169		4,235
Other accrued liabilities		627		558
Total accrued liabilities	$	20,803	$	23,438

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DEBT

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

DEBT

NOTE 6 – DEBT

The Company is party to a Credit Agreement with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent (the “Credit Agreement”). The Credit Agreement extends through October 1, 2017, and provides for maximum borrowings of the lesser of $150.0 million or the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. Additionally, at our request and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. The calculated maximum borrowing amount available at June 30, 2013, as computed under the Credit Agreement, was $149.5 million. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At June 30, 2013, there were no borrowings outstanding under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company.

Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of June 30, 2013.

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INCOME TAXES

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 4 – INCOME TAXES

Income taxes were accrued at an effective rate of 35.3% in the second quarter of 2013 versus 41.8% in the second quarter of 2012, consistent with the Company’s estimated liabilities. The decrease in the effective rate was due to a moderate change in the proportional effects of permanent items on the effective rate. For the six months ended June 30, the Company’s effective tax rate was approximately 33.9% in 2013 and 32.7% in 2012.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Allowance for accounts receivable	$ 2,065	$ 2,064	[1]
Preferred stock, par value	$ 0.01	$ 0.01	[1]
Preferred stock, shares authorized	2,000,000	2,000,000	[1]
Preferred stock, shares issued			[1]
Common stock, par value	$ 0.01	$ 0.01	[1]
Common stock, shares authorized	40,000,000	40,000,000	[1]
Common stock, shares issued	26,607,603	26,597,753	[1]
Treasury stock, shares	5,934,651	5,934,651	[1]

[1] The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following:

	June 30,			December 31,
In Thousands of Dollars	2013			2012
Raw materials	$	15,174		$	26,013
Work-in-process		30,719			22,309
Finished goods		82,441			88,750
Total		128,334			137,072
Adjust to LIFO cost		(63,831	)		(73,416	)
Lower of cost or market adjustment		—			—
Inventory, net	$	64,503		$	63,656

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
OPERATING ACTIVITIES
Net income	$ 21,897		$ 9,063
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	7,052		7,236
Deferred income taxes	4,769		(2,910)
Other	154		372
Changes in operating assets and liabilities:
Accounts receivable	(38,193)		(6,168)
Inventories	(847)		10,986
Trade accounts payable and accrued liabilities	2,551		10,197
Other assets and liabilities	1,822		380
Current income taxes receivable / payable	486		(2,183)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(309)		26,973
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(31,712)		(24,042)
Proceeds from sale of assets			11
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(31,712)		(24,031)
FINANCING ACTIVITIES
Proceeds from issuances of common stock	169		56
Purchase of treasury stock			(66,638)
Dividends paid	(827)		(937)
Excess tax benefits of options exercised	30		6
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(628)		(67,513)
Net increase (decrease) in cash and cash equivalents	(32,649)		(64,571)
Cash and cash equivalents at beginning of period	33,883	[1]	112,298
Cash and cash equivalents at end of period	$ 1,234		$ 47,727

[1] The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 1,234	$ 33,883	[1]
Accounts receivable, net of allowance of $2,065 and $2,064	236,172	197,980	[1]
Inventories	64,503	63,656	[1]
Income taxes receivable			[1]
Deferred income taxes	2,156	5,790	[1]
Prepaid expenses and other	3,846	5,541	[1]
Total current assets	307,911	306,850	[1]
Property, plant and equipment - at cost:
Land and land improvements	44,217	18,466	[1]
Construction-in-progress	9,206	25,434	[1]
Buildings and improvements	90,949	90,790	[1]
Machinery and equipment	218,630	196,838	[1]
Furniture and fixtures	8,466	8,426	[1]
Total property, plant and equipment	371,468	339,954	[1]
Accumulated depreciation	(181,847)	(175,030)	[1]
Property, plant and equipment - net	189,621	164,924	[1]
Other assets	543	693	[1]
Total assets	498,075	472,467	[1]
Current liabilities:
Trade accounts payable	25,298	20,112	[1]
Accrued liabilities	20,803	23,438	[1]
Income taxes payable	2,263	1,807	[1]
Total current liabilities	48,364	45,357	[1]
Non-current deferred income taxes	18,081	16,946	[1]
Commitments and contingencies			[1]
Stockholders' equity:
Preferred stock, $.01 par value: Authorized shares - 2,000,000; none issued			[1]
Common stock, $.01 par value: Authorized shares - 40,000,000; Issued shares - 26,607,603 and 26,597,753	266	266	[1]
Additional paid-in capital	48,694	48,298	[1]
Treasury stock, at cost - 5,934,651 and 5,934,651 shares	(88,134)	(88,134)	[1]
Retained earnings	470,804	449,734	[1]
Total stockholders' equity	431,630	410,164	[1]
Total liabilities and stockholders' equity	$ 498,075	$ 472,467	[1]

[1] The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

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Debt - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2013 Bank
Credit Facility [Line Items]
Number of banks to which Company is party to a Credit Agreement	2
Credit Agreement expiration date	Oct. 01, 2017
Feature of financial agreement	Maximum borrowings of the lesser of $150.0 million or the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks
Available increase in borrowings under Credit Agreement	$ 100,000,000
Calculated maximum borrowings	150,000,000
Calculated maximum borrowing amount available in current year	149,500,000
Outstanding borrowings	$ 0
Credit Agreement [Member]
Credit Facility [Line Items]
Line of credit facility, interest rate description	LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio)
Percentage of federal funds rate	Highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%
Minimum [Member] | Credit Agreement [Member]
Credit Facility [Line Items]
Debt instrument basis spread on variable rate	0.875%
Percentage of commitment fee	0.15%
Debt instrument basis spread on base rate	0.00%
Maximum [Member] | Credit Agreement [Member]
Credit Facility [Line Items]
Debt instrument basis spread on variable rate	1.75%
Percentage of commitment fee	0.30%
Debt instrument basis spread on base rate	0.25%

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CONTINGENCIES

6 Months Ended

Jun. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

CONTINGENCIES

NOTE 8 – CONTINGENCIES

On July 7, 2009, Southwire Company, a Delaware corporation (“Southwire”), filed a complaint for patent infringement against the Company and Cerro Wire, Inc. (“Cerro”) in the United States District Court for the Eastern District of Texas. In the complaint, Southwire alleged that the Company infringed one or more claims of United States Patent No. 7,557,301 (the “’301 patent”), entitled “Method of Manufacturing Electrical Cable Having Reduced Required Force for Installation,” by making and selling electrical cables, including the Company’s Super Slick cables. The case has been transferred to the Northern District of Georgia and the parties have agreed to stay it pending reexamination of the ’301 patent by the United States Patent and Trademark Office (the “USPTO”). On June 23, 2011, the USPTO issued an office action in the reexamination finally rejecting all the claims of the ’301 patent. Southwire responded to these final rejections on August 8, 2011 by submitting substantially amended claims. The examiner determined that the amended claims captured patentable subject matter and on September 21, 2011 issued a notice that a reexamination certificate would be issued evidencing the patentability of the amended claims. The reexamination certificate was issued on the ‘301 patent on December 27, 2011. Subsequent to the issuance of the ‘301 reexamination certificate, a new inter partes reexamination proceeding was instituted by Cerro Wire against the reexamined ‘301 patent. At this time all of the claims of the reexamined ‘301 patent have been rejected by the USPTO. This decision is not final.

On July 2, 2010, the Company filed a complaint against Southwire in the Northern District of Georgia. The complaint alleged that Southwire was using a deceptively misdescriptive trademark on its SimPull products, and that Southwire had made false statements about the Company’s Slick Wire products. Southwire’s United States Patent No. 7,749,024 (“the ’024 patent”) issued on July 6, 2010. The morning the patent issued, the Company amended its complaint to seek a declaratory judgment that the Company’s Slick Wire products do not infringe the ’024 patent. Later that same day, Southwire filed a separate complaint against the Company and Cerro Wire in the Eastern District of Texas alleging infringement of the ’024 patent. The Company’s complaint against Southwire was stayed by agreement on April 11, 2011. The case will remain stayed until the USPTO issues a certificate of reexamination of the ‘024 patent. The complaint filed by Southwire in the Eastern District of Texas has been voluntarily dismissed and Southwire will have the option to pursue its claims against the Company in the Northern District of Georgia, once the reexamination is completed. On October 8, 2010, the Company filed a request with the USPTO for an inter partes reexamination of the ’024 patent. On November 9, 2010, the USPTO ordered the reexamination of the ’024 patent. In ordering reexamination of Southwire’s ’024 patent, the USPTO determined that the Company’s submission of prior art raised a substantial new question of patentability of the claims of the ’024 patent. On December 3, 2010, the USPTO issued a non-final office action rejecting all of the claims of the ’024 Patent. Southwire filed a response to the non-final office action on February 3, 2011, which included legal arguments and supporting technical declarations. The Company filed its comments to the Southwire response on March 3, 2011, including points and authorities, legal arguments, and supporting technical declarations. On July 9, 2012, the Examiner issued an Action Closing Prosecution (“ACP”) finally rejecting patent claims 4-7 and 9-12 in the reexamination of the ‘024 patent. On August 15, 2012, Southwire filed a response to the ACP, which included extensive proposed claim amendments and arguments supporting the patentability of the proposed amended claims. The Company filed its comments to the Southwire response to the ACP on September 13, 2012, including points and authorities, legal arguments, and a supporting technical declaration. The Examiner refused entry of Southwire’s proposed amendments and maintained the rejection of all the claims under reexamination in a Right of Appeal Notice mailed September 28, 2012. On October 17, 2012 Southwire filed two petitions requesting that the reexamination be reopened or, in the alternative, that the proposed amendments presented in its September 13, 2012 response to ACP be entered into the record. These petitions were denied by the USPTO in a decision mailed April 5, 2013. Southwire filed a Notice of Appeal on October 29, 2012 and its Appellant’s Brief on December 31, 2012, followed by the Company filing its Respondent’s Brief on January 25, 2013. The Examiner’s Brief was mailed on July 16, 2013. Southwire now has one month to file its Rebuttal Brief, after which the reexamination proceeds to the Patent Trial and Appeal Board for a decision.

The ‘024 patent was also subject to parallel Inter Partes Reexamination Control No. 95/000,594, instituted by Cerro on November 11, 2010 (“the ‘594 reexamination”). The ‘024 patent exam proceeded with the ‘594 reexamination and ultimately all the claims were finally rejected by the Examiner in an Action Closing Prosecution (“ACP”) mailed August 10, 2012. In response to a right of appeal notice mailed by the Examiner on October 25, 2012, Southwire filed a notice of appeal on November 26, 2012 and filed an appeal brief on January 28, 2013. Southwire’s appeal brief exceeded the page limitations allowed for patent owner’s appeal briefs during reexaminations, and therefore the USPTO mailed a notice of defective appeal brief on February 20, 2013. Even though Southwire was given at least one month to file a corrected appeal brief, Southwire failed to do so. Instead, Southwire filed a petition with the Patent Trial and Appeal Board (“PTAB”) on March 5, 2013, requesting a waiver of the page limit on appeal brief length. On June 24, 2013, the PTAB denied the petition to waive the appeal brief page limit and, since the time limit to file a corrected appeal brief had expired, also dismissed Southwire’s appeal. On July 12, 2013, the Examiner mailed a Notice of Intent to Issue Inter Partes Reexamination Certificate, cancelling all claims of the ‘024 patent.

Southwire’s complaints sought unspecified damages and injunctive relief. At this time, all pending litigation between Encore and Southwire has been dismissed or stayed by agreement of the parties.

The parties convened on March 21, 2012 and August 27, 2012 for settlement conferences regarding the ‘301 patent lawsuit. Such settlement conferences did not result in any negotiation, agreement, decision or other development that the Company believed is material to such lawsuit. Settlement discussions continue between the parties.

The potentially applicable factual and legal issues related to the above claims asserted against the Company have not been resolved. The Company disputes all of Southwire’s claims and alleged damages and intends to vigorously defend the lawsuits and vigorously pursue its own claims against Southwire if and when the litigation resumes.

The Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of the probability of a loss and the determination as to whether a loss is reasonably estimable. Any such accruals are reviewed at least quarterly and adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel and technical experts and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility (within the meaning of ASC 450) that probable losses could exceed amounts already accrued, if any, and the additional loss or range of loss is able to be estimated, management discloses the additional loss or range of loss.

For matters where the Company has evaluated that a loss is not probable, but is reasonably possible, the Company will disclose an estimate of the possible loss or range of loss or make a statement that such an estimate cannot be made. In some instances, for reasonably possible losses, the Company cannot estimate the possible loss or range of loss. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have on the Company. There are many reasons that the Company cannot make these assessments, including, among others, one or more of the following: the early stages of a proceeding; damages sought that are unspecified, unsupportable, unexplained or uncertain; discovery is incomplete; the complexity of the facts that are in dispute; the difficulty of assessing novel claims; the parties not having engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and/or the often slow pace of litigation.

At this time, given the status of the proceedings, the complexities of the facts in dispute and the multiple claims involved, the Company has not concluded that a probable loss exists with respect to the Southwire litigation. Accordingly, no accrual has been made. Additionally, given the aforementioned uncertainties, the Company is unable to estimate any possible loss or range of losses for disclosure purposes.

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Quarters Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	15,502	$	2,370
Denominator:
Denominator for basic earnings per share – weighted average shares		20,669		21,997
Effect of dilutive securities:
Employee stock options		69		40
Denominator for diluted earnings per share – weighted average shares		20,738		22,037

	Six Months Ended
	June 30,		June 30,
In Thousands	2013		2012
Numerator:
Net income (loss)	$	21,897	$	9,063
Denominator:
Denominator for basic earnings per share – weighted average shares		20,667		22,712
Effect of dilutive securities:
Employee stock options		69		45
Denominator for diluted earnings per share – weighted average shares		20,736		22,757

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 1,000,000 shares of its common stock through December 31, 2007 on the open market or through privately negotiated transactions at prices determined by the President of the Company. The Company’s Board of Directors has subsequently authorized increases and annual extensions of this stock repurchase program. As of June 30, 2013, the repurchase authorization had 1,225,750 shares remaining authorized through March 31, 2014. The Company did not repurchase any shares of its stock in the first six months of 2013. On May 14, 2012, the Company repurchased 2,774,250 shares of common stock owned by Capital Southwest Venture Corporation at an aggregate purchase price of $66,637,485, based on a price of $24.02 per share. Appropriate consents to the repurchase were also obtained from lenders under the Company’s Financing Agreement. The repurchase represented approximately 11.8% of the outstanding shares of the Company as of the purchase date and was the only repurchase in the first six months of 2012. Other than net income, there was no material change in stockholders equity during the quarter and six months ended June 30, 2013.

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INVENTORIES

6 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 2 – INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories consist of the following:

	June 30,			December 31,
In Thousands of Dollars	2013			2012
Raw materials	$	15,174		$	26,013
Work-in-process		30,719			22,309
Finished goods		82,441			88,750
Total		128,334			137,072
Adjust to LIFO cost		(63,831	)		(73,416	)
Lower of cost or market adjustment		—			—
Inventory, net	$	64,503		$	63,656

LIFO pools are established at the end of each fiscal year. During the first three quarters of every year, LIFO calculations are based on the inventory levels and costs at that time. Accordingly, interim LIFO balances will fluctuate up and down in tandem with inventory levels and costs.

During the first quarter of 2013, the Company liquidated a portion of the layer established in 2011 and built some of that layer back in the second quarter of 2013. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs. This activity impacted net income positively in the second quarter of 2013 by $481,000 and negatively by $903,000 for the first six months of 2013. During the first six months of 2012, the Company liquidated a portion of the layer established in 2011. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs, which negatively impacted net income for the second quarter and the first six months of 2012 by $383,000.

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Accrued Liabilities - Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accrued Liabilities Current [Abstract]
Sales volume discounts payable	$ 13,274	$ 13,940
Property taxes payable	1,490	2,937
Commissions payable	2,243	1,768
Accrued salaries	3,169	4,235
Other accrued liabilities	627	558
Total accrued liabilities	$ 20,803	$ 23,438	[1]

[1] The consolidated balance sheet at December 31, 2012, as presented, is derived from the audited consolidated financial statements at that date.

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ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2013

Payables And Accruals [Abstract]

Accrued Liabilities

Accrued liabilities consist of the following:

	June 30,		December 31,
In Thousands of Dollars	2013		2012
Sales volume discounts payable	$	13,274	$	13,940
Property taxes payable		1,490		2,937
Commissions payable		2,243		1,768
Accrued salaries		3,169		4,235
Other accrued liabilities		627		558
Total accrued liabilities	$	20,803	$	23,438

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Earnings Per Share - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share Reconciliation [Abstract]
Weighted average employee stock options excluded from the determination of diluted earnings per share	191,000	193,000	191,000	166,000

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Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Effective tax rate	35.30%	41.80%	33.90%	32.70%

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	WIRE
Entity Registrant Name	ENCORE WIRE CORP
Entity Central Index Key	0000850460
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		20,673,452

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Earnings Per Share - Computation of Basic And Diluted Net Earnings (Loss) Per Share (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Numerator:
Net income (loss)	$ 15,502	$ 2,370	$ 21,897	$ 9,063
Denominator:
Denominator for basic earnings per share - weighted average shares	20,669	21,997	20,667	22,712
Effect of dilutive securities:
Employee stock options	69	40	69	45
Denominator for diluted earnings per share - weighted average shares	20,738	22,037	20,736	22,757