Business segment information

9 Months Ended

Sep. 30, 2012

Business segment information

Note 2 – Business segment information:

Our operating segments are organized by our manufacturing facilities and include three reportable segments:

• 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;

• 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.

We are vertically integrated, converting substantially all of our products from billets produced in KSW’s steel mini-mill. Calumet’s primary raw material is billet and EWP’s primary raw material is wire rod. Both Calumet and EWP source the majority of their primary raw material requirements from KSW.

	Three months ended September 30,						Nine months ended September 30,
	(In thousands)
	2011			2012			2011			2012
Net sales:
KSW	$	133,328		$	122,268		$	418,347		$	420,409
EWP		16,492			18,929			44,902			48,653
Calumet		7,132			6,359			23,044			21,948
Elimination of intersegment sales		(15,979	)		(14,484	)		(55,202	)		(51,898	)
Total net sales	$	140,973		$	133,072		$	431,091		$	439,112
Operating income (loss):
KSW	$	6,006		$	5,617		$	24,424		$	25,283
EWP		583			1,192			2,050			2,603
Calumet		(464	)		(1,651	)		(28	)		(2,248	)
Pension credit		4,750			1,346			14,250			5,143
OPEB credit		1,299			1,403			3,898			4,557
Other(1)		(508	)		535			(2,702	)		(2,317	)
Total operating income		11,666			8,442			41,892			33,021
Non operating income (expense):
Interest expense		(319	)		(274	)		(922	)		(967	)
Other income (expense), net		113			(141	)		661			(488	)
Income before income taxes	$	11,460		$	8,027		$	41,631		$	31,566

⁽¹⁾  Other items primarily consist of the elimination of intercompany profit or loss on ending inventory balances and general corporate expenses.