1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 3, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From ____________ to __________ Commission File Number 1-9929 INSTEEL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-0674867 -------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1373 BOGGS DRIVE, MOUNT AIRY, NORTH CAROLINA 27030 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 336-786-2141 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the registrant's common stock as of May 12, 1999 was 8,457,226.
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INSTEEL INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) <TABLE> <CAPTION> APRIL 3, OCTOBER 3, 1999 1998 -------- --------- <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 822 $ 422 Accounts receivable, net 27,368 28,687 Inventories 28,547 30,566 Prepaid expenses and other 1,780 2,023 -------- -------- Total current assets 58,517 61,698 Property, plant and equipment, net 79,497 80,350 Other assets 11,020 5,083 -------- -------- Total assets $149,034 $147,131 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,614 $ 28,758 Accrued expenses 7,489 6,013 Current portion of long-term debt 620 620 -------- -------- Total current liabilities 28,723 35,391 Long-term debt 40,296 35,743 Deferred income taxes 6,694 5,726 Other liabilities 1,012 1,011 Shareholders' equity: Common stock 16,894 16,885 Additional paid-in capital 38,244 38,232 Retained earnings 17,171 14,143 -------- -------- Total shareholders' equity 72,309 69,260 -------- -------- Total liabilities and shareholders' equity $149,034 $147,131 ======== ======== </TABLE>
3 INSTEEL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (In thousands except for per share data) (Unaudited) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED ------------------- -------------------- APRIL 3, MARCH 28, APRIL 3, MARCH 28, 1999 1998 1999 1998 -------- --------- -------- --------- <S> <C> <C> <C> <C> Net sales $ 66,162 $ 62,996 $128,429 $ 122,915 Cost of sales 56,958 61,669 112,659 120,113 -------- --------- -------- --------- Gross profit 9,204 1,327 15,770 2,802 Selling, general and administrative expense 4,565 3,338 8,119 6,418 -------- --------- -------- --------- Operating income (loss) 4,639 (2,011) 7,651 (3,616) Interest expense 655 1,049 1,248 2,017 Other expense (income) 82 (2,472) 138 (2,430) -------- --------- -------- --------- Earnings (loss) before income taxes and extraordinary item 3,902 (588) 6,265 (3,203) Provision (benefit) for income taxes 1,385 (209) 2,224 (1,137) -------- --------- -------- --------- Earnings (loss) before extraordinary item 2,517 (379) 4,041 (2,066) Extraordinary item - loss on early extinguishment of debt -- (408) -- (408) -------- --------- -------- --------- Net earnings (loss) $ 2,517 $ (787) $ 4,041 $ (2,474) ======== ========= ======== ========= Weighted average shares outstanding (basic) 8,443 8,443 8,443 8,442 ======== ========= ======== ========= Per share (basic and diluted): Earnings (loss) before extraordinary item $ 0.30 $ (0.04) $ 0.48 $ (0.24) Extraordinary item - loss on early extinguishment of debt -- (0.05) -- (0.05) -------- --------- -------- --------- Net earnings (loss) $ 0.30 $ (0.09) $ 0.48 $ (0.29) ======== ========= ======== ========= Dividends paid per share $ 0.06 $ 0.06 $ 0.12 $ 0.12 ======== ========= ======== ========= </TABLE>
4 INSTEEL INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) <TABLE> <CAPTION> SIX MONTHS ENDED ------------------------ APRIL 3, MARCH 28, 1999 1998 -------- --------- <S> <C> <C> CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES: Net earnings (loss) $ 4,041 $ (2,474) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 4,497 4,696 Gain on sale of assets (17) (5,177) Extraordinary loss -- 408 Net changes in assets and liabilities: Accounts receivable, net 1,379 (3,450) Inventories 2,019 153 Accounts payable and accrued expenses (6,668) (578) Other changes 1,638 (2,335) -------- -------- Total adjustments 2,848 (6,283) -------- -------- Net cash provided by (used for) continuing operating activities 6,889 (8,757) -------- -------- CASH FLOWS FROM DISCONTINUED OPERATING ACTIVITIES: Net cash provided by discontinued operating activities -- 1,869 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (3,664) (3,937) Equity investments (3,250) -- Purchases of short-term investments (1,875) -- Proceeds from (issuance of) notes receivable (1,421) 12 Proceeds from sale of property, plant and equipment 159 8,966 -------- -------- Net cash provided by (used for) investing activities (10,051) 5,041 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 51,437 64,469 Principal payments on long-term debt (46,884) (61,635) Proceeds from exercise of stock options 22 44 Cash dividends paid (1,013) (1,013) -------- -------- Net cash provided by financing activities 3,562 1,865 -------- -------- Net increase in cash 400 18 Cash and cash equivalents at beginning of period 422 1,079 -------- -------- Cash and cash equivalents at end of period $ 822 $ 1,097 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 685 $ 2,288 Income taxes 1,060 523 </TABLE>
5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION The consolidated unaudited financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended October 3, 1998. The unaudited consolidated financial statements included herein reflect all adjustments (consisting only of normal recurring accruals) that the Company considers necessary for a fair presentation of the financial position, results of operations and cash flows for all periods presented. The results for the interim periods are not necessarily indicative of the results for the entire fiscal year. (2) INVENTORIES <TABLE> <CAPTION> APRIL 3, OCTOBER 3, (Amounts in thousands) 1999 1998 ------- ---------- <S> <C> <C> Raw materials $14,734 $15,514 Supplies 2,614 2,242 Work in process 649 1,525 Finished goods 10,550 11,285 ------- ------- Total inventories $28,547 $30,566 ======= ======= </TABLE> (3) EARNINGS PER SHARE The reconciliation of basic and diluted earnings per share ("EPS") is as follows: <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED ------------------ ---------------- APRIL 3, MARCH 28, APRIL 3, MARCH 28, (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998 -------- ---------- -------- -------- <S> <C> <C> <C> <C> Earnings (loss) before extraordinary item $2,517 $ (379) $4,041 $(2,066) Extraordinary loss -- (408) -- (408) ------ ------- ------ ------- Net earnings (loss) $2,517 $ (787) $4,041 $(2,474) ====== ======= ====== ======= Weighted average shares outstanding: Weighted average shares outstanding (basic) 8,443 8,443 8,443 8,442 Dilutive effect of stock options 15 -- 2 -- ------ ------- ------ ------- Weighted average shares outstanding (diluted) 8,458 8,443 8,445 8,442 ====== ======= ====== ======= Earnings (loss) per share (basic and diluted): Earnings (loss) before extraordinary item $ 0.30 $ (0.04) $ 0.48 $ (0.24) Extraordinary loss -- (0.05) -- (0.05) ------ ------- ------ ------- Net earnings (loss) $ 0.30 $ (0.09) $ 0.48 $ (0.29) ====== ======= ====== ======= </TABLE> Options to purchase 443,000 shares and 532,000 shares for the three months ended April 3, 1999 and March 28, 1998, respectively, were antidilutive and were not included in the diluted EPS computation. (4) NEW ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for the reporting and display of comprehensive income and its components. The Company has adopted SFAS No. 130 as required in its interim financial statements for the first quarter
6 ended January 2, 1999. The adoption of this statement did not impact the Company's consolidated financial statements as there were no differences between net earnings and comprehensive income. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131, which is based on the management approach to segment reporting, establishes requirements to report selected information about operating segments and related disclosures about products and services, major customers and geographic areas. As the statement only impacts financial statement disclosures, it will not effect the Company's financial position or results of operations. Management is in the process of evaluating the effects of this change on its reporting. The Company will adopt SFAS No. 131 as required in its annual report for 1999. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Management has not yet evaluated the effects of this change on its financial position or results of operations. The Company will adopt SFAS No. 133 as required in its interim financial statements for the first quarter of 2000. (5) INVESTMENT IN STRUCTURAL REINFORCEMENT PRODUCTS In January 1999, the Company announced that it had acquired a 25% interest in Structural Reinforcement Products, Inc. ("SRP"), a manufacturer of welded wire fabric products for the construction industry. Under the terms of the purchase agreement, the Company acquired 25% of the common stock in SRP for $3.3 million. In addition, the Company provided SRP with $1.5 million of debt financing and $1.9 million of collateral to support its existing credit facility in order to assume a proportionate share of SRP's debt-related obligations. The Company may be obligated to increase its investment for its equity position by up to $1.0 million depending upon SRP's future financial performance. The Company is accounting for its investment in SRP on an equity basis and, accordingly, is including its share of SRP's earnings in its consolidated earnings. For the second quarter, the Company recorded an equity loss of $125,000 in other expense on its consolidated statement of earnings. (6) SUBSEQUENT EVENT Following the end of the second quarter, in April 1999, the Company acquired the assets of the concrete reinforcing business of Northwestern Steel and Wire Company ("Northwestern"). Under the terms of the purchase agreement, the Company acquired the inventory, property, plant and equipment of Northwestern's Hickman, Kentucky facility for approximately $8.3 million. In addition, the companies entered into a three-year agreement under which Northwestern will supply Insteel with a portion of its raw material requirements.
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS STATEMENTS OF EARNINGS - SELECTED DATA ($ in thousands) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED -------------------------------- ----------------------------------- APRIL 3, MARCH 28, APRIL 3, MARCH 28, 1999 CHANGE 1998 1999 CHANGE 1998 ------- ------ --------- ---------- ------ --------- <S> <C> <C> <C> <C> <C> <C> Net sales $ 66,162 5% $ 62,996 $ 128,429 4% $ 122,915 Gross profit 9,204 594% 1,327 15,770 463% 2,802 Percentage of net sales 13.9% 2.1% 12.3% 2.3% Selling, general and administrative expense $ 4,565 37% $ 3,338 $ 8,119 27% $ 6,418 Percentage of net sales 6.9% 5.3% 6.3% 5.2% Operating income (loss) $ 4,639 N/M $ (2,011) $ 7,651 N/M $ (3,616) Percentage of net sales 7.0% (3.2)% 6.0% (2.9)% Interest expense $ 655 (38)% $ 1,049 $ 1,248 (38)% $ 2,017 Percentage of net sales 1.0% 1.7% 1.0% 1.6% Effective income tax rate 35.5% 35.5% 35.5% 35.5% Earnings (loss) before extraordinary item $ 2,517 N/M $ (379) $ 4,041 N/M $ (2,066) Percentage of net sales 3.8% (0.6)% 3.1% (1.7)% </TABLE> Net sales for the second quarter increased 5% to $66.2 million from $63.0 million in the year-ago period. For the six-month period, sales increased 4% from the prior year. The sales increase was in spite of the sale of the assets related to the Company's agricultural fencing product line in February 1998 which reduced current year sales relative to the prior year. On a comparable basis, sales rose 9% for the quarter and 10% for the six-month period. Sales of concrete reinforcing products increased sharply driven by strong construction markets. Sales of tire bead wire and welding wire rose to new highs during the quarter as the Company continued to make significant progress towards obtaining customer approvals and furthering its market penetration. Industrial wire sales declined from a year ago primarily due to a significant increase in the proportion of wire consumed internally to manufacture higher value products. Gross margins for the second quarter increased to 13.9% of sales compared with 2.1% in the prior year. For the six-month period, gross margins rose to 12.3% of sales from 2.3% a year ago. The increase in margins was primarily caused by higher shipment volumes and widening spreads between selling values and raw material costs for most products together with increased operating efficiencies and lower per-unit manufacturing costs. Higher sales of tire bead wire and welding wire were also responsible for the margin improvement. The Company is incurring substantially all of the manufacturing costs related to these products while it operates at a low level of capacity utilization. As a result, any increases in volume significantly impact the Company's profitability. Selling, general and administrative expense ("SG&A expense") rose 37% for the second quarter, increasing to 6.9% of sales from 5.3% in the prior year. For the six-month period, SG&A expense increased 27%, rising to 6.3% of sales from 5.2% a year ago. The increase in SG&A expense was primarily caused by higher incentive plan and profit-sharing plan expenses resulting from the significant improvement in the Company's financial results. Interest expense fell sharply for the second quarter and six-month periods compared with a year ago due to lower borrowing levels on the Company's revolving credit facility. The reduction in debt was primarily related to lower inventories and the improvement in the Company's earnings relative to the year-ago loss. Second-quarter and six-month results for the prior year reflect a pre-tax gain of $2.5 million in other income related to the February 1998 sale of the assets related to the Company's agricultural fencing product line. Second-quarter and six-month results for the prior year reflect an extraordinary loss of $408,000 after income taxes, or approximately five cents per share, related to the early extinguishment of debt.. In March 1998, the Company retired its $10.0 million 8.25% senior secured notes due 2002, funding the prepayment under its unsecured revolving credit facility,
8 FINANCIAL CONDITION SELECTED FINANCIAL DATA ($ in thousands) <TABLE> <CAPTION> SIX MONTHS ENDED ----------------------------- APRIL 3, MARCH 28, 1999 1998 ----------- ----------- <S> <C> <C> Net cash provided by (used for) continuing operating activities $ 6,889 $ (8,757) Net cash provided by (used for) investing activities (10,051) 5,041 Net cash provided by financing activities 3,562 1,865 Total long-term debt 40,916 55,554 Percentage of total capital 36% 45% Shareholders' equity $ 72,309 $ 67,879 Percentage of total capital 64% 55% Total capital (total long-term debt + shareholders' equity) $ 113,225 $ 123,433 </TABLE> Operating activities generated $6.9 million of cash for six-month period while using $8.8 million a year ago. The year-to-year change was primarily related to the significant improvement in the Company's financial results. Cash generated from reductions in accounts receivables and inventories was offset by a reduction in accounts payable and accrued expenses. Investing activities used $10.1 million of cash for the six-month period while providing $5.0 million a year ago. The year-to-year change was principally due to the current year investments related to SRP together with the prior year proceeds from the sale of agricultural fencing equipment. Capital expenditures were primarily for recurring equipment maintenance and upgrades together with the tire bead wire and welding wire expansion. Financing activities provided $3.6 million of cash for the six-month period compared with $1.9 million a year ago. The increase in financing requirements primarily resulted from the investments relating to SRP. The Company's debt to capital ratio decreased to 36% at April 3, 1999 compared with 45% at March 28, 1998. At April 3, 1999, approximately $18.2 million was available under the Company's revolving credit facility which provided for maximum availability of $55.0 million. Following the end of the second quarter, in April 1999, the facility was amended, increasing the maximum availability to $60.0 million. The Company currently expects to fund its capital expenditure requirements and liquidity needs from a combination of internally generated funds, the revolving credit facility and additional long-term sources of financing. YEAR 2000 The "Year 2000" issue refers to older computer systems and other equipment operating on software that uses only two digits to represent the year, rather than four digits. As a result, these older systems and equipment may not process information or otherwise function properly when using the year "2000", since that year will be indistinguishable from the year "1900". The Company has initiated a Year 2000 program to assess and develop plans to resolve the issue both internally and externally. During 1996, the Company began developing a plan to upgrade its business and operating systems to Year 2000 compliant software. In addition to addressing the Year 2000 issue, the systems upgrade is expected to enhance the performance of the Company's customer service, manufacturing and administrative processes. Implementation of the upgrade began in 1997 with the initial testing of the system on a limited basis prior to converting all of the Company's locations. As of April 3, 1999, the implementation had been completed at 50% of the Company's facilities with the pace of the conversion expected to accelerate for the remaining locations. The Company expects to complete the project by September 1999. In order to identify potential Year 2000 problems at key suppliers and customers, the Company initiated external surveys to assess their level of compliance. As of April 3, 1999, the Company had received responses back from approximately 75% of its critical suppliers indicating that they were either already in compliance or planned on being in compliance by December 31, 1999. The Company is in the process of following up with those suppliers who have not responded that are considered to be critical to the Company's operations. Alternative suppliers will be identified and evaluated by October 31, 1999 for those vendors who have not indicated that they will be Year 2000 compliant by December 31, 1999.
9 The Company also is in the process of reviewing embedded software in its equipment and facilities to identify potential Year 2000 issues. Equipment manufacturers are being requested to certify their compliance and assist the Company in developing solutions where they are currently non-compliant. As of April 3, 1999, approximately 90% of the Company's critical manufacturing equipment had been certified by vendors as being Year 2000 compliant. The Company expects to complete the assessment and testing process by September 1999. Any critical equipment that is non-compliant will be upgraded or replaced as necessary. The Company's efforts to date have been concentrated on mitigating Year 2000 disturbances. As the Company proceeds forward with its assessment, remediation and testing programs and evaluates the reasonable potential risks, it will determine the appropriate contingency plans and resources. Any such contingency actions and resources would be planned to be in place in sufficient time for the Year 2000. While reasonable actions have been taken to address the Year 2000 problem and will continue to be taken in the future to mitigate such disruption, the magnitude of all Year 2000 disturbances cannot be predicted. Failure to complete these programs as planned could result in the corruption of data, hardware or equipment failures or the inability to manufacture products or conduct other business activities, all of which could have a material impact on the Company's business, consolidated financial position or results of operations. Management believes that past or expected future capital requirements related to Year 2000 compliance issues will not have a material impact on its consolidated financial position or results of operations. OUTLOOK The Company's operating results are impacted by seasonal factors, particularly in the first quarter of the fiscal year, which has historically represented the lowest quarterly sales volume. Shipments typically increase in the second quarter and reach a high point in the third or fourth quarter, reflecting the buying patterns of the Company's customers. Market conditions for hot-rolled wire rod, the Company's primary raw material, continued to be favorable through the second quarter. Recent expansions in domestic production capacity together with changes in the global market environment significantly increased supplier competition. In December 1998, domestic wire rod producers initiated a Section 201 filing with the U.S. International Trade Commission ("ITC") alleging that rising import levels had resulted in serious injury. The domestic producers are pursuing trade relief on a worldwide basis against all countries other than NAFTA nations through duties, quotas or other measures intended to reduce import competition. In May 1999, the ITC voted 3-3 in its initial injury determination with the investigation now proceeding to the remedy phase. Domestic rod producers have recently announced or implemented price increases in response to strong market conditions. The future impact of these actions on the Company's financial results is difficult to predict, depending upon the resolution of the trade filings together with the Company's ability to recover any raw material price increases in its markets. The Company's business strategy continues to be focused on (1) further expansion into higher value products that offer the potential to generate returns that exceed the Company's cost of capital and (2) improving the financial performance of the Company's traditional businesses to acceptable levels. During 1994 - 1997, the Company built two new production facilities and reconfigured an existing operation in order to develop the manufacturing capabilities required to enter the markets for PC strand, collated fasteners, tire bead wire and welding wire. Sales of these new products are expected to increase from $39.6 million in 1998 to $100.0 million when fully operational. The Company expects that the recently enacted federal highway spending legislation ("TEA-21") will have a favorable impact on the demand for its concrete reinforcing products. As customer requirements rise, the Company expects to gradually increase the operating volumes of its recently expanded PC strand manufacturing facility to its full design capacity. During the second quarter, sales of the Company's most recent product additions, tire bead wire and welding wire, rose to new highs as the Company made significant progress towards completing the qualification process and establishing itself as a credible supplier. As the Company is currently incurring substantially all of the anticipated operating costs required to support its new businesses, the incremental impact of projected increases in sales is expected to have a significant favorable impact on its financial performance. FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that reflect management's current assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those projected, stated or implied by the statements. Such risks and uncertainties include, but are not limited to, general economic conditions in the markets in which the Company operates;
10 unanticipated changes in customer demand, order patterns and inventory levels; fluctuations in the cost and availability of the Company's primary raw material, hot rolled steel wire rod; the Company's ability to raise selling prices in order to recover increases in wire rod prices; the impact of the resolution of the Section 201 filing with the U.S International Trade Commission on the cost and availability of wire rod; legal, environmental or regulatory developments that significantly impact the Company's operating costs; increased demand for the Company's concrete reinforcing products resulting from increased federal funding levels provided for in the TEA-21 highway spending legislation; the success of the Company's new product initiatives, including the PC strand, collated fastener, tire bead wire and welding wire expansions; the inability of the Company to expedite the qualification process with prospective customers for tire bead wire and welding wire; and the failure of the Company to receive regular and substantial orders for its new products. PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On April 26, 1999, the Board of Directors of the Company declared a dividend distribution of one Preferred Stock Purchase Right on each share of the Company's Common Stock to shareholders of record on May 17, 1999. One right will also be issued for each share of Common Stock issued after May 17, 1999. The Company issued the rights pursuant to a Rights Agreement dated as of April 27, 1999 between the Company and First Union National Bank, as Rights Agent. The issuance of the rights did not constitute a sale of securities for the purpose of Section 5 of the Securities Act of 1933. The rights and the Rights Agreement are described in the Company's Current Report on Form 8-K dated April 26, 1999, which is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its 1999 Annual Meeting of Shareholders on February 9, 1999. Three directors were elected to serve for three-year terms ending in 2002. Voting results were as follows: <TABLE> <CAPTION> VOTES -------------------------------- FOR WITHHELD ------------ ---------- <S> <C> <C> W. Allen Rogers II 7,898,020 56,694 Gary L. Pechota 7,896,617 58,097 William J. Shields 7,901,254 53,460 </TABLE> ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits: <TABLE> <CAPTION> 3 - ARTICLES OF INCORPORATION AND BYLAWS ------------------------------------ <S> <C> <C> 3.1 Articles of amendment to the restated articles of incorporation of the registrant. 3.2 Bylaws of the registrant (as last amended April 26, 1999) 27 - Financial Data Schedule (for SEC use only) b. Reports on Form 8-K </TABLE> No reports on Form 8-K were filed by the Registrant during the quarter ended April 3, 1999.
11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INSTEEL INDUSTRIES, INC. ------------------------ Registrant Date: May 12, 1999 By /s/ H.O. Woltz III ------------------------------ H.O. Woltz III President and Chief Executive Officer Date: May 12, 1999 By /s/ Michael C. Gazmarian ------------------------------ Michael C. Gazmarian Chief Financial Officer and Treasurer