The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the Company's financial position and results of operations. MD&A is provided as a supplement to the Company's Consolidated Financial Statements (unaudited) and the accompanying Notes to Consolidated Financial Statements (unaudited) and should be read in conjunction with the MD&A included in the Company's Form 10-K for the year ended December 31, 2007.

Overview

We are one of the largest distributors of specialty wire and cable and related services to the U.S. electrical distribution market. We serve over 2,800 customers in over 8,200 individual locations, including virtually all of the top 200 electrical distributors in the U.S. We have strong relationships with leading wire and cable manufacturers and provide them with efficient access to the fragmented electrical distribution market. We distribute approximately 23,000 SKUs (stock-keeping units) from eleven strategically located distribution centers in ten states. We are focused on providing our electrical distributor customers with a single-source solution for specialty wire and cable and related services by offering a large selection of in-stock items, exceptional customer service and high levels of product expertise.

We offer products in most categories of specialty wire and cable, including:

· continuous and interlocked armor cable (cable encapsulated in either a seamless or interlocked aluminum protective sheath);

· control and power cable (single or multiple conductor industrial cable);

· electronic wire and cable (computer, audio and signal cable);

· flexible and portable cords (flexible, heavy duty industrial cable);

· instrumentation and thermocouple cable (cables used for transmitting signals for instruments and heat sensing devices);

· lead and high temperature cable (single conductor cable used for low or high temperature applications);

· medium voltage cable (cables used for applications between 2,001 volts and 35,000 volts); and

· premise and category wire and cable (cable used for home and high speed data applications).

We also offer private branded products, including our LifeGuard™ low-smoke, zero-halogen cable. Low-smoke, zero halogen products are made with compounds that produce no halogen gases and very little smoke while under combustion.

In addition to our product offerings, we provide comprehensive value-added services including: standard same day shipment from our extensive inventory and distribution network; application engineering support through our knowledgeable sales and technical support staff; custom cutting of wire and cable to exact specifications; inventory management programs that provide job-specific asset management and just-in-time delivery; job-site delivery and logistics support; 24/7/365 customer service provided by our own employees; and customized internet-based ordering capabilities.

Critical Accounting Policies

Critical accounting policies are those that both are important to the accurate portrayal of a company's financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

In order to prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.

We have identified the following accounting policies as those that require us to make the most subjective or complex judgments in order to fairly present our consolidated financial position and results of operations. Actual results in these areas could differ materially from management's estimates under different assumptions and conditions.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts receivable for estimated losses resulting from the inability of our customers to make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent with industry practices, we require payment from most customers within 30 days of invoice date. We have an estimation procedure, based on historical data and recent changes in the aging of these receivables, which we use to record reserves throughout the year. In the last five years, write-offs against our allowance for doubtful accounts have averaged approximately $100,000 per year. A 20% change in our estimate at June 30, 2008 would have resulted in a change in income before income taxes of approximately $26,000.

Reserve for Returns and Allowances

We estimate the gross profit impact of returns and allowances for previously recorded sales. This reserve is calculated on historical and statistical returns and allowances data and adjusted as trends in the variables change. A 20% change in our estimate at June 30, 2008 would have resulted in a change in income before income taxes of approximately $134,000.

Reserve for Inventory Obsolescence

We continually monitor our inventory levels at each of our distribution locations. Our reserve for inventory obsolescence is based on the age of the inventory, movements of our inventory over the prior twelve months and the experience of our purchasing and sales departments in estimating demand for the product in the succeeding year. Our inventories are generally not susceptible to technological obsolescence. A 20% change in our estimate at June 30, 2008 would have resulted in a change in income before income taxes of approximately $399,000.

Accrual for Vendor Rebates

Many of our arrangements with our vendors entitle us to receive a rebate of a specified amount when we achieve any of a number of measures, generally related to the volume of purchases from the vendor. We account for these rebates as a reduction of the prices of the vendor's products, which reduces inventory until we sell the product, at which time these rebates reduce cost of sales. Throughout the year, we estimate the amount of rebates earned based on our purchases to date and our estimate of purchases to be made for the remainder of the year relative to the purchase levels that mark our progress toward earning the rebates. We continually revise these estimates to reflect actual purchase levels. A 20% change in our estimate of total rebates earned during the six months ended June 30, 2008 would have resulted in a change in income before income taxes of approximately $870,000.

Goodwill

Goodwill represents the excess of the amount we paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. At June 30, 2008, our net goodwill balance was $3.0 million, representing 2.0% of our total assets.

Under the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), we test goodwill for impairment annually, or more frequently if indications of possible impairment exist, by applying a fair value-based test. In October 2007, we performed our annual goodwill impairment tests for goodwill and other indefinite-lived intangible assets, and, as a result of this test, we believe the goodwill on our balance sheet is not impaired.

If circumstances change or events occur to indicate that our fair value has fallen below book value, we will compare the estimated fair value of the goodwill to its carrying value. If the carrying value of goodwill exceeds the estimated fair value of goodwill, we will recognize the difference as an impairment loss in operating income.

Results of Operations

The following table shows, for the periods indicated, information derived from
our consolidated statements of income, expressed as a percent of net sales for
the periods presented.

                                        Three Months Ended          Six Months Ended
                                             June 30,                   June 30,
                                         2008          2007         2008         2007

      Sales                                100.0 %      100.0 %       100.0 %     100.0 %
      Cost of sales                         75.1 %       73.4 %        74.9 %      72.9 %
      Gross profit                          24.9 %       26.6 %        25.1 %      27.1 %

      Operating expenses:
      Salaries and commissions               6.3 %        6.2 %         6.5 %       6.5 %
      Other operating expenses               5.1 %        4.8 %         5.3 %       5.3 %
      Depreciation and amortization          0.1 %        0.1 %         0.1 %       0.1 %
      Total operating expenses:             11.5 %       11.1 %        12.0 %      12.0 %

      Operating income                      13.4 %       15.5 %        13.1 %      15.1 %
      Interest expense                       0.5 %        0.2 %         0.5 %       0.2 %

      Income before income taxes            12.9 %       15.3 %        12.6 %      14.9 %
      Income taxes                           4.9 %        5.8 %         4.8 %       5.7 %

      Net income                             8.0 %        9.4 %         7.8 %       9.2 %

Note: Due to rounding, percentages may not add up to total operating expenses, operating income, income before taxes or net income.

Comparison of the Three Months Ended June 30, 2008 and 2007

Sales
Three Months Ended June 30,
(in millions) 2008 2007 Change Sales $ 97.4 $ 89.2 $ 8.2 9.2 %

Sales in the second quarter of 2008 increased 9.2% to $97.4 million from $89.2 million in the second quarter of 2007. Internal growth accounted for the entire increase in sales. The Company estimates that the entire sales growth resulted from project activity in the five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation. Investment and capital expansion continued during the quarter and we benefited from improved penetration into these markets. Our core Repair and Replacement sector, also referred to as Maintenance, Repair and Operations ("MRO"), was slightly down as we believe this sector is selectively deferring discretionary expenses due to the challenging economic environment.

Gross Profit
                                                Three Months Ended
                                                     June 30,
(in millions)                         2008       2007            Change
Gross profit                         $ 24.2     $ 23.7      $   0.5       2.1 %
Gross profit as a percent of sales     24.9 %     26.6  %     (1.7) %

Gross profit increased 2.1% to $24.2 million in 2008 from $23.7 million in 2007 as it benefited from increased sales volume. Our gross profit as a percent of sales (gross margin) was 24.9% in 2008 which was 170 basis points lower than 2007. The reduction in gross margin was primarily attributable to unusually high gross margins in 2007 versus historical trends, reduced supplier incentives from product mix along with increased customer incentives due to increased sales, and additional targeted customer accounts also compressed the gross margin.

Operating Expenses
                                                     Three Months Ended
                                                          June 30,
(in millions)                               2008       2007           Change
Operating expenses:
Salaries and commissions                   $  6.1     $  5.5     $ 0.6       10.8 %
Other operating expenses                      5.0        4.3       0.7       16.3 %
Depreciation and amortization                 0.1        0.1       0.0       18.3 %
Total operating expenses                   $ 11.2     $  9.9     $ 1.3       13.3 %

Operating expenses as a percent of sales 11.5 % 11.1 % 0.4 %

Note: Due to rounding, numbers may not add up to total operating expenses.

The increase in salaries and commissions is attributable to both commissions and salaries. The higher commissions are due to increased commissions over the comparable period in 2007. The higher salaries are attributable to additional employees, annual pay increases and an increase in stock compensation expense. Salaries and commissions as a percent of sales increased slightly to 6.3% in 2008 from 6.2% in the comparable period in 2007.

Other operating expenses increased primarily due to a credit of $0.3 million for the allowance for doubtful accounts in the second quarter of 2007 which was deemed no longer necessary and a higher level of business activity.

Depreciation and amortization expense was consistent at $0.1 million for both periods.

Operating expenses as a percent of sales increased to 11.5% in 2008 from 11.1% in 2007, primarily due to a credit for the allowance for doubtful accounts recorded in 2007.

Interest Expense

Interest expense increased $0.3 million or 141.9% from $0.2 million in 2007 to $0.5 million in 2008 due primarily to increased debt for stock repurchases in the latter portion of 2007 and in 2008. Average debt was $42.7 million for the quarter ended June 30, 2008 versus $8.2 million for the quarter ended June 30, 2007. The average effective interest rate decreased to 4.0% in the 2008 period, from 8.3% in 2007 due to market interest rate declines.

Income Taxes

Income taxes decreased $0.4 million or 7.6% as our income before income taxes decreased $1.1 million or 7.9%. The effective income tax rate increased slightly from 38.2% in 2007 to 38.3% in 2008.

Net Income

We achieved net income of $7.7 million compared to net income of $8.4 million in 2007, a decrease of 8.0%.

Comparison of the Six Months Ended June 30, 2008 and 2007

Sales
                            Six Months Ended
                                June 30,
(in millions)    2008        2007            Change
Sales           $ 186.8     $ 171.0     $ 15.8       9.3 %

Sales in the first six months of 2008 increased 9.3% to $186.8 million from $171.0 million in the first six months of 2007. Internal growth accounted for the entire increase in sales. The Company estimates that the entire sales growth resulted from project activity in the five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation. Investment and capital expansion within these initiatives remained healthy and we benefited from continued penetration into these markets. Our core Repair and Replacement sector, was slightly down as this sector is facing a challenging economy which we believe lowered discretionary spending.

Gross Profit
                                                 Six Months Ended
                                                     June 30,
(in millions)                         2008       2007            Change
Gross profit                         $ 46.9     $ 46.3     $   0.6        1.2 %
Gross profit as a percent of sales     25.1 %     27.1 %     (2.0) %

Gross profit increased 1.2% to $46.9 million in 2008 from $46.3 million in 2007 as it benefited from increased sales volume. Our gross profit as a percent of sales (gross margin) was 25.1% in 2008 which was 200 basis points lower than 2007. The reduction in gross margin was primarily attributable to unusually high gross margins in 2007 versus historical trends, reduced supplier incentives from product mix along with increased customer incentives due to increased sales, and additional targeted customer accounts also compressed the gross margin.

Operating Expenses
                                                      Six Months Ended
                                                          June 30,
(in millions)                               2008       2007           Change
Operating expenses:
Salaries and commissions                   $ 12.2     $ 11.2     $ 1.0        8.9 %
Other operating expenses                     10.0        9.1       0.9       10.1 %
Depreciation and amortization                 0.3        0.2       0.1       16.9 %
Total operating expenses                   $ 22.4     $ 20.5     $ 2.0        9.5 %

Operating expenses as a percent of sales 12.0 % 12.0 % 0.0 %

Note: Due to rounding, numbers may not add up to total operating expenses.

The increase in salaries and commissions is primarily attributable to higher salaries. The higher salaries are attributable to additional employees, annual pay increases and an increase in stock compensation expense. Salaries and commissions as a percent of sales remained consistent at 6.5% in 2008 and 2007.

Other operating expenses increased primarily due to a credit of $0.3 million for the allowance for doubtful accounts in the second quarter of 2007 which was deemed no longer necessary and a higher level of business activity in 2008.

Depreciation and amortization expense increased slightly to $0.3 million in 2008 from $0.2 million in 2007.

Operating expenses as a percent of sales were consistent at 12.0% for both periods.

Interest Expense

Interest expense increased $0.6 million or 167.1% from $0.4 million in 2007 to $1.0 million in 2008 due primarily to increased debt for stock repurchases in the latter portion of 2007 and in 2008. Average debt was $42.0 million for the period ended June 30, 2008 versus $8.9 million for the period ended June 30, 2007. The average effective interest rate decreased to 4.5% for the period ended June 30, 2008 from 7.8% for the period ended June 30, 2007.

Income Taxes

Income taxes decreased $0.8 million or 7.9% as our income before income taxes decreased $2.0 million or 7.9%. The effective tax rate was consistent at 38.4% in 2007 and 2008.

Net Income

The Company achieved net income of $14.5 million compared to net income of $15.7 million in 2007, a decrease of 7.9%.

Impact of Inflation and Commodity Prices

Our results of operations are affected by changes in the inflation rate and commodity prices. Moreover, because copper and petrochemical products are components of the wire and cable we sell, fluctuations in the costs of these and other commodities have historically affected our operating results. To the extent we are unable to pass on to our customers cost increases due to inflation or rising commodity prices, it could adversely affect our operating results. To the extent commodity prices decline, the net realizable value of our existing inventory could be reduced and our gross profit could be adversely affected. As we turn our inventory approximately four times a year, the impact of decreasing copper prices would primarily affect the results of the succeeding calendar quarter.

Liquidity and Capital Resources

Our primary capital needs are for working capital obligations, debt service, capital expenditures and other general corporate purposes. Our primary sources of working capital are cash from operations supplemented by bank borrowings. During 2008, we have funded our capital expenditures through cash from operations. Our working capital amounted to $112.6 million at June 30, 2008 compared to $98.0 million at December 31, 2007.

Liquidity is defined as the ability to generate adequate amounts of cash to meet the current need for cash. We assess our liquidity in terms of our ability to generate cash to fund our operating activities. Significant factors which could affect liquidity include the following:

• the adequacy of available bank lines of credit;

• the ability to attract long-term capital with satisfactory terms;

• additional stock repurchases;

• cash flows generated from operating activities;

• payment of dividends;

• capital expenditures; and

• acquisitions.

Comparison of the Six Months Ended June 30, 2008 and 2007

Our net cash provided by operating activities for the six months ended June 30, 2008 was $2.0 million compared to $5.0 million in the prior year period. Our net income was $14.5 million compared to $15.7 million in 2007. Accrued and other liabilities decreased $6.8 million due to lower customer prepayments on orders, lower accrued wire purchases and the absence of an accrual for Treasury Stock purchases at June 30, 2008. Accounts receivable increased $5.0 million due to increased sales. The book overdraft decreased $3.9 million, to a zero balance because of the timing of collected funds in the lockbox awaiting transfer to our lender which was higher than the outstanding checks at June 30, 2008. This also created a momentary positive cash balance at June 30, 2008 which was used to pay down debt in the first week of July. Inventory levels increased $2.9 million due to an increase in cable management inventory, partially offset by a decrease in regular stock inventory. Our cable management program involves purchasing and storing dedicated inventory, so our customers have immediate availability for the duration of their projects. The income tax receivable of $2.0 million at December 31, 2007 was due to an overpayment of taxes. There was an income tax liability of $0.2 million at June 30, 2008.

Net cash used in investing activities was $0.2 million in 2008 compared to $0.3 million in 2007 as requirements for additional capital resources remained low.

Net cash used in financing activities was $0.6 million in 2008 compared to $4.8 million in 2007. Treasury stock purchases of $13.8 million and dividend payments of $3.0 million offset by net borrowings of $15.9 million, were the main components of cash used in financing activities.

Indebtedness

Our principal source of liquidity at June 30, 2008 was working capital of $112.6 million compared to $98.0 million at December 31, 2007. We also had available borrowing capacity of approximately $24.6 million at June 30, 2008 and $40.5 million at December 31, 2007 under our $75 million loan and security agreement with a commercial bank ("lender").

We believe that we will have adequate availability of capital to fund our present operations, meet our commitments on our existing debt, continue the stock repurchase program, continue to fund our dividend payments and fund anticipated growth over the next twelve months, including expansion in existing and targeted market areas. We continually seek potential acquisitions and from time to time hold discussions with acquisition candidates. If suitable acquisition opportunities or working capital needs arise that would require additional financing, we believe that our financial position and earnings history provide a solid base for obtaining additional financing resources at competitive rates and terms. Additionally, based on market conditions, we may issue additional shares of common or preferred stock to raise funds.

Loan and Security Agreement

We have a loan and security agreement with a lender that provides for a revolving loan through May 21, 2010. On September 28, 2007, we increased the facility to $75.0 million to fund the stock repurchase program and fund business growth. The agreement allows for the payment of dividends, not to exceed $10 million in the aggregate in any twelve month period; and, effective January 29, 2008, the repurchase of stock, prior to December 31, 2009, in the aggregate amount of not more than $75 million. The lender has a security interest in all of our assets, including accounts receivable and inventory. The loan bears interest at the lender's base interest rate. Portions of the outstanding loan may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. Upon such conversion, interest is payable at LIBOR plus a margin ranging from 1.0% to 1.5%, depending on the Company's debt-to-EBITDA ratio. We have entered into a series of one-month LIBOR loans, which, upon maturity, are either rolled back into the revolving loan or renewed under a new LIBOR contract.

Contractual Obligations

The following table describes our loan commitment at June 30, 2008:

                                                               Less than                                     More than
                                                  Total         1 year         1-3 years     3-5 years        5 years
                                                                              (In thousands)
Term loans and loans payable                     $ 50,406     $         -     $  50,406     $         -     $         -

There were no new material changes in operating lease obligations or non-cancellable purchase obligations since December 31, 2007.

Cautionary Statement for Purposes of the "Safe Harbor"

Forward-looking statements in this report are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to, but are not limited to, information or assumptions about our sales and marketing strategy, sales (including pricing), income, operating income or gross margin improvements, working capital, cash flow, interest rates, impact of changes in accounting standards, future economic performance, management's plans, goals and objectives for future operations, performance and growth or the assumptions relating to any of the forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim", "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "project", "should", "will be", "will continue", "will likely result", "would" and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. The Company cautions that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. Actual results could differ materially from those expressed or implied in the forward-looking statements. The factors listed under "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.