INSTEEL INDUSTRIES INC (Form: 8-K, Received: 04/27/2009 06:12:56)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): April 21, 2009

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 incorporation or organization)		(I.R.S. Employer 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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

See “Item 3.03 Material Modification to Rights of Security Holders” for a discussion of the April 25, 2009 amendment to the Insteel Industries, Inc. (the “Company”) Rights Agreement. That discussion is incorporated herein by reference.

Item 3.03 Material Modification to Rights of Security Holders.

(a) On April 21, 2009, the Board of Directors of the Company authorized it to enter into Amendment No. 1 to Rights Agreement (“Amendment No. 1”), effective as of April 25, 2009, amending the Company’s Rights Agreement dated as of April 27, 1999 (the “Rights Agreement”) between the Company and American Stock Transfer & Trust Company, LLC (the “Rights Agent”). The Rights Agreement is attached as Exhibit 99.1 to the Company’s Form 8-A filed with the U.S. Securities and Exchange Commission (“SEC”) on May 7, 1999. On April 26, 1999, the Board of Directors of the Company declared a dividend distribution of one Right for each outstanding share of the Company’s Common Stock, with each Right entitling the registered holder to purchase from the Company, upon the occurrence of a Distribution Date, a Unit, representing one two-hundredth of a share (as adjusted for stock splits), of Series A Junior Participating Preferred Stock for $40.00 (as adjusted). Defined terms used in this report and not otherwise defined herein have the meanings set forth in the Rights Agreement as amended by Amendment No. 1. The Rights Agent also serves as the transfer agent for the Company’s Common Stock.

Amendment No. 1:

	•		extends the “Final Expiration Date” of the Rights Agreement to April 24, 2019;

	•		changes the “Purchase Price” from $40.00 to $46.00;

	•		modifies the definition of “Beneficial Owner” to address certain derivative security contexts; and

	•		provides a procedure for determining the number of shares of Common Stock of the Company to which such Person’s derivative position relates.

The Rights Agreement, as modified by Amendment No. 1, remains in full force and effect.

The foregoing summary of Amendment No. 1 does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement and to Amendment No. 1, a copy of which is filed as Exhibit 4.2 to this Current Report on Form 8-K and incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On April 21, 2009, the Board of Directors of the Company approved certain amendments to Article 2, Section 11 of the Company’s bylaws. Article 2, Section 11 of the bylaws specifies the business which may be conducted at meetings of shareholders, including procedures for proposing actions, such as nominations for director, to be taken at the Company’s annual shareholders’ meeting.

The bylaws previously provided that advance notice of shareholder proposals for consideration at the annual meeting (other than those included in the Company’s proxy materials) must be delivered to the secretary of the Company at least 90 days prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting. The amendments to the bylaws clarify that such time period is not affected by any postponement or adjournment of the annual meeting.

The bylaws also previously provided that a shareholder who submits a proposal for consideration at the annual meeting (other than those included in the Company’s proxy materials) must, in addition to requirements imposed by applicable law, provide information regarding his or her name, address, beneficial ownership of Company securities and material interest in the proposal. The amendments to the bylaws expand the information which must be supplied by the proposing shareholder by requiring:

	•		the same information (name, address, ownership, and material interest) regarding any “Shareholder Associated Person”;

	•		the name and address of any other shareholder supporting the proposal; and

	•		a description of any hedging or other transactions entered into by the shareholder submitting the proposal or any Shareholder Associated Person if the effect of such transactions is to mitigate loss or manage risk of stock price changes, or to increase the voting power of such shareholder or Shareholder Associated Person.

The amendments to the bylaws define “Shareholder Associated Person” to mean (i) any person controlling, directly or indirectly, or acting in concert with, such shareholder, (ii) any beneficial owner of shares of stock of the Company owned or controlled by such shareholder, and (iii) any person controlling, controlled by or under common control with such Shareholder Associated Person.

The amendments further provide that information submitted pursuant to Article 2, Section 11 of the bylaws shall be updated upon written request by the Secretary of the Company, and that information which is inaccurate to a material extent or not timely updated may be deemed not to have been provided in accordance with the bylaws. If information does not meet the requirements of Article 2, Section 11 of the bylaws, the proposal will not be presented for a shareholder vote.

This summary of the amendments to the Company’s bylaws is qualified by the full text of the revised bylaws. A copy of the revised bylaws, which is marked to show the changes described, is attached hereto as Exhibit 3.1 to this current Report on Form 8-K and incorporated herein by reference. The amendment was effective April 21, 2009.

Item 8.01 Other Events

On April 21, 2009, the Company issued a press release announcing that its Board of Directors has declared a quarterly cash dividend of $0.03 per share payable on July 6, 2009 to shareholders of record as of June 19, 2009. A copy of this release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

While the Company intends to pay regular quarterly cash dividends for the foreseeable future, the declaration and payment of future dividends, if any, are discretionary and will be subject to determination by the board of directors each quarter after taking into account various factors, including general business conditions and the Company’s financial condition, operating results, cash requirements and expansion plans.

Cautionary Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to the Company’s intent and ability to pay future dividends. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and the Company can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in the Company’s reports and statements that it files with the SEC, in particular in its Annual Report on Form 10-K for the year ended September 27, 2008. You should carefully review these risks and uncertainties.

All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only to the respective dates on which such statements are made and the Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description of Exhibit
3.1		Amended and Restated Bylaws of the Company, marked to show the amendments.

4.2		Amendment No. 1 to the Rights Agreement, dated as of April 21, 2009, between Insteel Industries, Inc. and American Stock Transfer & Trust Company, LLC (as the Rights Agent).

99.1		Press release dated April 21, 2009 announcing declaration of a quarterly cash dividend of $0.03 per share.

SIGNATURE

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.
By:	/s/ James F. Petelle
	Name:	James F. Petelle
	Title:	Vice President and Secretary

Date: April 27, 2009

EXHIBIT INDEX


Exhibit No.		Description of Exhibit
3.1		Amended and Restated Bylaws of the Company, marked to show the amendments.

4.2		Amendment No. 1 to the Rights Agreement, dated as of April 21, 2009, between Insteel Industries, Inc. and American Stock Transfer & Trust Company, LLC (as the Rights Agent).

99.1		Press release dated April 21, 2009 announcing declaration of a quarterly cash dividend of $0.03 per share.

Exhibit 3.1

BYLAWS

INSTEEL INDUSTRIES, INC.

Effective August 21, 1990
As last amended ~~September 18, 2007~~ April 21, 2009

TABLE OF CONTENTS TO BYLAWS
OF INSTEEL INDUSTRIES, INC.


	Page
ARTICLE 1- OFFICES		1
Section 1. Principal and Registered Office		1
Section 2. Other Offices		1

ARTICLE 2- MEETINGS OF SHAREHOLDERS		1
Section 1. Place of Meeting		1
Section 2. Annual Meeting		1
Section 3. Substitute Annual Meeting		1
Section 4. Special Meetings		1
Section 5. Notice of Meetings		1
Section 6. Quorum		2
Section 7. Shareholders’ List		2
Section 8. Voting of Shares		2
Section 9. Inspectors of Election.		3
Section 10. Action Without Meeting		3
Section 11. Action to Be Taken at Annual or Special Meetings of Shareholders		3

ARTICLE 3- BOARD OF DIRECTORS	5 6
Section 1. General Powers	5 6
Section 2. Number, Term and Qualification	5 6
Section 3. Removal	5 6
Section 4. Vacancies	5 6
Section 5. Compensation	5 6

ARTICLE 4- MEETINGS OF DIRECTORS	6 7
Section 1. Annual and Regular Meetings	6 7
Section 2. Special Meetings	6 7
Section 3. Notice of Meetings	6 7
Section 4. Quorum	6 7
Section 5. Manner of Acting	6 7
Section 6. Presumption of Assent	6 7
Section 7. Action Without Meeting	6 7
Section 8. Meeting by Communications Device	7 8

ARTICLE 5- COMMITTEES	7 8
Section 1. Election and Powers	7 8
Section 2. Removal; Vacancies	7 8
Section 3. Meetings	8 9
Section 4. Minutes	8 9


		Page
ARTICLE 6- OFFICERS		8 9
Section 1. Titles		8 9
Section 2. Election; Appointment		8 9
Section 3. Removal		8 9
Section 4. Vacancies		8 9
Section 5. Compensation		8 9
Section 6. Chairman and Vice Chairman of the Board of Directors		8 9
Section 7. Chief Executive Officer		8 9
Section 8. President		9 10
Section 9. Vice Presidents		9 10
Section 10. Secretary		9 10
Section 11. Assistant Secretaries		9 10
Section 12. Treasurer		9 10
Section 13. Assistant Treasurers		10 11
Section 14. Controller and Assistant Controllers		10 11
Section 15. Voting Upon Stocks		10 11

ARTICLE 7- CAPITAL STOCK		10 11
Section 1. Certificates		10 11
Section 2. Transfer of Shares		11 12
Section 3. Transfer Agent and Registrar		11 12
Section 4. Regulations		11 12
Section 5. Fixing Record Date		11 12
Section 6. Lost Certificates		11 12

ARTICLE 8- INDEMNIFICATION OP DIRECTORS AND OFFICERS		11 12
Section 1. Indemnification Provisions		11 12
Section 2. Definitions		12 13
Section 3. Settlements		12 13
Section 4. Litigation Expense Advances.		12 13
Section 5. Approval of Indemnification Payments		12 13
Section 6. Suits by Claimant		13 14
Section 7. Consideration; Personal Representatives and Other Remedies		13 14
Section 8. Scope of Indemnification Rights		13 14

ARTICLE 9- GENERAL PROVISIONS		13 14
Section 1. Dividends and Other Distributions		13 14
Section 2. Seal		13 14
Section 3. Waiver of Notice		13 14
Section 4. Checks		14 15
Section 5. Fiscal Year		14 15
Section 6. Amendments		14 15
Section 7. Applicability of Antitakeover Statutes		14 15

BYLAWS QF

INSTEEL INDUSTRIES. INC.

ARTICLE 1- OFFICES

Section 1. Principal and Registered Office . The principal office of the corporation shall be located at 1373 Boggs Drive, Mount Airy, North Carolina, which shall also be the registered office of the corporation.

Section 2. Other Offices . The corporation may have offices at such other places, either within or without the State of North Carolina, as the board of directors may from time to time determine.

ARTICLE 2- MEETINGS OF SHAREHOLDERS

Section 1. Place of Meeting . Meetings of shareholders shall be held at the principal office of the corporation, or at such other place, either within or without the State of North Carolina, as shall be designated in the notice of the meeting.

Section 2. Annual Meeting . The annual meeting of shareholders shall be held at such time and on such day (except a Saturday, Sunday or legal holiday) during the month of February in each year as the directors shall from time to time determine for the purpose of electing directors of the corporation and the transaction of such other business as may be properly brought before the meeting.

Section 3. Substitute Annual Meeting . If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article. A meeting so called shall be designated and treated for all purposes as the annual meeting.

Section 4. Special Meetings . Special meetings of the shareholders may be called at any time by the resident or the board of directors.

Section 5. Notice of Meetings . At least 10 and no more than 60 days prior to any annual or special meeting of shareholders, the corporation shall notify shareholders of the date, time and place of the meeting and, in the case of a special or substitute annual meeting or where otherwise required by law, shall briefly describe the purpose or purposes of the meeting. Only business within the purpose or purposes described in the notice may be taken at a special meeting. Unless otherwise required by the articles of incorporation or by law (for example, in the event of a meeting to consider the adoption of a plan of merger or share exchange, a sale of assets other than in the ordinary course of business or a voluntary dissolution), the corporation shall be required to give notice only to shareholders entitled to vote at the meeting. If an annual or special shareholders’ meeting is adjourned to a different date, time or place, notice thereof need not be given if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date. It shall be the primary responsibility of the secretary to give the notice, but notice may be

given by or at the direction of the president or other person or persons calling the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail with postage thereon prepaid, correctly addressed to the shareholder’s address shown in the corporation’s current record of shareholders.

Section 6. Quorum . A majority of the votes entitled to be cast by a voting group on a matter, represented in person or by proxy at a meeting of shareholders, shall constitute a quorum for that voting group for any action on that matter, unless quorum requirements are otherwise fixed by a court of competent jurisdiction acting pursuant to Section 55-7-03 of the General Statutes of North Carolina. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof, unless a new record date is or must be set for the adjournment. Action may be taken by a voting group at any meeting at which a quorum of that voting group is represented, regardless of whether action is taken at that meeting by any other voting group. In the absence of a quorum at the opening of any meeting of shareholders, such meeting may be adjourned from time to time by a vote of the majority of the shares voting on the motion to adjourn.

Section 7. Shareholders’ List . After a record date is fixed for a meeting, the secretary of the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the shareholders’ meeting. Such list shall be arranged by voting group (and within each voting group by class or series of shares) and shall show the address of and number of shares held by each shareholder. The shareholders’ list shall be made available for inspection by any shareholder beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation’s principal office or at such other place identified in the meeting notice in the city where the meeting will be held. The corporation shall make the shareholders’ list available at the meeting, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.

Section 8. Voting of Shares . Except as otherwise provided by the articles of incorporation or by law, each outstanding share of voting capital stock of the corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the shareholders. Unless otherwise provided in the articles of incorporation, cumulative voting for directors shall not be allowed. Action on a matter by a voting group for which a quorum is present is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the vote of a greater number is required by law or by the articles of incorporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of one-tenth of the shares represented at the meeting shall demand a ballot vote on a particular matter. Absent special circumstances, the shares of the corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, except that this provision shall not limit the power of the corporation to vote shares held by it in a fiduciary capacity.

Section 9. Inspectors of Election .

(a) Appointment of inspectors of election . In advance of any meeting of shareholders, the board of directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the chairman of any such meeting may, and on the request of any shareholder or his proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting, or at the meeting by the person acting as chairman.

(b) Duties of inspectors . The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity, and effect of proxies, receive votes, ballots, or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine the result, and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical.

(c) Vote of inspectors . If there are three inspectors of election the decision, act, or certificate of a majority is effective in all respects as the decision, act, or certificate of all.

(d) Report of inspectors . On request of the chairman of the meeting or of any shareholder or his proxy the inspectors shall make a report in writing of any challenge or question or matter determined by them and execute a certificate of any fact found by them. Any report or certificate made by them is prima facie evidence of the facts stated therein.

Section 10. Action Without Meeting . Any action which the share-holders could take at a meeting may be taken without a meeting if one or more written consents, setting forth the action taken, shall be signed, before or after such action, by all the shareholders who would be entitled to vote upon the action at a meeting. The consent shall be delivered to the corporation for inclusion in the minutes or filing with the corporate records. The corporation must give its nonvoting shareholders written notice of the proposed action at least 10 days before the action is taken, which notice must contain or be accompanied by the same material that would have been required by law to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.

Section 11. Action to Be Taken at Annual or Special Meetings of Shareholders . Business to be conducted at meetings of shareholders shall be limited to (a) business properly specified in the notice of meeting given as provided in Article 2, Section 5 hereof; (b) business otherwise properly brought before the meeting by or at the direction of the board of directors; and (c) business (which may include nominations for director if in accordance with the procedures established herein) otherwise properly brought before the meeting by a holder of voting securities entitled to vote at the meeting in compliance with the procedures set forth in

this Section 11. In addition to any other applicable requirements, including, but not limited to, requirements established pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations adopted thereunder, ~~for~~ no business to may be brought before an annual or special meeting by a holder of voting securities pursuant to (c) above, unless the ~~holder must have~~ shareholder has given timely , accurate and complete notice in writing to the secretary of the corporation as ~~provided in~~ required by this Section 11. In the case of an annual meeting, to be timely, notice must be delivered to, or mailed to and received by, the secretary of the corporation at the principal offices of the corporation not less than 90 days prior to the anniversary of the mailing date for the prior year’s annual meeting proxy statement. In the case of a special meeting, to be timely, notice must be delivered to, or mailed to and received by, the secretary of the corporation at the principal offices of the corporation not less than 90 days prior to the date of the special meeting; provided, however, that if less than 100 days’ notice or prior public disclosure of the meeting is given or made by the corporation, notice will be timely if received not later than the close of business on the tenth day following the day on which such notice or public disclosure of the meeting was given or made. Neither the postponement or adjournment of an annual meeting, nor the prior public disclosure of such postponement or adjournment, shall commence a new time period for the giving of a shareholder’s notice pursuant to (c) above. For purposes of this Section 11, “prior public disclosure” shall mean disclosure (i) in a press release either transmitted to the principal securities exchange on which shares of the corporation’s common stock are traded or reported by a recognized news service or (ii) in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

In addition to any requirements imposed by applicable law (including, but not limited to, Section 14(a) of the Exchange Act and the rules and regulations adopted thereunder), notice of the business to be brought before an annual or special meeting pursuant to (c) above shall set forth the following as to each matter the holder of voting securities proposes to bring before the meeting: (i) a brief description of the business desired to be brought before the meeting and the reasons for bringing such business before the meeting; (ii) the name and address, as they appear on the corporation’s books, of each holder of voting securities proposing such business and each Shareholder Associated Person (as defined below) ; (iii) the classes and number of shares or other securities of the corporation that are owned of record or beneficially by such holder; and by each Shareholder Associated Person; (iv) any material interest of such holder and each Shareholder Associated Person in such business other than ~~his~~ such person’s interest as a shareholder of the corporation (including any anticipated benefit to the shareholder or Shareholder Associated Person therefrom); (v) to the extent known by the shareholder giving the notice, the name and address of any other shareholder supporting the proposal on the date of such shareholder’s notice; and (vi) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such shareholder or Shareholder Associated Person with respect to any share of the corporation, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of the corporation) has been made, the effect or intent of which is to mitigate loss to or manage risk of stock price changes for, or to increase the voting power of, such shareholder or Shareholder Associated Person with respect to any share of the corporation.

Nominations for election to the board of directors may be made pursuant to (c) above by a holder of securities entitled to vote for the election of directors if written notice of the nomination of such person(s) shall have been delivered to the secretary of the corporation in accordance with the provisions of this Article 2, Section 11 and such notice shall set forth the information required herein with respect to matters to be brought by a shareholder, as well as (i) the name and address of the person(s) to be nominated by the shareholder; (ii) a representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person(s) specified in the notice; (iii) a description of all arrangements or understandings between the shareholder (and any Shareholder Associated Person) and each nominee and any other person(s) (naming such person(s)) pursuant to which the nomination(s) are to be made by the shareholder; (iv) such other information regarding each such nominee as would be required to be included in a proxy statement filed pursuant to Section 14(a) of the Exchange Act and the rules and regulations adopted thereunder if the nominee had been nominated by the board of directors or a committee thereof; and (v) the written consent of each nominee to be nominated and to serve as a director of the corporation if so elected.

If information submitted pursuant to this Article 2, Section 11, by any shareholder proposing any proposal for other business at the annual meeting shall be inaccurate to a material extent, such information may be deemed not to have been provided in accordance with this Article 2, Section 11. Upon written request by the secretary of the corporation or the Board of Directors, any shareholder proposing any proposal for other business at a meeting of the shareholders shall provide, within five business days of delivery of such request (or such other period as may be specified in such request), (1) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the corporation, to demonstrate the accuracy of any information submitted by the shareholder pursuant to this Article 2, Section 11, or (2) a written update of any information previously submitted by the shareholder pursuant to this Article 2, Section 11 as of an earlier date. If a shareholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Article 2, Section 11.

For purposes of this Article 2, Section 11, “Shareholder Associated Person” of any shareholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such shareholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such shareholder, and (iii) any person controlling, controlled by or under common control with such Shareholder Associated Person.

Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual or special meeting except in accordance with the provisions set forth in this Section 11. If the chairman of the meeting determines that any business was not properly submitted, the chairman shall so declare to the meeting, and to the extent permitted by law, any such business not properly submitted shall not be transacted at the meeting. All judgments made by the chairman of the meeting as to submission of proposals shall be final and binding unless determined by a court of competent jurisdiction to have clearly been made in bad faith.

(Article 2, Section 11 was adopted by the Board of Directors effective April 26, 1999. and amended by the Board of Directors on April 21, 2009 )

ARTICLE 3- BOARD OF DIRECTORS

Section 1. General Powers . The business and affairs of the corporation shall be managed under the direction of the board of directors except as otherwise provided by the articles of incorporation or by a valid shareholders’ agreement.

Section 2. Number, Term and Qualification . The number of directors constituting the board of directors shall be not less than seven nor more than twelve as may be fixed by resolution duly adopted by the shareholders or by the board of directors prior to the annual meeting at which such directors are to be elected, but, in the absence of such resolution, the number of directors elected at the meeting shall constitute the number of directors of the corporation until the next annual meeting of shareholders. The directors shall be divided into three classes, as nearly equal in number as may be, to serve in the first instance for terms of one, two and three years, respectively, and until their successors shall be elected and shall qualify, and thereafter the successors in each class of directors shall be elected to serve for terms of three years and until their successors shall be elected and shall qualify. In the event of any increase or decrease in the number of directors, the additional or eliminated directorships shall be so classified or chosen that all classes of directors shall remain or become equal in number, as nearly as may be. In the event of the death, resignation, retirement, removal or disqualification of a director during his elected term of office, his successor shall be elected to serve only until the expiration of the term of his predecessor. Directors need not be residents of the State of North Carolina or shareholders of the corporation unless the articles of incorporation so provide. This Section 2, although adopted by a vote of the corporation’s shareholders, may be amended or repealed by the corporation’s Board of Directors without a shareholder vote.

Section 3. Removal . Directors may be removed from office with or without cause (unless the articles of incorporation provide that directors may be removed only for cause) provided the notice of the shareholders’ meeting at which such action is to be taken states that a purpose of the meeting is removal of the director and the number of votes cast to remove the director exceeds the number of votes cast not to remove him.

Section 4. Vacancies . Except as otherwise provided in the articles of incorporation, a vacancy occurring in the board of directors, including, without limitation, a vacancy resulting from an increase in the number of directors or from the failure by the shareholders to elect the full authorized number of directors, may be filled by a majority of the remaining directors or by the sole director remaining in office. The shareholders may elect a director at any time to fill a vacancy not filled by the directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office.

Section 5. Compensation . The directors shall not receive compensation for their services as such, except that by resolution of the board of directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the board or of a committee, and they may be reimbursed for expenses of attendance. Any director may serve the corporation in any other capacity and receive compensation therefor.

ARTICLE 4- MEETINGS OF DIRECTORS

Section 1. Annual and Regular Meetings . The annual meeting of the board of directors shall be held immediately following the annual meeting of the shareholders. The board of directors may by resolution provide for the holding of regular meetings of the board on specified dates and at specified times. Notice of regular meetings held at the principal office of the corporation and at the usual scheduled time shall not be required. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on a date designated in the notice of the meeting, if any, during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the board shall be held at the principal office of the corporation or at such other place as may be designated in the notice of the meeting.

Section 2. Special Meetings . Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president or any two directors. Such meetings may be held at the time and place designated in the notice of the meeting.

Section 3. Notice of Meetings . Unless the articles of incorporation provide otherwise, the annual and regular meetings of the board of directors may be held without notice of the date, time, place or purpose of the meeting. The secretary or other person or persons calling a special meeting shall give notice by any usual means of communication to be sent at least two days before the meeting if notice is sent by means of telephone, telecopy or personal delivery and at least five days before the meeting if notice is sent by mail. A director’s attendance at, or participation in, a meeting for which notice is required shall constitute a waiver of notice, unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

Section 4. Quorum . Except as otherwise provided in the articles of incorporation, a majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the board of directors.

Section 5. Manner of Acting . Except as otherwise provided in the articles of incorporation, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors.

Section 6. Presumption of Assent . A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken is deemed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon arrival) to holding, or transacting business at, the meeting, or unless his dissent or abstention is entered in the minutes of the meeting or unless he shall file written notice of his dissent or abstention to such action with the presiding officer of the meeting before its adjournment or with the corporation immediately after adjournment of the meeting. The right of dissent or abstention shall not apply to a director who voted in favor of such action.

Section 7. Action Without Meeting . Unless otherwise provided in the articles of incorporation, action required or permitted to be taken at a meeting of the board of directors may

be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents signed by each director before or after such action, describing the action taken, and included in the minutes or filed with the corporate records. Action taken without a meeting is effective when the last director signs the consent, unless the consent specifies a different effective date.

Section 8. Meeting by Communications Device . Unless otherwise provided in the articles of incorporation, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

ARTICLE 5- COMMITTEES

Section 1. Election and Powers . Unless otherwise provided by the articles of incorporation, a majority of the board of directors may create one or more committees and appoint two or more directors to serve at the pleasure of the board on each such committee. To the extent specified by the board of directors or in the articles of incorporation, each committee shall have and may exercise the powers of the board in the management of the business and affairs of the corporation, except that no committee shall have authority to do the following:

(a) Authorize distributions.

(b) Approve or propose to shareholders action required to be approved by shareholders.

(d) Amend the articles of incorporation.

(e) Adopt, amend or repeal the bylaws.

(f) Approve a plan of merger not requiring shareholder approval.

(g) Authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the board of directors.

(h) Authorize or approve the issuance, sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize the executive committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors.

Section 2. Removal; Vacancies . Any member of a committee may be removed at any time with or without cause, and vacancies in the membership of a committee by means of death, resignation, disqualification or removal shall be filled by a majority of the whole board of directors.

Section 3. Meetings . The provisions of Article 4 governing meetings of the board of directors, action without meeting, notice, waiver of notice and quorum and voting requirements shall apply to the committees of the board and its members.

Section 4. Minutes . Each committee shall keep minutes of its proceedings and shall report thereon to the board of directors at or before the next meeting of the board.

ARTICLE 6- OFFICERS

Section 1. Titles . The officers of the corporation shall be a president, a vice president, a secretary and a treasurer and may include a chairman and vice chairman of the board of directors, a chief executive officer, an executive vice president, one or more additional vice presidents, a controller, one or more assistant secretaries, one or more assistant treasurers, one or more assistant controllers, and such other officers as shall be deemed necessary. The officers shall have the authority and perform the duties as set forth herein or as from time to time may be prescribed by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of officers). Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required.

Section 2. Election; Appointment . The officers of the corporation shall be elected from time to time by the board of directors or appointed from time to time by the president (to the extent that the president is authorized by the board to appoint officers).

Section 3. Removal . Any officer may be removed by the board at any time with or without cause whenever in its judgment the best interests of the corporation will be served, but removal shall not itself affect the officer’s contract rights, if any, with the corporation.

Section 4. Vacancies . Vacancies among the officers may be filled and new offices may be created and filled by the board of directors, or by the president (to the extent authorized by the board).

Section 5. Compensation . The compensation of the officers shall be fixed by the board of directors.

Section 6. Chairman and Vice Chairman of the Board of Directors . The chairman of the board of directors, if such officer is elected, shall preside at meetings of the board of directors and shareholders and shall have such other authority and perform such other duties as the board of directors shall designate. The vice chairman, if elected, shall preside at meetings of the board and shareholders in the absence of the chairman and shall have such other authority and perform such other duties as the board of directors shall designate.

Section 7. Chief Executive Officer . The chief executive officer shall be the principal executive officer of the corporation and, subject to the control of the board of directors, shall, in general, supervise and control all of the business and affairs of the corporation. He shall have such other authority and perform such other duties as the board of directors shall designate.

Section 8. President . The president shall be the principal operating officer of the corporation and shall be in general charge of the affairs of the corporation in the ordinary course of its business. Subject to the direction of the chief executive officer, the president may perform such acts, not inconsistent with applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the corporation. The president shall have such other powers and perform such other duties as the board of directors shall designate or as may be provided by applicable law or elsewhere in these bylaws.

Section 9. Vice Presidents . In the absence or inability to act of both the chief executive officer and the president, the executive vice president, if such officer is elected or appointed, shall exercise the powers of the president during that officer’s absence or inability to act. In default of the chief executive officer and both the president and the executive vice president, any other vice president may exercise the powers of the president. Any action taken by a vice president in the performance of the duties of the president shall be presumptive evidence of the absence or inability to act of the president at the time the action was taken. The vice presidents shall have such other powers and perform such other duties as may be assigned by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers).

Section 10. Secretary . The secretary shall keep accurate records of the acts and proceedings of all meetings of shareholders and of the board of directors and shall give all notices required by law and by these bylaws. The secretary shall have general charge of the corporate books and records and shall have the responsibility and authority to maintain and authenticate such books and records. The secretary shall have general charge of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The secretary shall have general charge of the stock transfer books of the corporation and shall keep at the principal office of the corporation a record of shareholders, showing the name and address of each shareholder and the number and class of the shares held by each. The secretary shall sign such instruments as may require the signature of the secretary, and in general shall perform the duties incident to the office of secretary and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers).

Section 11. Assistant Secretaries . Each assistant secretary, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (if authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant secretaries shall exercise the powers of the secretary during that officer’s absence or inability to act.

Section 12. Treasurer . The treasurer shall have custody of all funds and securities belonging to the corporation and shall receive, deposit or disburse the same under the direction of the board of directors. The treasurer shall keep full and accurate accounts of the finances of the corporation, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared

for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. The corporation shall mail the annual financial statements, or a written notice of their availability, to each shareholder within 120 days of the close of each fiscal year. The treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers).

Section 13. Assistant Treasurers . Each assistant treasurer, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant treasurers shall exercise the powers of the treasurer during that officer’s absence or inability to act.

Section 14. Controller and Assistant Controllers . The controller, if such officer is elected, shall have charge of the accounting affairs of the corporation and shall have such other powers and perform such other duties as the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers) shall designate. Each assistant controller shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant controllers shall exercise the powers of the controller during that officer’s absence or inability to act.

Section 15. Voting Upon Stocks . Unless otherwise ordered by the board of directors, the president shall have full power and authority in behalf of the corporation to attend, act and vote at meetings of the shareholders of any corporation in which this corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the corporation might have possessed and exercised if present. The board of directors may by resolution from time to time confer such power and authority upon any other person or persons.

ARTICLE 7- CAPITAL STOCK

Section 1. Certificates . Shares of the capital stock of the corporation may be certificated or without certificate. The name and address of the persons to whom shares of capital stock of the corporation are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the corporation. Certificates for shares of the capital stock of the corporation shall be in such form not inconsistent with the articles of incorporation of the corporation as shall be approved by the board of directors. Each certificate shall be signed (either manually or by facsimile) by (a) the president or any vice president and by the secretary, assistant secretary, treasurer or assistant treasurer or (b) any two officers designated by the board of directors. Each certificate may be sealed with the seal of the corporation or a facsimile thereof. Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send, or cause to be sent, to the shareholder a written statement including the information required by law to be set forth on certificates for shares of capital stock.

Section 2. Transfer of Shares . Transfer of certificated shares shall be made on the stock transfer records of the corporation, and transfers shall be made only upon surrender of the certificate for the shares sought to be transferred by the recordholder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer or reissue shall be cancelled before new certificates for the shares or shares without certificate shall be issued. Shares without certificate shall be transferable on the stock transfer records of the corporation upon proper instruction from the holder of such shares.

Section 3. Transfer Agent and Registrar . The board of directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers.

Section 4. Regulations . The board of directors may make rules and regulations as it deems expedient concerning the issue, transfer and registration of shares of capital stock of the corporation.

Section 5. Fixing Record Date . For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors may fix in advance a date as the record date for the determination of shareholders. The record date shall be not more than 70 days before the meeting or action requiring a determination of shareholders. A determination of shareholders entitled to notice of or to vote at a shareholders’ meeting shall be effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed for the determination of shareholders, the record date shall be the day the notice of the meeting is mailed or the day the action requiring a determination of shareholders is taken. If no record date is fixed for action without a meeting, the record date for determining shareholders entitled to take action without a meeting shall be the date the first shareholder signs consent to the action taken.

Section 6. Lost Certificates . The board of directors must authorize the issuance of a new certificate or share without certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken, upon receipt of (a) an affidavit from the person explaining the loss, destruction or wrongful taking, and (b) a bond from the claimant in a sum as the corporation may reasonably direct to indemnify the corporation against loss from any claim with respect to the certificate claimed to have been lost, destroyed or wrongfully taken. The board of directors may, in its discretion, waive the affidavit and bond and authorize the issuance of a new certificate or share without certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken.

ARTICLE 8- INDEMNIFICATION OP DIRECTORS AND OFFICERS

Section 1. Indemnification Provisions . Any person who at any time serves or has served as a director or officer of the corporation or of any wholly owned subsidiary of the corporation, or in such capacity at the request of the corporation for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under any employee benefit plan of the corporation or of any wholly owned subsidiary thereof (a

“Claimant”), shall have the right to be indemnified and held harmless by the corporation to the fullest extent from time to time permitted by law against all liabilities and litigation expenses (as hereinafter defined) in the event a claim shall be made or threatened against that person in, or that person is made or threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of the corporation, including all appeals therefrom (a “proceeding”), arising out of that person’s status as such or that person’s activities in any such capacity; provided, that such indemnification shall not be effective with respect to (a) that portion of any liabilities or litigation expenses with respect to which the Claimant is entitled to receive payment under any insurance policy or (b) any liabilities or litigation expenses incurred on account of any of the Claimant’s activities which were at the time taken known or believed by the Claimant to be clearly in conflict with the best interests of the corporation.

Section 2. Definitions . As used in this Article, (a) “liabilities” shall include, without limitation, (1) payments in satisfaction of any judgment, money decree, excise tax, fine or penalty for which Claimant had become liable in any proceeding and (2) payments in settlement of any such proceeding subject, however, to Section 3 of this Article 8; (b) “litigation expenses” shall include, without limitation, (1) reasonable costs and expenses and attorneys’ fees and expenses actually incurred by the Claimant in connection with any proceeding and (2) reasonable costs and expenses and attorneys’ fees and expenses in connection with the enforcement of rights to the indemnification granted hereby or by applicable law, if such enforcement is successful in whole or in part; and (c) “disinterested directors” shall mean directors who are not party to the proceeding in question.

Section 3. Settlements . The corporation shall not be liable to indemnify the Claimant for any amounts paid in settlement of any proceeding effected without the corporation’s written consent. The corporation will not unreasonably withhold its consent to any proposed settlement.

Section 4. Litigation Expense Advances .

(a) Except as provided in subsection (b) below, any litigation expenses shall be advanced to any Claimant within 30 days of receipt by the secretary of the corporation of a demand therefor, together with an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that Claimant is entitled to be indemnified by the corporation against such expenses. The secretary shall promptly forward notice of the demand and undertaking immediately to all directors of the corporation.

(b) Within 10 days after mailing of notice to the directors pursuant to subsection (a) above, any disinterested director may, if desired, call a meeting of all disinterested directors to review the reasonableness of the expenses so requested. No advance shall be made if a majority of the disinterested directors affirmatively determines that the item of expense is unreasonable in amount; but if the disinterested directors determine that a portion, of the expense item is reasonable, the corporation shall advance such portion.

Section 5. Approval of Indemnification Payments . Except as provided in Section 4 of this Article, the board of directors of the corporation shall take all such action as may be necessary and appropriate to authorize the corporation to pay the indemnification required by

Section 1 of this Article, including, without limitation, making a good faith evaluation of the manner in which the Claimant acted and of the reasonable amount of indemnity due the Claimant. In taking any such action, any Claimant who is a director of the corporation shall not be entitled to vote on any matter concerning such Claimant’s right to indemnification.

Section 6. Suits by Claimant . No Claimant shall be entitled to bring suit against the corporation to enforce his rights under this Article until sixty days after a written claim has been received by the corporation, together with any undertaking to repay as required by Section 4 of this Article. It shall be a defense to any such action that the Claimant’s liabilities or litigation expenses were incurred on account of activities described in clause (b) of Section 1, but the burden of proving this defense shall be on the corporation. Neither the failure of the corporation to have made a determination prior to the commencement of the action to the effect that indemnification of the Claimant is proper in the circumstances, nor an actual determination by the corporation that the Claimant had not met the standard of conduct described in clause (b) of Section 1, shall be a defense to the action or create a presumption that the Claimant has not met the applicable standard of conduct.

Section 7. Consideration; Personal Representatives and Other Remedies . Any person who during such time as this Article or corresponding provisions of predecessor bylaws is or has been in effect serves or has served in any of the aforesaid capacities for or on behalf of the corporation shall be deemed to be doing so or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein or therein. The right of indemnification provided herein or therein shall inure to the benefit of the legal representatives of any person who qualifies or would qualify as a Claimant hereunder, and the right shall not be exclusive of any other rights to which the person or legal representative may be entitled apart from this Article.

Section 8. Scope of Indemnification Rights . The rights granted herein shall not be limited by the provisions of Section 55-8-51 of the General Statutes of North Carolina or any successor statute.

ARTICLE 9- GENERAL PROVISIONS

Section 1. Dividends and Other Distributions . The board of directors may from time to time declare and the corporation may pay dividends or make other distributions with respect to its outstanding shares in the manner and upon the terms and conditions provided by law.

Section 2. Seal . The seal of the corporation shall be any form approved from time to time or at any time by the board of directors.

Section 3. Waiver of Notice . Whenever notice is required to be given to a shareholder, director or other person under the provisions of these bylaws, the articles of incorporation or applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the date and time stated in the notice, and delivered to the corporation shall be equivalent to giving the notice.

Section 4. Checks . All checks, drafts or orders for the payment of money shall be signed by the officer or officers or other individuals that the board of directors may from time to time designate.

Section 5. Fiscal Year . The fiscal year of the corporation shall be fixed by the board of directors.

Section 6. Amendments . Unless otherwise provided in the articles of incorporation or a bylaw adopted by the shareholders or by law, these bylaws may be amended or repealed by the board of directors, except that a bylaw adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the board of directors if neither the articles of incorporation nor a bylaw adopted by the shareholders authorizes the board of directors to adopt, amend or repeal that particular bylaw or the bylaws generally. These bylaws may be amended or repealed by the shareholders even though the bylaws may also be amended or repealed by the board of directors. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed (a) if originally adopted by the shareholders, only by the shareholders, unless such bylaw as originally adopted by the shareholders provides that such bylaw may be amended or repealed by the board of directors or (b) if originally adopted by the board of directors, either by the shareholders or by the board of directors. A bylaw that fixes a greater quorum or voting requirement may not be adopted by the board of directors by a vote less than a majority of the directors then in office and may not itself be amended by a quorum or vote of the directors less than the quorum or vote prescribed in such bylaw or prescribed by the shareholders.

Section 7. Applicability of Antitakeover Statutes . The provisions of Article 9 and Article 9A of the North Carolina Business Corporation Act shall not be applicable to the corporation.

THIS IS TO CERTIFY that the above bylaws of Insteel Industries, Inc., were adopted by the board of directors of the corporation by action taken at a meeting held on August 21, 1990, as amended by the shareholders of the corporation as to Article 3, Section 2, on February 5, 1991, as further amended by the board of directors of the corporation as to Article 2, Section 11 on April 26, 1999, as further amended by the board of directors of the corporation as to Article 3, Section 2 on October 24, 2005, and as further amended by the board of directors as to Article 7, Sections 1, 2 and 6 on September 18, 2007. :

	•		by the shareholders of the corporation as to Article 3, Section 2, on February 5, 1991,

	•		by the board of directors of the corporation as to Article 2, Section 11 on April 26, 1999,

	•		by the board of directors of the corporation as to Article 3, Section 2 on October 24, 2005,

	•		by the board of directors as to Article 7, Sections 1, 2 and 6 on September 18, 2007, and

	•		by the board of directors as to Article 2, Section 11 on April 21, 2009.

This ~~___~~ 21st day of ~~___, 2007.~~ April, 2009.




	Secretary

[Corporate Seal]

Exhibit 4.2

INSTEEL INDUSTRIES, INC.

AMENDMENT NO. 1 TO RIGHTS AGREEMENT

THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (the “Amendment No. 1”) is dated as of the 25th day of April 2009 between Insteel Industries, Inc., a North Carolina corporation (the “Company”), and American Stock Transfer & Trust Company, LLC (as successor rights agent to First Union National Bank, the “Rights Agent”).

RECITALS

WHEREAS, the Company and the Rights Agent are parties to that certain Rights Agreement dated as of April 27, 1999 (the “Rights Agreement”);

WHEREAS, the Board of Directors of the Company has considered the reasons underlying the adoption of the Rights Agreement, obtained the advice of its counsel and financial advisor, and has determined those reasons continue to be valid and in the best interests of the Company at present;

WHEREAS, the Company and the Rights Agent desire to amend the Rights Agreement on the terms and conditions hereinafter set forth; and

WHEREAS, the Board of Directors of the Company has duly authorized this Amendment No. 1.

NOW, THEREFORE, for and in consideration of the mutual promise, covenants and agreements contained herein and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto do hereby agree to amend the Rights Agreement, in accordance with Section 27 of the Rights Agreement, as follows:

1. Section 1(a) of the Rights Agreement is hereby amended by deleting the last sentence of such subsection in its entirety and replacing it with the following:

Notwithstanding the first sentence of this Section 1(a), no person shall be deemed to be an “Acquiring Person” if the Board of Directors of the Company determines in good faith that such Person became the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding inadvertently and such Person divests, as promptly as practicable after receipt of a written notice from the Company, a sufficient number of shares of Common Stock (or, for the avoidance of doubt, with respect to any Derivative Common Shares, terminates the subject derivative transaction or transactions or disposes of the subject derivative security or securities) so that such Person is no longer the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding.

2. Section 1(d)(ii) of the Rights Agreement is hereby amended by deleting the term “or” at the end of the subsection.

3. Section 1(d)(iii) of the Rights Agreement is hereby amended by deleting “acquisition.” at the end of such subsection and replacing it with “acquisition; or”.

4. Section 1(d) of the Rights Agreement is amended by adding the following subsection (iv) to follow subsection (iii):

(iv) that are the subject of a derivative transaction entered into by such Person or any of such Person’s Affiliates or Associates, or derivative security acquired by such Person or any of such Person’s Affiliates or Associates, which gives such Person or any of such Person’s Affiliates or Associates the economic equivalent of ownership of an amount of such securities due to the fact that the value of the derivative is explicitly determined by reference to the price or value of such securities, or which provides such Person or any of such Person’s Affiliates or Associates an opportunity, directly or indirectly, to profit, or to share in any profit, derived from any change in the value of such securities, in any case without regard to whether (A) such derivative conveys any voting rights in such securities to such Person or any of such Person’s Affiliates or Associates, (B) the derivative is required to be, or capable of being, settled through delivery of such securities, or (C) such Person or any of such Person’s Affiliates or Associates may have entered into other transactions that hedge the economic effect of such derivative. In determining the number of shares of Common Stock of the Company beneficially owned by virtue of the operation of this Section 1(d)(iv), the subject Person shall be deemed to beneficially own (without duplication) the notional or other number of shares of Common Stock of the Company specified in the documentation evidencing the derivative position as being subject to be acquired upon the exercise or settlement of the applicable right or as the basis upon which the value or settlement amount of such right, or the opportunity of the holder of such right to profit or share in any profit, is to be calculated in whole or in part, and in any case (or if no such number of shares of Common Stock of the Company is specified in such documentation or otherwise), as determined by the Board of Directors in good faith to be the number of shares of Common Stock of the Company to which the derivative position relates. Such shares of Common Stock of the Company that are deemed so beneficially owned pursuant to the operation of this Section 1(d)(iv) shall be referred to herein as “Derivative Common Shares.”

5. Section 1(r) of the Rights Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

(r) “Final Expiration Date” shall mean the Close of Business on April 24, 2019, unless extended by the Board of Directors of the Company as provided in Section 27 hereof.

6. Section 7(b) of the Rights Agreement is hereby amended by deleting it in its entirety and replacing it with the following:

(b) The Purchase Price for each one two-hundredths of a share of Preferred Stock pursuant to the exercise of a Right shall be $46.00 as of April 21, 2009 and shall be subject to adjustment from time to time thereafter as provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below.

7. The Company and Rights Agent acknowledge and agree that Rights Agent has succeeded to the rights and obligations of First Union National Bank pursuant to Section 19 of the Rights Agreement, and that the contact information for Rights Agent set forth in Section 26 of the Rights Agreement is hereby deleted and replaced with the following:

American Stock Transfer & Trust Company, LLC
10150 Mallard Creek Road
Suite 307
Charlotte, NC 28262
Attention: Holly H. Drummond, VP/Senior Account Administrator
Telephone: (718) 921-8521
Facsimile: (718) 765-8742

8. The Company and Rights Agent hereby acknowledge and agree that the amended and restated form of Rights Certificate attached hereto as Exhibit A supersedes the Exhibit A that was attached to the original form of this Rights Agreement as of April 27, 1999.

9. Rights Agent acknowledges receipt of an officer’s certificate notifying Rights Agent of this Amendment in accordance with Section 27 of the Rights Agreement.

10. This Amendment No. 1 shall be effective as of the date hereof and, except as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. The term “Agreement” as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended hereby.

11. If any term, provision, covenant or restriction of this Amendment No. 1 is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment No. 1 shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

12. The Amendment No. 1 shall be deemed to be a contract under the laws of the State of North Carolina and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.

13. This Amendment No. 1 may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed as of the date first written above.


INSTEEL INDUSTRIES, INC.
By:	/s/ James F. Petelle
	Name:	James F. Petelle
	Title:	Vice President and Secretary


AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
By:	/s/ Paula Caroppoli
	Name:	Paula Caroppoli
	Title:	Vice President

EXHIBIT A

[FORM OF RIGHTS CERTIFICATE]

Certificate No. R____________

NOT EXERCISABLE AFTER APRIL 24, 2019 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]

RIGHTS CERTIFICATE

INSTEEL INDUSTRIES, INC.

This certifies that _____________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of April 27, 1999, as amended by Amendment Number 1 dated April 25, 2009 (collectively, the “Rights Agreement”), between Insteel Industries, Inc., a North Carolina corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as successor in interest to First Union National Bank (the “Rights Agent”), to purchase from the Company at any time prior to 5:00 P.M., Mount Airy, North Carolina time, on April 24, 2019 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one two-hundredths of a fully paid, nonassessable share of Series A Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of $46.00 per one two-hundredths of a share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate ¹ duly executed. The Purchase Price may be paid in cash or by certified bank check or money order payable to the order of the Company. The number of Rights evidenced by this Rights Certificate (and the number of shares of Preferred Stock which may be purchased upon exercise hereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of April 25, 2009, based on the Preferred Stock as constituted at such date.


¹		The portion of the legend in brackets shall be inserted only if applicable and shall replace the immediately preceding sentence of the legend.

Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person or an Associate or Affiliate of any such Acquiring Person, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person or an Affiliate or Associate of any such Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.

As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Preferred Stock or other securities which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events (as such term is defined in the Rights Agreement).

This Rights Certificate is subject to all of the terms, provisions, and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are available upon written request to the Company.

This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one two-hundredths of a share of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $0.005 per Right at any time prior to the earliest of the Close of Business on (i) the tenth Business Day following the Stock Acquisition Date (as such time period may be extended pursuant to the Rights Agreement) or (ii) the Final Expiration Date. After the expiration of the redemption period referenced in clause (i) above, the Company’s right of redemption may be reinstated if an Acquiring Person reduces his beneficial ownership to less than 20% of the outstanding shares of Common Stock in a transaction or series of transactions not involving the Company and there are no other Acquiring Persons.

The Company may (but shall not be required to) issue fractional shares of Preferred Stock upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one two-hundredth of a share of Preferred Stock, which may, at the election

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of the Company, be evidenced by depositary receipts), and in lieu thereof a cash payment may be made, as provided in the Rights Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.

WITNESS, the facsimile signature of the proper officers of the Company and its corporate seal.


ATTEST: [Corporate Seal]

Name:
Title:


Countersigned: AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
By:
		Authorized Signature


INSTEEL INDUSTRIES, INC.
By:
	Name:	Howard O. Woltz, III
	Title:	President

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[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

FORM OF ASSIGNMENT

[To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.]

FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto [NAME AND ADDRESS OF TRANSFEREE] this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____________ Attorney, to transfer the within Rights Certificate on the books of the within-named Company, with full power of substitution.


Dated:

				Signature

Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such term is defined in the Rights Agreement); and

(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of any such Acquiring Person.


Dated:

				Signature

Affix Medallion Guarantee Imprint in Box]

Note to Guarantor : Numeric code on bottom of the medallion stamp must be legible.

IMPORTANT READ CAREFULLY : The signatures on this form must correspond with the name as written upon the face of the rights certificate in every particular without alteration or enlargement or any changes whatsoever. The signature of the person executing this power must be guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Securities Broker / Dealer participating in a Medallion Program approved by the Securities Transfer Association, Inc. Under S.E.C. Regulations, no other form of signature verification can be accepted.

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NOTICE

The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

FORM OF ELECTION TO PURCHASE

[To be executed by the registered holder if such holder desires to exercise
Rights represented by the Rights Certificate.]

To: The Rights Agent

The undersigned hereby irrevocably elects to exercise ____________ Rights represented by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other Person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to:

(Please print name and address)

Please insert social security or other identifying number:

________________________

If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to:

(Please print name and address)

Please insert social security or other identifying number:

________________________


Dated:

				Signature

Affix Medallion Guarantee Imprint in Box]

Note to Guarantor : Numeric code on bottom of the medallion stamp must be legible.

A-5

Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such term is defined in the Rights Agreement);

(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of any such Acquiring Person.


Dated:

				Signature

Affix Medallion Guarantee Imprint in Box]

Note to Guarantor : Numeric code on bottom of the medallion stamp must be legible.

A-6

Exhibit 99.1

Insteel Industries, Inc.

NEWS RELEASE


FOR IMMEDIATE RELEASE	Contact:	Michael C. Gazmarian
		Vice President, Chief Financial Officer
		and Treasurer
		Insteel Industries, Inc.
		336-786-2141, Ext. 3020

INSTEEL INDUSTRIES REPORTS SECOND-QUARTER FINANCIAL RESULTS

MOUNT AIRY, N.C., April 16, 2009 — Insteel Industries, Inc. (NasdaqGS: IIIN) today reported a net loss of $16.4 million ($0.94 per share) for the second quarter ended March 28, 2009 compared with net earnings of $6.9 million ($0.39 per diluted share) for the same period last year. The net loss for the current year quarter includes a pre-tax charge of $16.1 million ($0.58 per share after-tax) for inventory write-downs to reduce the carrying value of inventory to the lower of cost or market. Net sales for the second quarter decreased 34.8% to $50.4 million from $77.3 million in the same year-ago period. Shipments decreased 45.5% while average selling prices increased 19.7% from the same period last year.

For the six-month period ended March 28, 2009, the net loss was $22.0 million ($1.27 per share) compared with net earnings of $11.1 million ($0.62 per diluted share) for the same period last year. The net loss for the current year includes a pre-tax charge of $23.0 million ($0.82 per share after-tax) for inventory write-downs. Net sales for the six-month period decreased 21.7% to $112.2 million from $143.2 million in the same year-ago period. Shipments decreased 41.9% while average selling prices increased 34.9% from the same period last year.

Insteel’s financial results for the second quarter were unfavorably impacted by the reduction in shipments, the consumption of higher cost inventory that was purchased prior to the recent collapse in steel prices and the escalation in unit conversion costs resulting from reduced operating schedules at its manufacturing facilities. The Company’s overall capacity utilization level for the quarter was 35%. Shipments continued to trend at reduced levels due to customer inventory destocking, the general economic downturn and the tightening in the credit markets. Although selling prices for Insteel’s products have fallen since the beginning of the fiscal year to a lesser extent than the prices for hot-rolled steel wire rod, its primary raw material, the favorable impact from the widening in spreads has not been reflected in the Company’s current year results due to the inventory write-downs and consumption of the previously purchased higher cost inventory.

Operating activities used $0.7 million of cash during the second quarter while providing $6.8 million during the same period last year primarily due to the current year loss, which was partially offset by the year-over-year changes in net working capital. Net working capital provided $6.8 million of cash during the quarter while using $3.1 million during the same year-ago period largely due to the reduced operating levels and declining prices during the current year. Capital expenditures for the six-month period were $1.4 million compared with $6.2 million for the same period last year and are expected to total less than $5.0 million for fiscal 2009. Insteel ended the quarter with $0.4 million of borrowings outstanding on its $100.0 million revolving credit facility.

Commenting on the outlook for the remainder of fiscal 2009, H.O. Woltz III, Insteel’s president and CEO said, “In the wake of the dramatic drop-off in demand that has occurred since September, our visibility is limited as we move into the second half of the year. We expect our order book to improve due to the

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1373 BOGGS DRIVE / MOUNT AIRY, NORTH CAROLINA 27030 / 336-786-2141/ FAX 336-786-2144

Page 2 of 6

usual seasonal factors together with the anticipated completion of the inventory rebalancing by our customers, although the timing and magnitude of any upturn remains uncertain. We also believe the mismatching of higher raw material costs with lower selling prices is largely behind us and expect significant improvement in our margins as the lower replacement costs for wire rod begin to be reflected in cost of sales.

“Despite the losses we have incurred resulting from the unprecedented decline in steel prices, we are pleased with the effectiveness of the measures that we have taken to preserve cash. Absent further deterioration in our markets, we expect to generate strong operating cash flow through the remainder of the fiscal year driven by the anticipated improvement in our financial results together with substantial reductions in our inventory levels. We will continue to focus on cash generation through our ongoing initiatives to minimize operating costs and closely manage working capital while continuing to meet the expectations of our customers.”

Conference Call

Insteel will hold a conference call at 10:00 a.m. ET today to discuss its second quarter financial results. A live webcast of this call can be accessed on Insteel’s website at http://investor.insteel.com/ and will be archived for replay until its next quarterly conference call.

About Insteel

Insteel is one of the nation’s largest manufacturers of steel wire reinforcing products for concrete construction applications. Insteel manufactures and markets prestressed concrete strand (“PC strand”) and welded wire reinforcement, including concrete pipe reinforcement, engineered structural mesh (“ESM”) and standard welded wire reinforcement. Insteel’s products are sold primarily to manufacturers of concrete products that are used in nonresidential construction. Headquartered in Mount Airy, North Carolina, Insteel operates six manufacturing facilities located in the United States.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,” “intends,” “may,” “should” and similar expressions are intended to identify forward-looking statements. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, such forward-looking statements are subject to a number of risks and uncertainties, and the Company can provide no assurances that such plans, intentions or expectations will be achieved. Many of these risks and uncertainties are discussed in detail in the Company’s periodic and other reports and statements that it files with the U.S. Securities and Exchange Commission (the “SEC”), in particular in its Annual Report on Form 10-K for the year ended September 27, 2008. You should carefully review these risks and uncertainties.

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Insteel Industries, Inc.

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It is not possible to anticipate and list all risks and uncertainties that may affect the Company’s future operations or financial performance; however, they include, but are not limited to, the following: general economic and competitive conditions in the markets in which the Company operates; credit market conditions and the impact of the measures that have been taken by the federal government on the relative availability of financing for the Company, its customers and the construction industry as a whole; the timing and magnitude of the impact of the additional federal infrastructure-related funding provided for under the American Recovery and Reinvestment Act; the anticipated reduction in spending for nonresidential construction, particularly commercial construction, and the impact on demand for the Company’s concrete reinforcing products; the severity and duration of the downturn in residential construction and the impact on those portions of the Company’s business that are correlated with the housing sector; the cyclical nature of the steel and building material industries; fluctuations in the cost and availability of the Company’s primary raw material, hot-rolled steel wire rod from domestic and foreign suppliers; the Company’s ability to raise selling prices in order to recover increases in wire rod costs; changes in U.S. or foreign trade policy affecting imports or exports of steel wire rod or the Company’s products; the impact of increased imports of PC strand; unanticipated changes in customer demand, order patterns and inventory levels; the impact of weak demand and reduced capacity utilization levels on the Company’s unit manufacturing costs; the Company’s ability to further develop the market for ESM and expand its shipments of ESM; the actual net proceeds realized and closure costs incurred in connection with the Company’s exit from the industrial wire business; legal, environmental, economic or regulatory developments that significantly impact the Company’s operating costs; unanticipated plant outages, equipment failures or labor difficulties; continued escalation in certain of the Company’s operating costs; and the other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for the year ended September 27, 2008 and in other filings made by the Company with the SEC.

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Insteel Industries, Inc.

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share data)
(Unaudited)


	Three Months Ended						Six Months Ended
	March 28,			March 29,			March 28,			March 29,
	2009			2008			2009			2008

Net sales	$	50,404		$	77,260		$	112,203		$	143,240
Cost of sales		55,323			61,473			114,564			116,833
Inventory write-downs		16,121			—			22,955			—

Gross profit (loss)		(21,040	)		15,787			(25,316	)		26,407
Selling, general and administrative expense		4,368			5,165			9,101			9,252
Other income, net		(58	)		(57	)		(49	)		(76	)
Interest expense		189			152			337			310
Interest income		(7	)		(236	)		(102	)		(443	)

Earnings (loss) from continuing operations before income taxes		(25,532	)		10,763			(34,603	)		17,364
Income taxes		(9,150	)		3,871			(12,622	)		6,241

Earnings (loss) from continuing operations		(16,382	)		6,892			(21,981	)		11,123
Earnings (loss) from discontinued operations net of income taxes of ($8), $16, ($31) and $12		(13	)		26			(49	)		19

Net earnings (loss)	$	(16,395	)	$	6,918		$	(22,030	)	$	11,142


Per share amounts:
Basic:
Earnings (loss) from continuing operations	$	(0.94	)	$	0.40		$	(1.27	)	$	0.63
Earnings (loss) from discontinued operations		—			—			—			—

Net earnings (loss)	$	(0.94	)	$	0.40		$	(1.27	)	$	0.63


Diluted:
Earnings (loss) from continuing operations	$	(0.94	)	$	0.39		$	(1.27	)	$	0.62
Earnings (loss) from discontinued operations		—			—			—			—

Net earnings (loss)	$	(0.94	)	$	0.39		$	(1.27	)	$	0.62


Cash dividends declared	$	0.03		$	0.03		$	0.06		$	0.06


Weighted average shares outstanding
Basic		17,365			17,503			17,350			17,762

Diluted		17,365			17,647			17,350			17,918

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Insteel Industries, Inc.

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)


	(Unaudited)
	March 28,			September 27,
	2009			2008
Assets
Current assets:
Cash and cash equivalents	$	8		$	26,493
Accounts receivable, net		23,353			49,581
Inventories		55,073			71,220
Prepaid expenses and other		16,774			3,122

Total current assets		95,208			150,416
Property, plant and equipment, net		67,056			69,105
Other assets		4,046			5,064
Non-current assets of discontinued operations		3,635			3,635

Total assets	$	169,945		$	228,220


Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	11,094		$	23,581
Accrued expenses		4,794			29,081
Current liabilities of discontinued operations		225			188

Total current liabilities		16,113			52,850
Long-term debt		400
Other liabilities		5,422			5,306
Long-term liabilities of discontinued operations		200			217
Shareholders’ equity:
Common stock		17,526			17,507
Additional paid-in capital		44,439			43,202
Deferred stock compensation		(1,668	)		(1,456	)
Retained earnings		89,398			112,479
Accumulated other comprehensive loss		(1,885	)		(1,885	)

Total shareholders’ equity		147,810			169,847

Total liabilities and shareholders’ equity	$	169,945		$	228,220

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Insteel Industries, Inc.

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INSTEEL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


	Three Months Ended						Six Months Ended
	March 28,			March 29,			March 28,			March 29,
	2009			2008			2009			2008

Cash Flows From Operating Activities:
Net earnings (loss)	$	(16,395	)	$	6,918		$	(22,030	)	$	11,142
Loss (earnings) from discontinued operations		13			(26	)		49			(19	)

Earnings (loss) from continuing operations		(16,382	)		6,892			(21,981	)		11,123
Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by (used for) operating activities of continuing operations:
Depreciation and amortization		1,808			1,781			3,569			3,473
Amortization of capitalized financing costs		124			125			249			249
Stock-based compensation expense		551			582			985			910
Excess tax deficiencies (benefits) from stock-based compensation		43			(30	)		(2	)		(15	)
Inventory write-downs		16,121			—			22,955			—
Loss on sale of property, plant and equipment		—			10			20			56
Deferred income taxes		(115	)		529			339			653
Gain from life insurance proceeds		—			(661	)		—			(661	)
Net changes in assets and liabilities:
Accounts receivable, net		2,206			(7,451	)		26,228			1,107
Inventories		10,971			(9,898	)		(6,808	)		(7,907	)
Accounts payable and accrued expenses		(6,382	)		14,223			(28,162	)		12,554
Other changes		(9,622	)		695			(13,883	)		2,512

Total adjustments		15,705			(95	)		5,490			12,931

Net cash provided by (used for) operating activities - continuing operations		(677	)		6,797			(16,491	)		24,054
Net cash used for operating activities — discontinued operations		(11	)		(36	)		(28	)		(65	)

Net cash provided by (used for) operating activities		(688	)		6,761			(16,519	)		23,989


Cash Flows From Investing Activities:
Capital expenditures		(483	)		(1,259	)		(1,382	)		(6,159	)
Proceeds from sale of property, plant and equipment		—			83			13			83
Decrease (increase) in cash surrender value of life insurance policies		(364	)		(122	)		354			(382	)
Proceeds from surrender of life insurance policies		413			—			413			—
Proceeds from life insurance claims		—			1,111			—			1,111

Net cash used for investing activities — continuing operations		(434	)		(187	)		(602	)		(5,347	)

Net cash used for investing activities		(434	)		(187	)		(602	)		(5,347	)


Cash Flows From Financing Activities:
Proceeds from long-term debt		19,500			74			20,474			772
Principal payments on long-term debt		(19,100	)		(74	)		(20,074	)		(772	)
Cash received from exercise of stock options		53			38			66			38
Excess tax benefits (deficiencies) from stock-based compensation		(43	)		30			2			15
Repurchases of common stock		—			(6,161	)		—			(8,691	)
Cash dividends paid		(525	)		(544	)		(9,804	)		(1,092	)
Other		1			(4	)		(28	)		37

Net cash used for financing activities — continuing operations		(114	)		(6,641	)		(9,364	)		(9,693	)

Net cash used for financing activities		(114	)		(6,641	)		(9,364	)		(9,693	)

Net increase (decrease) in cash and cash equivalents		(1,236	)		(67	)		(26,485	)		8,949
Cash and cash equivalents at beginning of period		1,244			17,719			26,493			8,703

Cash and cash equivalents at end of period	$	8		$	17,652		$	8		$	17,652


Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	64		$	16		$	88		$	61
Income taxes		427			2,427			11,333			2,557
Non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable		(30	)		263			170			650
Issuance of restricted stock		—			733			—			733
Declaration of cash dividends to be paid		1			524			526			524
Restricted stock surrendered for withholding taxes payable		9			76			9			76

###

Insteel Industries, Inc.