Good day, ladies and gentlemen and welcome to the Insteel Industries fourth quarter 2010 conference call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference may be recorded. I would now like to introduce your host for today Mr. H. O. Woltz III, Insteel President and CEO. Sir, please go ahead.

Thank you, Karen. Good morning. Thank you for your interest in Insteel and welcome to our fourth quarter 2010 conference call which will be conducted by Mike Gazmarian, our Vice President, CFO and Treasurer and me. Before we begin, let me remind you that some of the comments made in our presentation are considered to be forward-looking statements. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those projected. These risk factors are described in our periodic filings with the SEC. I will now turn it over to Mike to review our fourth quarter financial results then follow up to comment more on market conditions and our business outlook.

Thank you H. As we reported earlier this morning, Insteel incurred a loss from continuing operation of $1.7 million or $0.09 a share for the quarter compared with earnings from continuing operation of $2.8 million or $0.16 a share for the same period last year. The loss for the quarter includes pre-tax charges totalling one $1.9 million or $0.06 a share after tax for inventory write-downs and the settlement of litigation. $0.4 million or $0.01 a share after tax was related to inventory write-down to reduce the carrying value of inventory associated with our standard welded wire reinforcement product line to the lower cost to market as a result of competitive pricing pressures. The other $1.5 million or $0.05 a share after tax for the settlement of the litigation matter that has been discussed in our SEC filings on an ongoing basis dating back to fiscal year 2008. We are pleased to have as a matter of results which will serve to eliminate the associated legal fees that we have been incurring and restore the commercial relationship with this customer going forward. Excluding these charges, the loss from continuing operations for the quarter would have been $0.03 a share. In addition to these charges are results for the quarter are unfavourably impacted by lower shipment and compressed spread between selling prices in raw material cost which were driven by the continuation of weak market conditions. Net sales for the fourth quarter were down 8% from the prior year due a 13.8% decrease in shipment which is partially offset by a 6.7% increase in average selling prices. On a sequential basis, net sales were down 9.2% from the third quarter on a 7.5% decrease in shipments and 2% decrease in average selling prices. Gross profit for the fourth quarter fell to…

Thank you, Mike. I want to focus my comments on current market conditions, our outlook for demand over the next few quarters and developments in our raw material markets. As we discussed on the conference call last quarter, heightened competitive pricing activity had begun to adversely impact margins across each of Insteel’s product lines. We mentioned that those trends were likely to continue and draw our fourth quarter further depressing margins in view of Insteel’s commitment to keep its customers competitive in an environment of increasing chaotic pricing behaviour by competitors. Those concerns proved to be well-founded as reflected in our fourth quarter results that we released today. Spreads between selling prices and raw material costs have reached levels that have severely impacted the operating results of our industry and are likely to challenge the survival of less cost-effective or more highly leveraged producers. In fact, as reflected in today’s earnings release, we have seen some fall out of higher cost competitors that had not invested in their facilities and presumably elected to close the doors rather than incur continued operating losses. While these exits from the market illustrate the harsh competitive environment that exists the elimination of these standard welded wire reinforcing competitors is not expected to have a significant market impact for the immediate future just given the depressed level of demand. Nonetheless, it is encouraging to see some initial indications that market forces are spurring a reconciliation of supply and demand. The primary challenge we continue to face is simply a lack of demand for our products driven by an economy that it is at best stuck in neutral with historically low levels of consumption of welded wire enforcing and PC strand. Employment growth is marginal. Economic and patch policies are unfathomable creating enormous uncertainty in undermining…

Certainly. (Operator Instructions) And we do have a question from the line of Robert Kelly of Sidoti.

Good morning, H, Mike.

Good morning, Bob.

Good morning, Bob.

I just have a question. You talked about the intensifying pricing pressures in the release, but on a sequential basis average pricing only down 2%. Could you just kind of reconcile what is going on there?

Well, pricing – competitive pricing activity is at a high level. Of course when we talked about pricing and the impact on Insteel’s profitability, it also goes to the question of spreads between wire rod costs and selling prices and the spreads have clearly narrowed on edge. Some of the high raw material costs from earlier in the year is going to cost the sales at a time when competitors have elected not only not to seek to recover high raw material cost in the market but to in fact reduce selling prices so the impact on spreads is what’s really driving the poor results.

Alright, but the selling price is held pretty firm sequentially. I mean and you have kind of worked through a big portion of your high cost raw material. Should we expect spreads to stay stable for the next couple of quarter or do you expect pricing competition to take prices at another let down?

Well, clearly the competitive pricing pressure continues. We will know only month to month what happens on transaction prices for wire rods at this point. It is not something that we can forecast but let me just say that to sum it up we feel margin pressure.

Understood. Can you talk about the size and the scope of the closures you saw that have come out on the release and you know what…

I think more they are indicative of market conditions rather than of themselves being a great substance. Both of the producers were reasonably small producing between 25,000 tons and 35,000 tons per year. They both focused solely on standard welded wire enforcing products and from our knowledge both were fairly antiquated facilities from an operating point of view.

Part of your efforts to match the lower industry pricing list with SEC some of this call it invalidation. I mean is this the strategy for the next or for the first day of the future?

I think what is really driving Insteel’s commercial policies right now is that our customers expect that we keep them competitive in the market that is increasingly chaotic. We are going to do that. You may recall from prior quarters we indicated that we have made what we have considered to be a valiant effort to recover high raw material prices in the market place and we hang out there for weeks as we watch competitors undercut us and indicate that they are really more interested in doing that so here we are. We are not going to lose our market share. We are going to keep our customers competitive and we are going to just to wait for some recovery or some change in market conditions.

And then finally, end of the year was almost $46 million in cash on the balance sheet. How do you think about use this for cash especially with – it seems like some of your quarter (inaudible) growth opportunities are not going to be surviving much longer? What are your opportunities for (NYSEARCA:MNA) and things like that as far as uses for cash?

Well, let me say first we feel awfully good about having it on balance sheet at this point in view of the hostile environment that we are operating in. We are, as Mike pointed out, extremely well positioned to capitalize on opportunities and we are looking and you know I do not think that we can say more than we are just interested and we are proactive so we are hopeful that something positive emerges from what is a pretty dismal environment.

What are your thoughts on as far as returning it to share holders at this point in the game?

Well, I think we have a pretty good record of doing that Bob. It would take an assessment by the company and the board that given all circumstances it was the right thing to do to either recommence share repurchases or look at another special dividend of some type. We are constantly evaluating that and it remains a high priority for us.

Thanks, guys.

Thank you, Bob.

Thank you. (Operator Instructions) Our next question comes from the line of Tim Hayes of Davenport and Company

Good morning,

Good morning, Tim.

Good morning, Tim.

Just one question, Mike. Could you repeat the year over year changes for pricing and shipment, please?

Sure. On a year-over-year basis, shipments were down 13.8% and that was partially offset. The impact of that was partially offset by 6.7% increase in average selling prices.

Did you have a sequential numbers or?

Yeah. We do. Thanks

Okay.

Sir, does that conclude your question?

Yes, it does.

Thank you and I see no further questions on queue at this time.

Okay. Thank you for your interest in the company and we are updating you next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may now disconnect. Everyone have a great day.