8-K

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 the earliest event reported)

March 28, 2007

Keystone Consolidated Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware	1-3919	37-0364250
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
5430 LBJ Freeway, Suite 1740, Dallas, Texas		75240-2697
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code (972) 458-0028
_________________________________________________________ (Former name or former address, if changed since last report.)

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 (see General Instruction A.2):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 260.425)

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

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

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

Item 2.02 Results of Operations and Financial Condition.

Item 7.01 Regulation FD Disclosure.

Pursuant to Items 2.02 and 7.01 of this current report, the registrant hereby furnishes the information set forth in its press release issued on March 28, 2007, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information, including the exhibit, the registrant furnishes in this report is not deemed "filed" for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Registration statements or other documents filed with the Securities and Exchange Commission shall not incorporate this information by reference, except as otherwise expressly stated in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Item No. Exhibit Index                                                                         

99.1 Press Release dated March 28, 2007 issued by the registrant.

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 hereunto duly authorized.

KEYSTONE CONSOLIDATED INDUSTRIES, INC.

(Registrant)

By:/s/ Bert E. Downing, Jr.                                            

Bert E. Downing, Jr.

Vice President, Chief Financial Officer, Corporate Controller and Treasurer

Date:  March 28, 2007

INDEX TO EXHIBITS

Exhibit No.Description                                                

99.1 Press release dated March 28, 2007 issued by Keystone Consolidated Industries, Inc.

EX-99.1

 

KEYSTONE CONSOLIDATED INDUSTRIES, INC.

PRESS RELEASE

FOR IMMEDIATE RELEASE

Keystone Consolidated Industries, Inc.	CONTACT:
5430 LBJ Freeway, Suite 1740	Bert E. Downing, Jr.
Dallas, Texas 75240-2697	Vice President and Chief Financial Officer
(972) 458-0028	(972) 458-0028

KEYSTONE REPORTS FOURTH QUARTER 2006 RESULTS

DALLAS, TEXAS . . . March 28, 2007 . . . Keystone Consolidated Industries, Inc. (OTCBB: KYCN), reported net income of $12.6 million, or $1.26 per diluted share, in the fourth quarter of 2006 as compared to $9.2 million, or $0.92 per diluted share, in the fourth quarter of 2005. The increase in earnings was due primarily to a significantly higher pension credit during the fourth quarter of 2006, an extra week of operations as 2006 was a 53-week year as compared to a 52-week year in 2005 and higher per-ton selling prices partially offset by lower shipment volumes and an increased provision for income taxes.

Because the amount of the Company’s net periodic defined benefit pension and other postretirement benefit (“OPEB”) expense or credits are unrelated to the operating activities of the Company, Keystone measures its overall operating performance using operating income before net pension and OPEB expense or credits. A reconciliation of operating income as reported to operating income adjusted for pension and OPEB expense or credit is set forth in the following table.

	Three months ended    December 31, 2006						Year ended    December 31, 2006
	(In thousands)
	2005			2006			2005			2006
Operating income as reported	$	10,499		$	20,454		$	22,718		$	80,963
Defined benefit pension credit		(2,035	)		(19,491	)		(11,710	)		(55,978	)
OPEB expense (credit)		(2,071	)		(1,997	)		8,885			(8,297	)
Operating income (loss) before pension/OPEB	$	6,393		$	(1,034	)	$	19,893		$	16,688

The Company’s sales volumes and per-ton selling prices for the fourth quarter and full year of 2005 and 2006 were as follows:

	Three months ended    December 31,				Three months ended    December 31,				Year ended    December 31,				Year ended    December 31,
	Sales Volume				Selling Prices				Sales Volume				Selling Prices
	2005		2006		2005		2006		2005		2006		2005		2006
	(000 tons)				(Per ton)				(000 tons)				(Per ton)
Fabricated wire products		22		21	$	1,054	$	1,055		101		112	$	1,090	$	1,037
Welded wire reinforcement		17		13		858		892		71		67		881		870
Nails		5		3		674		624		17		18		742		692
Industrial wire		22		16		708		740		72		75		731		726
Coiled rebar		-		1		-		521		-		1		-		529
Wire rod		87		58		474		504		236		349		503		500
Billets		18		21		336		350		29		53		321		354
All products		171		133		607		638		526		675		696		645

The decrease in operating income before pension and OPEB for the fourth quarter of 2006 as compared to the same period in 2005 was primarily a result of lower shipment volumes during the fourth quarter of 2006 partially offset by higher per-ton selling prices. Shipment volumes were lower in 2006, despite an extra week of operations, as shipment volumes during the fourth quarter of 2005 were exceptional due to increased demand after the storms in the late summer of 2005. The higher per-ton selling prices during the fourth quarter of 2006 were due primarily to price increases the Company began implementing during the third quarter of 2006.

The decrease in operating income before pension and OPEB for the year ended December 31, 2006 as compared to the same period in 2005 was primarily due to lower overall per-ton selling prices and increased conversion costs resulting from production interruptions due to operating issues with our wire rod mill reheat furnace, partially offset by higher shipment volumes and lower costs for ferrous scrap and natural gas. The reheat furnace was overhauled during the fourth quarter of 2006 to avoid future production inefficiencies. The higher shipment volumes of wire rod and billets in 2006 were due to increased market demand and general supply shortages resulting from competitor production problems. These competitor problems subsided during the fourth quarter of 2006. The lower per-ton selling prices during 2006 were due primarily to significantly lower ferrous scrap costs, as the Company’s selling prices are influenced in part by the market cost of ferrous scrap. Keystone’s average per-ton ferrous scrap cost was $210 during 2006 as compared to $220 during 2005.

The increased pension credit in 2006 was primarily a result of a $277 million increase in plan assets from the end of 2004 to the end of 2005. Additionally, as a result of an agreement with certain of the Company’s retirees entered into in connection with Keystone’s emergence from Chapter 11, the Company’s postretirement benefit expense subsequent to its emergence from Chapter 11 has been substantially reduced.

Prior to its emergence from bankruptcy, Keystone incurred substantial legal and professional fees relative to its Chapter 11 proceedings and the associated reorganization activities. In addition, upon the Company’s emergence from Chapter 11 on August 31, 2005, the Company recognized a $32.5 million pre-tax gain from cancellation of debt.

The Company’s provisions for income taxes were not significant during 2005 and prior to the second quarter of 2006. Due to Keystone’s profitability during the first six months of 2006 and due to expectations of continued profitability, the Company had reversed its deferred income tax asset valuation allowance by the end of June 2006 and Keystone’s effective income tax rate during the last three quarters of 2006 is significantly higher than during 2005.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this release that are not historical in nature are forward-looking and are not statements of fact. Forward-looking statements represent the Company’s beliefs and assumptions based on currently available information. In some cases you can identify these forward-looking statements by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expected" or comparable terminology, or by discussions of strategies or trends. Although Keystone believes the expectations reflected in forward-looking statements are reasonable, it does not know if these expectations will be correct. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results. Actual future results could differ materially from those predicted. While it is not possible to identify all factors, the Company continues to face many risks and uncertainties. Among the factors that could cause Keystone’s actual future results to differ materially from those described herein are the risks and uncertainties discussed from time to time in the Company’s filings with the SEC including, but not limited to, the following:

·   Future supply and demand for Keystone’s products (including cyclicality thereof),

·   Customer inventory levels,

·   Changes in raw material and other operating costs (such as ferrous scrap and energy)

·   The possibility of labor disruptions,

·   General global economic and political conditions,

·   Competitive products and substitute products,

·   Customer and competitor strategies,

·   The impact of pricing and production decisions,

·   Environmental matters (such as those requiring emission and discharge standards for existing and new facilities),

·   Government regulations and possible changes therein,

·   Significant increases in the cost of providing medical coverage to employees,

·   The ultimate resolution of pending litigation,

·   International trade policies of the United States and certain foreign countries,

·   Operating interruptions (including, but not limited to, labor disputes, fires, explosions, unscheduled or unplanned downtime and transportation interruptions),

·   The Company’s ability to renew or refinance credit facilities,

·   Any possible future litigation, and

·   Other risks and uncertainties as discussed in the Company’s filings with the SEC.

Should one or more of these risks materialize or if the consequences of such a development worsen, or if the underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected. Keystone disclaims any intention or obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise.

In an effort to provide investors with additional information regarding the Company’s results as determined by accounting principles generally accepted in the United States of America (“GAAP”), the Company has disclosed certain non-GAAP information, which the Company believes provides useful information to investors:

·   The Company discloses operating income before pension and OPEB expense, which is used by the Company’s management to assess its performance. The Company believes disclosure of operating income before pension and OPEB expense provides useful information to investors because it allows investors to analyze the performance of the Company’s operations in the same way that the Company’s management assesses performance.

Keystone Consolidated Industries, Inc. is headquartered in Dallas, Texas. The Company is a leading manufacturer and distributor of fabricated wire products, welded wire reinforcement, industrial wire, coiled rebar and wire rod for the agricultural, industrial, construction, original equipment manufacturer and retail consumer markets. Keystone’s common stock is traded on the OTC Bulletin Board (Symbol: KYCN).

* * * * * * * * * *

KEYSTONE CONSOLIDATED INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three months ended     December 31,						Year ended     December 31,
	2005			2006			2005			2006
	(unaudited)
Net sales	$	104,246		$	87,118		$	367,545		$	440,540
Cost of goods sold		92,867			83,508			329,589			405,719
Gross margin		11,379			3,610			37,956			34,821
Selling expense		1,605			1,707			6,247			6,864
General and administrative expense		3,381			2,938			11,816			11,269
Defined benefit pension credit		(2,035	)		(19,491	)		(11,710	)		(55,978	)
Other postretirement benefit expense (credit)		(2,071	)		(1,997	)		8,885			(8,297	)
Total operating costs		880			(16,843	)		15,238			(46,142	)
Operating income		10,499			20,454			22,718			80,963
Nonoperating income (expense):
Corporate income (expense)		(888	)		(669	)		(2,525	)		(1,213	)
Interest expense		(1,176	)		(992	)		(3,992	)		(4,720	)
Interest income		46			202			266			361
Other income, net		722			169			993			75
Total nonoperating expense		(1,296	)		(1,290	)		(5,258	)		(5,497	)
Income before income taxes and  reorganization items		9,203			19,164			17,460			75,466
Reorganization items:
Reorganization costs		15			(73	)		(10,308	)		(679	)
Gain on cancellation of debt		161			-			32,510			-
Total reorganization items		176			(73	)		22,202			(679	)
Income before income taxes		9,379			19,091			39,662			74,787
Provision for income taxes		158			6,468			430			17,055
Net income	$	9,221		$	12,623		$	39,232		$	57,732
Basic income per share	$	0.92		$	1.26		$	4.12		$	5.77
Basic shares outstanding		10,000			10,000			10,046			10,000
Diluted income per share	$	0.92		$	1.26		$	1.88		$	5.77
Diluted shares outstanding		10,063			10,000			22,029			10,000