For the quarter ended March 31, 2011
|
Commission file number 1-3919
|
Keystone Consolidated Industries, Inc.
|
(Exact name of Registrant as specified in its charter)
|
Delaware
|
37-0364250
|
|
(State or other jurisdiction of
Incorporation or organization)
|
(IRS Employer
Identification No.)
|
5430 LBJ Freeway, Suite 1740,
Three Lincoln Centre, Dallas, Texas
|
75240-2697
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code:
|
(972) 458-0028
|
|
*
|
The registrant has not yet been phased into the interactive data requirements.
|
Part I.
|
FINANCIAL INFORMATION
|
Page
|
Item 1.
|
Financial Statements
|
|
Condensed Consolidated Balance Sheets –
December 31, 2010; March 31, 2011 (unaudited)
|
3
|
|
Condensed Consolidated Statements of Income (unaudited) -
Three months ended March 31, 2010 and 2011
|
5
|
|
Condensed Consolidated Statements of Cash Flows (unaudited) –
Three months ended March 31, 2010 and 2011
|
6
|
|
Condensed Consolidated Statement of Stockholders' Equity and
Comprehensive Income (unaudited) - Three months ended March 31, 2011
|
7
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
8
|
|
Item 2.
|
Management's Discussion and Analysis of Financial
Condition and Results of Operations
|
14
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
22
|
Item 4.
|
Controls and Procedures
|
22
|
PART II.
|
OTHER INFORMATION
|
|
Item 1.
|
Legal Proceedings
|
24
|
Item 1A.
|
Risk Factors
|
24
|
Item 6.
|
Exhibits
|
24
|
Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.
|
December 31,
|
March 31,
|
|||||||
ASSETS
|
2010
|
2011
|
||||||
(unaudited)
|
||||||||
Current assets:
|
||||||||
Accounts receivable, net
|
$ | 46,765 | $ | 61,624 | ||||
Inventories
|
45,944 | 59,465 | ||||||
Deferred income taxes
|
17,501 | 17,501 | ||||||
Income taxes receivable
|
2,029 | - | ||||||
Prepaid expenses and other
|
1,474 | 1,616 | ||||||
Total current assets
|
113,713 | 140,206 | ||||||
Property, plant and equipment:
|
||||||||
Land
|
1,468 | 1,468 | ||||||
Buildings and improvements
|
63,375 | 64,073 | ||||||
Machinery and equipment
|
338,071 | 339,207 | ||||||
Construction in progress
|
4,628 | 5,295 | ||||||
407,542 | 410,043 | |||||||
Less accumulated depreciation
|
319,533 | 322,241 | ||||||
Net property, plant and equipment
|
88,009 | 87,802 | ||||||
Other assets:
|
||||||||
Pension asset
|
153,962 | 161,588 | ||||||
Other, net
|
1,533 | 1,510 | ||||||
Total other assets
|
155,495 | 163,098 | ||||||
Total assets
|
$ | 357,217 | $ | 391,106 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
December 31,
|
March 31,
|
||||||
2010
|
2011
|
|||||||
(unaudited)
|
||||||||
Current liabilities:
|
||||||||
Current maturities of long-term debt
|
$ | 27,744 | $ | 38,293 | ||||
Accounts payable
|
6,694 | 14,665 | ||||||
Accrued OPEB cost
|
1,279 | 1,279 | ||||||
Other accrued liabilities
|
22,901 | 25,679 | ||||||
Total current liabilities
|
58,618 | 79,916 | ||||||
Noncurrent liabilities:
|
||||||||
Long-term debt
|
937 | 948 | ||||||
Accrued OPEB cost
|
45,247 | 45,529 | ||||||
Deferred income taxes
|
58,830 | 63,465 | ||||||
Other accrued liabilities
|
1,849 | 1,698 | ||||||
Total noncurrent liabilities
|
106,863 | 111,640 | ||||||
Stockholders' equity:
|
||||||||
Common stock
|
125 | 121 | ||||||
Additional paid-in capital
|
100,111 | 98,863 | ||||||
Accumulated other comprehensive loss
|
(97,307 | ) | (96,720 | ) | ||||
Retained earnings
|
189,603 | 197,286 | ||||||
Treasury stock
|
(796 | ) | - | |||||
Total stockholders' equity
|
191,736 | 199,550 | ||||||
Total liabilities and stockholders’ equity
|
$ | 357,217 | $ | 391,106 | ||||
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(unaudited)
|
||||||||
Net sales
|
$ | 99,743 | $ | 134,163 | ||||
Cost of goods sold
|
(89,238 | ) | (121,194 | ) | ||||
Gross margin
|
10,505 | 12,969 | ||||||
Other operating income (expense):
|
||||||||
Selling expense
|
(1,709 | ) | (1,815 | ) | ||||
General and administrative expense
|
(3,875 | ) | (3,464 | ) | ||||
Defined benefit pension credit
|
1,212 | 4,750 | ||||||
Other postretirement benefit credit
|
1,342 | 1,300 | ||||||
Total other operating income (expense)
|
(3,030 | ) | 771 | |||||
Operating income
|
7,475 | 13,740 | ||||||
Nonoperating income (expense):
|
||||||||
Interest expense
|
(443 | ) | (275 | ) | ||||
Other income, net
|
64 | 123 | ||||||
Total nonoperating expense
|
(379 | ) | (152 | ) | ||||
Income before income taxes
|
7,096 | 13,588 | ||||||
Provision for income taxes
|
(2,721 | ) | (5,905 | ) | ||||
Net income
|
$ | 4,375 | $ | 7,683 | ||||
Basic and diluted income per share
|
$ | 0.36 | $ | 0.63 | ||||
Basic and diluted weighted average shares outstanding
|
12,102 | 12,102 | ||||||
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(unaudited)
|
||||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 4,375 | $ | 7,683 | ||||
Depreciation and amortization
|
3,261 | 2,823 | ||||||
Deferred income taxes
|
1,623 | 4,251 | ||||||
Defined benefit pension credit
|
(1,212 | ) | (4,750 | ) | ||||
OPEB credit
|
(1,342 | ) | (1,300 | ) | ||||
OPEB payments
|
(243 | ) | (323 | ) | ||||
Other, net
|
201 | (35 | ) | |||||
Change in assets and liabilities:
|
||||||||
Accounts receivable
|
(15,876 | ) | (14,790 | ) | ||||
Inventories
|
(18,072 | ) | (13,494 | ) | ||||
Accounts payable
|
6,910 | 7,971 | ||||||
Accrued liabilities
|
1,858 | 2,556 | ||||||
Income taxes
|
1,088 | 2,100 | ||||||
Other, net
|
519 | (591 | ) | |||||
Net cash used in operating activities
|
(16,910 | ) | (7,899 | ) | ||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(1,592 | ) | (2,705 | ) | ||||
Other, net
|
20 | 58 | ||||||
Net cash used in investing activities
|
(1,572 | ) | (2,647 | ) | ||||
Cash flows from financing activities:
|
||||||||
Revolving credit facility, net
|
19,823 | 10,549 | ||||||
Principal payments on other notes payable and
long-term debt
|
(1,334 | ) | - | |||||
Deferred financing costs paid
|
(7 | ) | (3 | ) | ||||
Net cash provided by financing activities
|
18,482 | 10,546 | ||||||
Net change in cash and cash equivalents
|
- | - | ||||||
Cash and cash equivalents, beginning of period
|
- | - | ||||||
Cash and cash equivalents, end of period
|
$ | - | $ | - | ||||
Supplemental disclosures:
Cash paid for:
|
||||||||
Interest, net of amount capitalized
|
$ | 240 | $ | 243 | ||||
Income taxes, net
|
9 | 10 |
Common
|
Additional
paid-in
|
Accumulated other
comprehensive income (loss)
|
Retained
|
Treasury
|
Comprehensive
|
|||||||||||||||||||||||||||
stock
|
capital
|
Pensions
|
OPEB
|
Earnings
|
stock
|
Total
|
income
|
|||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||
Balance – December 31, 2010
|
$ | 125 | $ | 100,111 | $ | (116,745 | ) | $ | 19,438 | $ | 189,603 | $ | (796 | ) | $ | 191,736 | ||||||||||||||||
Net income
|
- | - | - | - | 7,683 | - | 7,683 | $ | 7,683 | |||||||||||||||||||||||
Retirement of treasury stock
|
(4 | ) | (1,248 | ) | - | - | - | 796 | (456 | ) | ||||||||||||||||||||||
Amortization of actuarial
losses
|
- | - | 1,551 | 1,291 | - | - | 2,842 | 2,842 | ||||||||||||||||||||||||
Amortization of prior service
cost (credit)
|
- | - | 186 | (2,441 | ) | - | - | (2,255 | ) | (2,255 | ) | |||||||||||||||||||||
Balance – March 31, 2011
|
$ | 121 | $ | 98,863 | $ | (115,008 | ) | $ | 18,288 | $ | 197,286 | $ | - | $ | 199,550 | |||||||||||||||||
Comprehensive income
|
$ | 8,270 |
·
|
Keystone Steel & Wire (“KSW”), located in Peoria, Illinois, operates an electric arc furnace mini-mill, rod mill, industrial wire mill and wire product fabrication facilities and manufactures and sells wire rod, coiled rebar, industrial wire, fabricated wire and other products to agricultural, industrial, construction, commercial, original equipment manufacturers and retail consumer markets;
|
·
|
Engineered Wire Products, Inc. (“EWP”), located in Upper Sandusky, Ohio, manufactures and sells wire mesh in both roll and sheet form that is utilized as reinforcement in concrete construction products including pipe, pre-cast boxes and applications for use in roadways, buildings and bridges; and
|
·
|
Keystone-Calumet, Inc. (“Calumet”), located in Chicago Heights, Illinois, manufactures and sells merchant and special bar quality products and special sections in carbon and alloy steel grades for use in agricultural, cold drawn, construction, industrial chain, service centers and transportation applications as well as in the production of a wide variety of products by original equipment manufacturers.
|
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Net sales:
|
||||||||
KSW
|
$ | 102,490 | $ | 135,337 | ||||
EWP
|
7,376 | 11,042 | ||||||
Calumet
|
4,251 | 6,397 | ||||||
Elimination of intersegment sales
|
(14,374 | ) | (18,613 | ) | ||||
Total net sales
|
$ | 99,743 | $ | 134,163 | ||||
Operating income (loss):
|
||||||||
KSW
|
$ | 6,985 | $ | 8,810 | ||||
EWP
|
(363 | ) | (218 | ) | ||||
Calumet
|
147 | 100 | ||||||
Pension credit
|
1,212 | 4,750 | ||||||
OPEB credit
|
1,342 | 1,300 | ||||||
Other (1)
|
(1,848 | ) | (1,002 | ) | ||||
Total operating income
|
7,475 | 13,740 | ||||||
Non operating income (expense):
|
||||||||
Interest expense
|
(443 | ) | (275 | ) | ||||
Other income, net
|
64 | 123 | ||||||
Income before income taxes
|
$ | 7,096 | $ | 13,588 |
December 31,
|
March 31,
|
|||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Raw materials
|
$ | 3,957 | $ | 5,199 | ||||
Billet
|
5,832 | 8,449 | ||||||
Wire rod
|
7,042 | 11,224 | ||||||
Work in process
|
5,030 | 6,520 | ||||||
Finished products
|
22,821 | 28,598 | ||||||
Supplies
|
25,919 | 24,592 | ||||||
Inventory at FIFO
|
70,601 | 84,582 | ||||||
Less LIFO reserve
|
24,657 | 25,117 | ||||||
Total
|
$ | 45,944 | $ | 59,465 | ||||
December 31,
|
March 31,
|
|||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Wachovia revolving credit facility
|
$ | 27,740 | $ | 38,289 | ||||
Other
|
941 | 952 | ||||||
Total debt
|
28,681 | 39,241 | ||||||
Less current maturities
|
27,744 | 38,293 | ||||||
Total long-term debt
|
$ | 937 | $ | 948 |
December 31,
|
March 31,
|
|||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Current:
|
||||||||
Employee benefits
|
$ | 12,679 | $ | 13,078 | ||||
Self insurance
|
4,935 | 4,881 | ||||||
Environmental
|
472 | 420 | ||||||
Other
|
4,815 | 7,300 | ||||||
Total
|
$ | 22,901 | $ | 25,679 | ||||
Noncurrent:
|
||||||||
Workers compensation payments
|
$ | 1,242 | $ | 1,142 | ||||
Environmental
|
265 | 180 | ||||||
Other
|
342 | 376 | ||||||
Total
|
$ | 1,849 | $ | 1,698 |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Service cost
|
$ | 832 | $ | 931 | ||||
Interest cost
|
4,936 | 4,752 | ||||||
Expected return on plan assets
|
(10,951 | ) | (13,310 | ) | ||||
Amortization of accumulated other comprehensive income:
|
||||||||
Prior service cost
|
302 | 308 | ||||||
Actuarial losses
|
3,669 | 2,569 | ||||||
Total pension credit
|
$ | (1,212 | ) | $ | (4,750 | ) |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Service cost
|
$ | 28 | $ | 31 | ||||
Interest cost
|
611 | 574 | ||||||
Amortization of accumulated other comprehensive income:
|
||||||||
Prior service credit
|
(3,966 | ) | (4,042 | ) | ||||
Actuarial losses
|
1,985 | 2,137 | ||||||
Total OPEB credit
|
$ | (1,342 | ) | $ | (1,300 | ) |
Three months ended
|
||||||||
March 31,
|
||||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Expected income tax expense, at statutory rate
|
$ | 2,484 | $ | 4,756 | ||||
U.S. state income tax expense, net
|
226 | 1,142 | ||||||
Other, net
|
11 | 7 | ||||||
Income tax expense
|
$ | 2,721 | $ | 5,905 |
December 31,
2010
|
March 31,
2011
|
|||||||||||||||
Carrying
amount
|
Fair
value
|
Carrying
amount
|
Fair
value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Restricted cash equivalents
|
$ | 250 | $ | 250 | $ | 250 | $ | 250 | ||||||||
Accounts receivable, net
|
46,765 | 46,765 | 61,624 | 61,624 | ||||||||||||
Accounts payable
|
6,694 | 6,694 | 14,665 | 14,665 | ||||||||||||
Debt:
|
||||||||||||||||
Variable-rate debt
|
27,740 | 27,740 | 38,289 | 38,289 | ||||||||||||
Fixed-rate debt
|
941 | 1,019 | 952 | 1,025 | ||||||||||||
·
|
Future supply and demand for our products (including cyclicality thereof),
|
·
|
Customer inventory levels,
|
·
|
Changes in raw material and other operating costs (such as ferrous scrap and energy),
|
·
|
Availability of raw materials,
|
·
|
The possibility of labor disruptions,
|
·
|
General global economic and political conditions,
|
·
|
Competitive products (including low-priced imports) and substitute products,
|
·
|
Customer and competitor strategies,
|
·
|
The impact of pricing and production decisions,
|
·
|
Environmental matters (such as those requiring emission and discharge limits for existing and new facilities),
|
·
|
Government regulations and possible changes thereof,
|
·
|
Significant increases in the cost of providing medical coverage to employees,
|
·
|
The ultimate resolution of pending litigation, U.S. EPA investigations and audits conducted by the Internal Revenue Service,
|
·
|
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, supply disruptions and transportation interruptions),
|
·
|
Our ability to renew or refinance credit facilities,
|
·
|
The ability of our customers to obtain adequate credit,
|
·
|
Any possible future litigation, and
|
·
|
Other risks and uncertainties as discussed in this Quarterly Report and the 2010 Annual Report, including, without limitation, the section referenced above.
|
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Operating income as reported
|
$ | 7,475 | $ | 13,740 | ||||
Defined benefit pension credit
|
(1,212 | ) | (4,750 | ) | ||||
OPEB credit
|
(1,342 | ) | (1,300 | ) | ||||
Operating income before pension and OPEB
|
$ | 4,921 | $ | 7,690 |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
Sales volume (000 tons):
|
||||||||
Wire rod
|
81 | 93 | ||||||
Fabricated wire products
|
22 | 26 | ||||||
Industrial wire
|
11 | 16 | ||||||
Wire mesh
|
9 | 11 | ||||||
Bar
|
5 | 6 | ||||||
Coiled rebar
|
(1) | (1) | ||||||
Other
|
3 | 3 | ||||||
Total
|
131 | 155 | ||||||
(1) Less than 1,000 tons.
|
||||||||
Average per-ton selling prices:
|
||||||||
Wire rod
|
$ | 594 | $ | 707 | ||||
Fabricated wire products
|
1,286 | 1,331 | ||||||
Industrial wire
|
881 | 963 | ||||||
Wire mesh
|
857 | 937 | ||||||
Bar
|
859 | 982 | ||||||
Coiled rebar
|
597 | 696 | ||||||
All products
|
755 | 856 |
·
|
Keystone Steel & Wire (“KSW”), located in Peoria, Illinois, operates an electric arc furnace mini-mill, rod mill, industrial wire mill and wire product fabrication facilities and manufactures and sells wire rod, coiled rebar, industrial wire, fabricated wire and other products to agricultural, industrial, construction, commercial, original equipment manufacturers and retail consumer markets;
|
·
|
Engineered Wire Products, Inc. (“EWP”), located in Upper Sandusky, Ohio, manufactures and sells wire mesh in both roll and sheet form that is utilized as reinforcement in concrete construction products including pipe, pre-cast boxes and applications for use in roadways, buildings and bridges; and
|
·
|
Keystone-Calumet, Inc. (“Calumet”), located in Chicago Heights, Illinois, manufactures and sells merchant and special bar quality products and special sections in carbon and alloy steel grades for use in agricultural, cold drawn, construction, industrial chain, service centers and transportation applications as well as in the production of a wide variety of products by original equipment manufacturers.
|
KSW
|
EWP
|
Calumet
|
Other(1)
|
Total
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Three months ended March 31, 2010
|
||||||||||||||||||||
Net sales
|
$ | 102,490 | $ | 7,376 | $ | 4,251 | $ | (14,374 | ) | $ | 99,743 | |||||||||
Cost of goods sold
|
(91,767 | ) | (7,172 | ) | (3,898 | ) | 13,599 | (89,238 | ) | |||||||||||
Gross margin
|
10,723 | 204 | 353 | (775 | ) | 10,505 | ||||||||||||||
Selling and administrative expense
|
(3,738 | ) | (567 | ) | (206 | ) | (1,073 | ) | (5,584 | ) | ||||||||||
Operating income (loss) before pension/OPEB
|
$ | 6,985 | $ | (363 | ) | $ | 147 | $ | (1,848 | ) | $ | 4,921 | ||||||||
Three months ended March 31, 2011
|
||||||||||||||||||||
Net sales
|
$ | 135,337 | $ | 11,042 | $ | 6,397 | $ | (18,613 | ) | $ | 134,163 | |||||||||
Cost of goods sold
|
(122,882 | ) | (10,681 | ) | (6,109 | ) | 18,478 | (121,194 | ) | |||||||||||
Gross margin
|
12,455 | 361 | 288 | (135 | ) | 12,969 | ||||||||||||||
Selling and administrative expense
|
(3,645 | ) | (579 | ) | (188 | ) | (867 | ) | (5,279 | ) | ||||||||||
Operating income (loss) before pension/OPEB
|
$ | 8,810 | $ | (218 | ) | $ | 100 | $ | (1,002 | ) | $ | 7,690 |
Three months ended March 31,
|
||||||||||||||||
2010
|
% of
sales
|
2011
|
% of
sales
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Net sales
|
$ | 102,490 | 100.0 | % | $ | 135,337 | 100.0 | % | ||||||||
Cost of goods sold
|
(91,767 | ) | (89.5 | ) | (122,882 | ) | (90.8 | ) | ||||||||
Gross margin
|
10,723 | 10.5 | 12,455 | 9.2 | ||||||||||||
Selling and administrative expense
|
(3,738 | ) | (3.6 | ) | (3,645 | ) | (2.7 | ) | ||||||||
Operating income before pension/OPEB
|
$ | 6,985 | 6.9 | % | $ | 8,810 | 6.5 | % |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
Sales volume (000 tons):
|
||||||||
Wire rod
|
98 | 112 | ||||||
Fabricated wire products
|
22 | 26 | ||||||
Industrial wire
|
11 | 15 | ||||||
Billet
|
12 | 13 | ||||||
Coiled rebar
|
(1) | (1) | ||||||
Total sales
|
143 | 166 | ||||||
(1) Less than 1,000 tons.
|
||||||||
Average per-ton selling prices:
|
||||||||
Wire rod
|
$ | 593 | $ | 705 | ||||
Fabricated wire products
|
1,286 | 1,331 | ||||||
Industrial wire
|
881 | 972 | ||||||
Billet
|
428 | 509 | ||||||
Coiled rebar
|
597 | 696 | ||||||
All products
|
709 | 811 | ||||||
Average per-ton ferrous scrap cost of goods sold
|
$ | 250 | $ | 342 | ||||
Increase in LIFO reserve and cost of goods sold
|
$ | 306 | $ | 132 | ||||
Average electricity cost per kilowatt hour
|
$ | 0.04 | $ | 0.04 | ||||
Kilowatt hours consumed (000 hours)
|
128,443 | 138,023 | ||||||
Average natural gas cost per therm
|
$ | 0.58 | $ | 0.46 | ||||
Natural gas therms consumed (000 therms)
|
5,924 | 5,765 |
Three months ended March 31,
|
||||||||||||||||
2010
|
% of
sales
|
2011
|
% of
sales
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Net sales
|
$ | 7,376 | 100.0 | % | $ | 11,042 | 100.0 | % | ||||||||
Cost of goods sold
|
(7,172 | ) | (97.2 | ) | (10,681 | ) | (96.7 | ) | ||||||||
Gross margin
|
204 | 2.8 | 361 | 3.3 | ||||||||||||
Selling and administrative expense
|
(567 | ) | (7.7 | ) | (579 | ) | (5.2 | ) | ||||||||
Operating loss before pension/OPEB
|
$ | (363 | ) | (4.9 | ) | $ | (218 | ) | (1.9 | )% |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
Sales volume (000 tons):
|
||||||||
Wire mesh
|
9 | 11 | ||||||
Industrial wire
|
- | 1 | ||||||
Average per-ton selling prices:
|
||||||||
Wire mesh
|
$ | 857 | $ | 937 | ||||
Industrial wire
|
- | 807 | ||||||
All products
|
857 | 928 | ||||||
Average per-ton wire rod cost of goods sold
|
$ | 587 | $ | 673 | ||||
Increase in LIFO reserve and cost of goods sold
|
$ | 93 | $ | 329 |
Three months ended March 31,
|
||||||||||||||||
2010
|
% of
sales
|
2011
|
% of
sales
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Net sales
|
$ | 4,251 | 100.0 | % | $ | 6,397 | 100.0 | % | ||||||||
Cost of goods sold
|
(3,898 | ) | (91.7 | ) | (6,109 | ) | (95.5 | ) | ||||||||
Gross margin
|
353 | 8.3 | 288 | 4.5 | ||||||||||||
Selling and administrative expense
|
(206 | ) | (4.8 | ) | (188 | ) | (2.9 | ) | ||||||||
Operating income before pension/OPEB
|
$ | 147 | 3.5 | % | $ | 100 | 1.6 | % |
Three months ended
March 31,
|
||||||||
2010
|
2011
|
|||||||
Sales volume (000 tons) - Bar
|
5 | 6 | ||||||
Average per-ton selling prices - Bar
|
$ | 859 | $ | 982 | ||||
Average per-ton billet cost of goods sold
|
$ | 439 | $ | 493 |
·
|
higher operating income before pension and OPEB during 2011 of $2.8 million; and
|
·
|
less net cash used as a result of relative changes in our inventory in 2011 of $4.6 million due to lower inventory levels at March 31, 2011 caused by an increase in the rate at which we are selling inventory produced.
|
December 31,
|
March 31,
|
|||||||
2010
|
2011
|
|||||||
(In thousands)
|
||||||||
Working capital
|
$ | 55,095 | $ | 60,290 | ||||
Outstanding balance under revolving credit facility
|
27,740 | 38,289 | ||||||
Additional borrowing availability
|
38,779 | 27,681 |
|
·
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets,
|
|
·
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are made only in accordance with authorizations of our management and directors, and
|
|
·
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our Condensed Consolidated Financial Statements.
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
Legal Proceedings.
|
ITEM 1A.
|
Risk Factors.
|
ITEM 6.
|
Exhibits.
|
(a)
|
We have retained a signed original of any exhibit listed below that contains signatures, and we will provide any such exhibit to the Commission or its staff upon request. The following exhibit is included herein:
|
|
31.1
|
Certification.
|
|
31.2
|
Certification.
|
|
32.1
|
Certification.
|
Date: May 13, 2011
|
By/s/ Bert E. Downing, Jr.
Bert E. Downing, Jr.
Vice President, Chief Financial Officer,
Corporate Controller and Treasurer
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of Keystone Consolidated Industries, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of Keystone Consolidated Industries, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By/s/David L. Cheek
David L. Cheek
President and Chief Executive Officer
May 13, 2011
|
By/s/Bert E. Downing, Jr.
Bert E. Downing, Jr.
Vice President, Chief Financial Officer,
Corporate Controller and Treasurer
May 13, 2011
|