Second Fiscal Quarter 2004
For the second quarter ended March 27, 2004, net earnings were $6.2
million, or 73 cents per share, compared with a net loss of $1.2 million, or
14 cents per share for the same period last year. Sales for the quarter
increased 61 percent to $73.8 million from $45.9 million.
For the six-month period ended March 27, 2004, net earnings were $6.9
million, or 81 cents per share, compared with a net loss of $1.9 million, or
23 cents per share for the same period last year. Sales increased 40 percent
to $130.0 million from $92.7 million.

First Fiscal Quarter 2004
For the first quarter ended December 27, 2003, net earnings were $701,000,
or eight cents per share, compared with a net loss of $763,000, or nine cents
per share for the same period last year. Sales increased 20 percent to $56.1
million from $46.8 million.

Fourth Fiscal Quarter and Full Year 2003
For the fourth quarter ended September 27, 2003, net earnings were $8.0
million, or 94 cents per share, compared with a net loss of $923,000, or 11
cents per share for the same period last year. Excluding a $6.2 million tax
benefit that was recorded in the current year quarter related to a reduction
in the deferred tax asset valuation allowance, net earnings were $1.7 million,
or 21 cents per share. Sales rose one percent to $60.0 million from $59.3
million.
For the fiscal year ended September 27, 2003, net earnings were $6.7
million, or 79 cents per share, compared with a net loss of $25.7 million, or
$3.04 per share for the same period last year. Excluding the tax benefit that
was recorded in the current year associated with the reduction in the deferred
tax asset valuation allowance, net earnings were $500,000, or six cents per
share. Excluding the cumulative effect of an accounting change that was
recorded in the prior year, the year-ago loss was $11.4 million, or $1.34 per
share, which reflects $13.0 million of restructuring charges (pre-tax) and a
$1.0 million gain on an insurance settlement (pre-tax). Sales declined 15
percent to $212.1 million from $251.0 million primarily due to the Company's
exit from certain segments of the industrial wire business and the nail
business. On a comparable basis, excluding revenues from these product lines,
sales decreased three percent.
The significant improvement in the Company's fiscal 2004 financial
performance is attributable to the ongoing recovery in demand for concrete
reinforcing products which has led to higher shipment levels together with
changes in its pricing strategy resulting from the sharp escalation in raw
material costs which has favorably impacted profit margins.
Commenting on the Company's 2004 financial results, Insteel's president
and chief executive officer H.O. Woltz III said, "We are pleased by the
rebound in Insteel's financial performance which commenced with the fourth
fiscal quarter of 2003 and has continued to gain momentum through the second
fiscal quarter of 2004. We are benefiting from the significant improvements in
the Company's cost structure that have been effected over the last three years
as well as the upturn in our markets which follows four years of downward
trends.
"Although the sharp escalation in the cost of the Company's primary raw
material, hot-rolled steel wire rod, would be expected to compress margins,
the increases have been of a frequency and magnitude that has forced radical
changes in the pricing strategy of Insteel as well as its competitors. The
combined impact of the limitations in rod supply with the upward spiral in raw
material costs has required us to adjust our pricing structure to more closely
align Insteel's product offering with profitability and limit the availability
of lower margin products. The combination of these activities has favorably
affected margins as pricing has risen at unprecedented rates to levels never
before seen in our industry."

Refinancing of Credit Facility
As previously announced on June 3, 2004, the Company entered into a new
senior secured credit facility which has a four-year term and provides up to
$82.0 million of financing, consisting of a $60.0 million revolving credit
facility, a $17.0 million term loan and a $5.0 million term loan. As of June
3, 2004, approximately $42.2 million was drawn on the revolving credit
facility providing $10.9 million of excess availability, and $22.0 million was
outstanding on the term loans. Proceeds from the transaction were used to pay
off the Company's existing credit facility and will support its future working
capital, capital expenditure and general corporate requirements.
With the completion of the refinancing, the Company expects to file its
Form 10-K for the year ended September 27, 2003 and Form 10-Qs for the
quarters ended December 27, 2003 and March 27, 2004 with the Securities and
Exchange Commission on June 14, 2004. Shortly after the completion of these
filings, the Company expects that its common stock would resume trading on the
OTC bulletin board.

Outlook
"We believe that the completion of the refinancing represents a
significant milestone in our performance improvement efforts that will
increase the Company's financial flexibility going forward and reduce its cost
of capital," Woltz commented. "Looking ahead to the remainder of fiscal 2004,
we will continue to focus on expanding our presence in the engineered
structural mesh market as well as in other niche reinforcing products and
extending the successes of our spending control and productivity improvement
initiatives. We expect that spot shortages of raw materials will persist
throughout the balance of fiscal 2004 which should support the strong pricing
environment for our products, but which may cause inefficiencies in our
operations."
Insteel Industries is one of the nation's leading manufacturers of wire
products. The Company manufactures and markets concrete reinforcing and
industrial wire products for a broad range of construction and industrial
applications.
This news release contains forward-looking statements that reflect
management's current assumptions and expectations regarding the occurrence of
future actions or events. Such statements are made in reliance upon the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements contain words such as "expects," "plans,"
"believes," "will," "estimates," "intends," and other words of similar meaning
that do not relate strictly to historical or current facts. Forward-looking
statements are subject to various risks and uncertainties that include, but
are not limited to, those risk factors that are discussed in the Company's
latest Form 10-K and subsequent periodic filings with the Securities and
Exchange Commission that could cause actual results to differ materially from
those projected, stated or implied by such statements.

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

Three Months Ended
Dec. Dec. March March
27, 28, 27, 29,
2003 2002 2004 2003

Net sales $56,135 $46,797 $73,823 $45,923
Cost of sales 48,787 42,766 57,297 42,222
Gross profit 7,348 4,031 16,526 3,701
Selling, general and administrative
expense 3,569 2,759 4,290 2,977
Other expense (income) 64 9 (70) 31
Earnings before interest and
income taxes 3,715 1,263 12,306 693
Interest expense 2,592 2,490 2,362 2,457
Interest income (10) (16) (7) (1)
Earnings (loss) before income
taxes 1,133 (1,211) 9,951 (1,763)
Income taxes 432 (448) 3,790 (607)
Net earnings (loss) $701 $(763) $6,161 $(1,156)

Per share (basic):
Net earnings (loss) $0.08 $(0.09) $0.73 $(0.14)

Per share (diluted):
Net earnings (loss) $0.08 $(0.09) $0.70 $(0.14)

Six Months Ended
March 27, March 29,
2004 2003

Net sales $129,958 $92,720
Cost of sales 106,084 84,988
Gross profit 23,874 7,732
Selling, general and administrative
expense 7,859 5,736
Other expense (income) (6) 40
Earnings before interest and
income taxes 16,021 1,956
Interest expense 4,954 4,947
Interest income (17) (17)
Earnings (loss) before income
taxes 11,084 (2,974)
Income taxes 4,222 (1,055)
Net earnings (loss) $6,862 $(1,919)

Per share (basic):
Net earnings (loss) $0.81 $(0.23)

Per share (diluted):
Net earnings (loss) $0.78 $(0.23)

Three Months Ended Year Ended
Sept. Sept. Sept. Sept.
27, 28, 27, 28,
2003 2002 2003 2002

Net sales $59,978 $59,296 $212,125 $251,034
Cost of sales 52,925 52,944 190,838 226,950
Gross profit 7,053 6,352 21,287 24,084
Selling, general and administrative
expense 2,529 2,447 11,334 11,560
Restructuring charges - 32 - 12,978
Other expense (income) (72) 146 7 (797)
Earnings before interest, income
taxes and accounting change 4,596 3,727 9,946 343
Interest expense 2,674 2,719 10,077 11,815
Interest income - (1) (19) (92)
Earnings (loss) before income
taxes and accounting change 1,922 1,009 (112) (11,380)
Income taxes (6,036) 1,932 (6,834) (16)
Earnings (loss) before
accounting change 7,958 (923) 6,722 (11,364)
Cumulative effect of accounting
change - - - (14,358)
Net earnings (loss) $7,958 $(923) $6,722 $(25,722)

Per share (basic):
Earnings (loss) before
accounting change $0.94 $(0.11) $0.79 $(1.34)
Cumulative effect of accounting
change - - - (1.70)
Net earnings (loss) $0.94 $(0.11) $0.79 $(3.04)

Per share (diluted):
Earnings (loss) before
accounting change $0.92 $(0.11) $0.78 $(1.34)
Cumulative effect of accounting
change - - - (1.70)
Net earnings (loss) $0.92 $(0.11) $0.78 $(3.04)

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

Sept. 28, Sept. 27, Dec. 27, March 27,
2002 2003 2003 2004
Assets
Current assets:
Cash and cash equivalents $310 $310 $1,854 $462
Accounts receivable, net 29,898 30,909 24,158 38,934
Inventories 32,653 30,259 24,003 23,961
Prepaid expenses and other 5,831 8,309 8,916 6,335
Total current assets 68,692 69,787 58,931 69,692
Property, plant and equipment, net 55,445 50,816 49,831 49,566
Other assets 12,251 12,327 11,687 11,495
Total assets $136,388 $132,930 $120,449 $130,753

Liabilities and shareholders' equity
Current liabilities:
Accounts payable $23,855 $19,401 $14,026 $15,921
Accrued expenses 8,796 6,369 7,151 7,222
Current portion of long-term
debt 3,620 2,663 3,063 3,413
Total current liabilities 36,271 28,433 24,240 26,556
Long-term debt 70,020 67,630 59,100 61,150
Other liabilities 6,773 5,595 4,674 4,083
Shareholders' equity:
Common stock 16,920 16,920 16,920 16,932
Additional paid-in capital 38,327 38,327 38,327 38,316
Retained deficit (27,284) (20,562) (19,861) (13,701)
Accumulated other
comprehensive loss (4,639) (3,413) (2,951) (2,583)
Total shareholders' equity 23,324 31,272 32,435 38,964
Total liabilities and
shareholders' equity $136,388 $132,930 $120,449 $130,753

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

Three Months
Year Ended Ended
Sept. Sept. Dec. Dec.
27, 28, 27, 28,
2003 2002 2003 2002
Cash Flows From Operating Activities:
Net earnings (loss) $6,722 $(25,722) $701 $(763)
Adjustments to reconcile net
earnings (loss) to net cash
provided by operating activities:
Cumulative effect of
accounting change - 14,358 - -
Depreciation and
amortization 7,056 8,351 1,755 1,793
Loss on sale of assets 106 306 9 33
Restructuring charges - 12,978 - -
Deferred income taxes (6,834) (16) 432 (448)
Net changes in assets and
liabilities:
Accounts receivable,
net (1,011) 5,647 6,751 6,303
Inventories 2,394 (1,165) 6,256 (3,177)
Accounts payable and
accrued expenses (6,748) (8,478) (3,894) (6,065)
Other changes 2,078 1,586 (1,385) 3,595
Total adjustments (2,959) 33,567 9,924 2,034
Net cash
provided by
operating
activities 3,763 7,845 10,625 1,271

Cash Flows From Investing Activities:
Capital expenditures (962) (528) (251) (282)
Proceeds from sale of business - 16,448 - -
Proceeds from notes receivable 62 471 - 42
Proceeds from sale of property,
plant and equipment 184 1,777 - 7
Net cash provided
by (used for)
investing
activities (716) 18,168 (251) (233)

Cash Flows From Financing Activities:
Proceeds from long-term debt 10,400 5,000 600 1,600
Principal payments on long-term
debt (13,747) (32,065) (8,730) (3,550)
Other 300 400 (700) 1,121
Net cash used
for financing
activities (3,047) (26,665) (8,830) (829)

Net increase (decrease) in cash - (652) 1,544 209
Cash and cash equivalents at beginning
of period 310 962 310 310
Cash and cash equivalents at end of
period $310 $310 $1,854 $519

Supplemental Disclosures of Cash Flow
Information:
Cash paid (received) during the
period for:
Interest $8,692 $9,390 $2,181 $2,202
Income taxes (2,975) (2,736) - (2,975)

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

Six Months Ended
March 27, March 29,
2004 2003
Cash Flows From Operating Activities:
Net earnings (loss) $6,862 $(1,919)
Adjustments to reconcile net
earnings (loss) to net cash provided
by operating activities:
Cumulative effect of accounting
change - -
Depreciation and amortization 3,477 3,517
Loss on sale of assets 35 213
Restructuring charges - -
Deferred income taxes 4,222 (1,055)
Net changes in assets and
liabilities:
Accounts receivable, net (8,025) 5,113
Inventories 6,298 (2,821)
Accounts payable and
accrued expenses (3,903) (4,810)
Other changes (3,055) 3,618
Total adjustments (951) 3,775
Net cash provided by
operating activities 5,911 1,856

Cash Flows From Investing Activities:
Capital expenditures (1,304) (479)
Proceeds from sale of business - -
Proceeds from notes receivable - 47
Proceeds from sale of property,
plant and equipment - 13
Net cash provided by
(used for) investing
activities (1,304) (419)

Cash Flows From Financing Activities:
Proceeds from long-term debt 5,500 6,600
Principal payments on long-term debt (11,230) (7,320)
Other 1,275 (694)
Net cash used for
financing activities (4,455) (1,414)

Net increase (decrease) in cash 152 23
Cash and cash equivalents at beginning
of period 310 310
Cash and cash equivalents at end of period $462 $333

Supplemental Disclosures of Cash Flow
Information:
Cash paid (received) during the period for:
Interest $4,151 $4,290
Income taxes 50 (2,975)

SOURCE Insteel Industries, Inc.
-0- 06/10/2004
/CONTACT: Michael C. Gazmarian, Chief Financial Officer and Treasurer of
Insteel Industries, Inc., +1-336-786-2141, Ext. 3020/
/Web site: http://www.insteel.com /
(IIIN)