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; cable 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 $112,000 per year. A 20% change in our estimate at September 30, 2008 would have resulted in a change in income before income taxes of approximately $33,000.

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 September 30, 2008 would have resulted in a change in income before income taxes of approximately $135,000.

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 September 30, 2008 would have resulted in a change in income before income taxes of approximately $351,000.

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 nine months ended September 30, 2008 would have resulted in a change in income before income taxes of approximately $1,195,000.

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 September 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 2008, 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          Nine Months Ended
                                           September 30,              September 30,
                                         2008          2007          2008         2007

      Sales                                100.0 %      100.0 %        100.0 %     100.0 %
      Cost of sales                         77.1 %       74.9 %         75.7 %      73.6 %
      Gross profit                          22.9 %       25.1 %         24.3 %      26.4 %

      Operating expenses:
      Salaries and commissions               6.2 %        6.4 %          6.4 %       6.5 %
      Other operating expenses               5.4 %        4.9 %          5.4 %       5.1 %
      Depreciation and amortization          0.1 %        0.1 %          0.1 %       0.1 %
      Total operating expenses:             11.7 %       11.4 %         11.9 %      11.7 %

      Operating income                      11.2 %       13.7 %         12.4 %      14.6 %
      Interest expense                       0.5 %        0.3 %          0.5 %       0.2 %

      Income before income taxes            10.7 %       13.4 %         11.9 %      14.4 %
      Income taxes                           4.0 %        5.0 %          4.6 %       5.5 %

      Net income                             6.7 %        8.4 %          7.4 %       8.9 %

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 September 30, 2008 and 2007

Sales
Three Months Ended September 30, (Dollars in millions) 2008 2007 Change Sales $ 98.9 $ 98.9 $ 0.0 (0.1 )%

Sales in the third quarter of 2008 remained flat at $98.9 million when compared to the third quarter of 2007 in spite of very difficult conditions due to a slowing economy and market liquidity pressures resulting from the credit crisis. Although the Company's five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation are not directly tied to markets or customers most severely affected by these conditions, we did experience increased competitive pressures that tempered sales opportunities and revenues.

During September, we experienced significant business interruptions in the Louisiana and Texas Gulf Coast region due to Hurricanes Gustav and Ike. Although our business continuity plans worked as intended, our customer base in the expanded geography of the strike zones was severely affected and electrical power was disrupted or absent for approximately two weeks after each storm. Order flow rates from many of our customers in the hurricane affected areas were down significantly during these post-storm periods.

Sales in our core Repair and Replacement sector, also referred to as Maintenance, Repair and Operations ("MRO"), were down slightly as we believe this sector continued to be negatively affected by broad market conditions that influence select discretionary expense deferral and business disruptions resulting from the aforementioned hurricanes. Project business was slightly positive on a quarter over quarter basis and the Company continued to benefit from further penetration and success in the growth initiative markets.

Gross Profit
                                                        Three Months Ended
                                                          September 30,
        (Dollars in millions)                 2008       2007            Change
        Gross profit                         $ 22.6     $ 24.8     $ (2.2 )      (8.7 )%
        Gross profit as a percent of sales     22.9 %     25.1 %     (2.2 )%

Gross profit decreased 8.7% to $22.6 million in 2008 from $24.8 million in 2007. Our gross profit as a percentage of sales (gross margin) decreased to 22.9% in 2008, which was 220 basis points lower than 2007. The reduction in gross margin was primarily attributable to competitive pricing pressures resulting from the current market environment, commodity price deflation, and reduced supplier incentives.

Operating Expenses
                                                          Three Months Ended
                                                             September 30,
     (Dollars in millions)                       2008       2007           Change
     Operating expenses:
     Salaries and commissions                   $  6.2     $  6.3     $ (0.1 )     (2.2 )%
     Other operating expenses                      5.3        4.8        0.5       10.0 %
     Depreciation and amortization                 0.1        0.1        0.0       21.4 %
     Total operating expenses                   $ 11.6     $ 11.2     $  0.4        3.3 %

     Operating expenses as a percent of sales     11.7 %     11.4 %      0.3 %

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

Salaries and commissions decreased slightly to $6.2 million in 2008 from $6.3 million in 2007. Commissions decreased due to lower gross margin and changes to commission programs from the prior year and were partially offset by higher salaries which were attributable to additional employees, annual pay increases and an increase in stock compensation expense. Salaries and commissions as a percentage of sales were also down slightly to 6.2% in 2008 from 6.4% in 2007.

Other operating expenses increased primarily due to higher employee insurance costs, costs associated with additional sales personnel and bad debt expense. These expenses were partially offset by lower professional fees.

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

Operating expenses as a percent of sales increased slightly to 11.7% in 2008 from 11.4% in 2007.

Interest Expense

Interest expense increased $0.2 million or 62.8% from $0.3 million in 2007 to $0.5 million in 2008 due primarily to increased debt for stock repurchases in the latter portion of 2007 and during 2008. Average debt was $46.9 million for the quarter ended September 30, 2008 versus $14.3 million for the quarter ended September 30, 2007. The average effective interest rate decreased to 3.9% in the 2008 period, from 7.9% in 2007 due to market interest rate declines.

Income Taxes

Income taxes decreased $1.0 million or 20.0% as our income before income taxes decreased $2.7 million or 20.4%. The effective income tax rate increased slightly from 37.6% in 2007 to 37.8% in 2008.

Net Income

Based on the factors discussed above, we achieved net income of $6.6 million in 2008 compared to net income of $8.3 million in 2007, a decrease of 20.7%.

Comparison of the Nine Months Ended September 30, 2008 and 2007

Sales
Nine Months Ended September 30, (Dollars in millions) 2008 2007 Change Sales $ 285.7 $ 269.9 $ 15.8 5.8 %

Sales in the first nine months of 2008 increased 5.8% to $285.7 million from $269.9 million in the first nine 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 as project business was up slightly as we benefited from continued penetration into these markets. Our core Repair and Replacement sector was down slightly as this sector continued to face a slowing economy, market liquidity pressures resulting from the credit crisis, and significant business interruptions in large industrial markets during the month of September as a result of Hurricanes Gustav and Ike.

Gross Profit
                                                        Nine Months Ended
                                                          September 30,
        (Dollars in millions)                 2008       2007            Change
        Gross profit                         $ 69.5     $ 71.1     $ (1.6 )      (2.3 )%
        Gross profit as a percent of sales     24.3 %     26.4 %     (2.1 )%

Gross profit decreased 2.3% to $69.5 million in 2008 from $71.1 million in 2007 as a compression in gross margin more than offset the increase in sales. Our gross margin was 24.3% in 2008 which was 210 basis points lower than 2007. The compressed gross margin was primarily attributable to competitive pricing pressures in the current market environment, reduced supplier incentives, increased customer incentives due to increased sales and an additional number of targeted customers eligible for the incentives.

Operating Expenses
                                                           Nine Months Ended
                                                             September 30,
      (Dollars in millions)                       2008       2007           Change
      Operating expenses:
      Salaries and commissions                   $ 18.3     $ 17.5     $ 0.9        4.9 %
      Other operating expenses                     15.3       13.9       1.4       10.1 %
      Depreciation and amortization                 0.4        0.3       0.1       18.4 %
      Total operating expenses                   $ 34.0     $ 31.7     $ 2.3        7.3 %

Operating expenses as a percent of sales 11.9 % 11.7 % 0.2 %

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

The increase in salaries and commissions is due to higher salaries. The higher salaries are attributable to additional employees, annual pay increases and an increase in stock compensation expense.

Other operating expenses increased due to bad debt expense in 2008 versus a credit in 2007, increased sales activities, warehouse supplies and facility costs. These increases were partially offset by lower professional fees and reduced stock compensation expense for our Board of Directors.

Depreciation and amortization increased slightly to $0.4 million in 2008 from $0.3 million in 2007.

Operating expenses as a percent of sales increased slightly to 11.9% in 2008 compared to 11.7% in 2007.

Interest Expense

Interest expense increased $0.8 million or 121.3% from $0.7 million in 2007 to $1.5 million in 2008 due primarily to increased debt for stock repurchases in the latter portion of 2007 and in 2008. Average debt was $43.6 million for the period ended September 30, 2008 versus $10.7 million for the period ended September 30, 2007. The average effective interest rate decreased to 4.3% for the period ended September 30, 2008 from 7.9% for the period ended September 30, 2007 due to market rate declines.

Income Taxes

Income taxes decreased $1.8 million or 12.0% as our income before taxes decreased $4.7 million or 12.2%. The effective income tax rate increased slightly from 38.1% in 2007 to 38.2% in 2008.

Net Income

Based on the factors discussed above, we achieved net income of $21.1 million in 2008 compared to $24.0 million in 2007, a decrease of 12.3%.

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 commodity 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 $106.9 million at September 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 Nine Months Ended September 30, 2008 and 2007

Our cash provided by operating activities for the nine months ended September 30, 2008, was $14.4 million compared to $11.8 million in the prior year period. Our net income was $21.1 million in 2008 compared to $24.0 million in 2007. Accounts receivable increased $8.6 million due to increased sales. Accrued and other liabilities decreased due to lower customer prepayments on orders and lower accrued wire purchases. Accounts payable increased due to increased inventory and a higher number of invoices matched to the inventory receivers which increased accounts payable and reduced accrued wire purchases. Inventory levels increased due to an increase in cable management inventory, partially offset by a decrease in regular stock inventory. There is an income tax receivable of $0.7 million at September 30, 2008.

Net cash used in investing activities was $0.4 million in 2008 and 2007 as requirements for additional capital resources remained low.

Net cash used in financing activities was $14.0 million in 2008 compared to $11.4 million in 2007. Treasury stock purchases of $15.4 million and dividend payments of $4.5 million partially offset by net borrowings of $5.7 million, were the main components of cash used in financing activities.

Indebtedness

Our principal source of liquidity at September 30, 2008 was working capital of $106.9 million compared to $98.0 million at December 31, 2007. We also had available borrowing capacity of approximately $34.8 million at September 30, 2008 and $40.5 million at December 31, 2007 under our $75 million loan and security agreement.

We believe that we 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, depending upon 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 $10.0 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 September 30, 2008:

                                                             Less than                                       More than
                                                Total         1 year         1-3 years       3-5 years        5 years
                                                                            (In thousands)
Term loans and loans payable                   $ 40,200     $         -     $    40,200     $         -     $         -

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 . . .