/24-7PressRelease/ - May 20, 2008 - from http://supplier-steel.com/ -----check out the steel news all over the globe here
Keystone Consolidated Industries, Inc. (OTC Bulletin Board: KYCN - News), reported net income of $13.6 million, or $1.39 per diluted share, in the first quarter of 2008 as compared to $14.5 million, or $1.45 per diluted share, in the first quarter of 2007. The decrease in earnings was due primarily to a lower pension credit during the first quarter of 2008 of $19.0 million as compared to the $20.4 million pension credit recorded during the first quarter of 2007.
Because the amount of the Company¡¯s net periodic defined benefit pension and other postretirement benefit (¡±OPEB¡±) expense or credits are unrelated to the ongoing 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 credits is set forth in the following table.
Three months ended
March 31,
(In thousands)
2007 2008
Operating income as reported $24,291 $22,776
Defined benefit pension credit (20,378) (18,996)
OPEB credit (2,200) (2,198)
Operating income before pension and OPEB $1,713 $1,582
The Company¡¯s sales volumes and per-ton selling prices for the first quarter of 2007 and 2008 were as follows:
Sales Volume Selling Prices
Three months Three months
ended ended
March 31, March 31,
2007 2008 2007 2008
(000 tons) (Per ton)
Fabricated wire products 34 30 $1,068 $1,180
Wire mesh 12 13 879 941
Industrial wire 23 17 733 846
Coiled rebar 6 3 526 624
Bar - 5 - 710
Wire rod 86 106 517 621
Billets (1) 1 132 255
All products 161 175 693 764
(1) Less than 1,000 tons.
Operating income before pension and OPEB for the first quarter of 2008 was slightly lower than the first quarter of 2007 primarily due to the net effects of the following factors:
¡ª lower shipment volumes of fabricated wire products as a result of
customer resistance to Keystone¡¯s price increases;
¡ª lower shipment volumes of industrial wire due to exceptional shipment
volumes during the first quarter of 2007 as a result of competitor
production problems;
¡ª increased costs for ferrous scrap;
¡ª increased costs for electricity and natural gas;
¡ª severance costs of $800,000 related to a reduction in force at
Keystone¡¯s largest manufacturing facility during the first quarter
of 2008;
¡ª higher shipment volumes of wire rod due to lower quantities of import
product available for sale and higher prices for import products as
well as the weak U.S. dollar;
¡ª higher per-ton product selling prices primarily in reaction to the
increased costs for ferrous scrap.
The 2008 pension credit is lower than the pension credit for 2007 due to the component of the pension credit related to the expected return on plan assets; Keystone¡¯s plan assets decreased $19.5 million during 2007.
As previously reported, on March 24, 2008, Keystone received $25 million and issued an additional 2.5 million shares of its common stock pursuant to a subscription rights offering that expired on March 17, 2008. Keystone used the offering proceeds to reduce indebtedness under its revolving credit facility, which in turn created additional availability under that facility that can be used for general corporate purposes, including scheduled debt payments, capital expenditures, potential acquisitions or the liquidity needs of Keystone¡¯s current operations.
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 Securities and Exchange Commission (¡±SEC¡±) including, but not limited to, the following:
¡ª Future supply and demand for Keystone¡¯s products (including
cyclicality thereof),
¡ª Customer inventory levels,
¡ª Changes in raw material and other operating costs (such as ferrous
scrap and energy),
¡ª The possibility of labor disruptions,
¡ª General global economic and political conditions,
¡ª Competitive products (including low-priced imports) and substitute
products,
¡ª Customer and competitor strategies,
¡ª The impact of pricing and production decisions,
¡ª Environmental matters (such as those requiring emission and discharge
standards for existing and new facilities),
¡ª Government regulations and possible changes therein,
¡ª Significant increases in the cost of providing medical coverage to
employees,
¡ª The ultimate resolution of pending litigation,
¡ª International trade policies of the United States and certain
foreign countries,
¡ª Operating interruptions (including, but not limited to, labor
disputes, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions),
¡ª The Company¡¯s ability to renew or refinance credit facilities,
¡ª Any possible future litigation, and
¡ª Other risks and uncertainties as discussed in the Company¡¯s filings
with the SEC.
Should one or more of these risks materialize, if the consequences 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 changes in 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:
¡ª The Company discloses operating income before pension and OPEB credits
or expense, which is used by the Company¡¯s management to assess its
performance. The Company believes disclosure of operating income
before pension and OPEB credits or expense provides useful information
to investors because it allows investors to analyze the performance of
the Company¡¯s operations in the same way the Company¡¯s management
assesses performance.
Keystone Consolidated Industries, Inc. is headquartered in Dallas, Texas. The Company is a leading manufacturer of steel fabricated wire products, industrial wire, billets and wire rod. Keystone also manufactures wire mesh, coiled rebar and steel bar. The Company¡¯s products are used in the agricultural, industrial, cold drawn, construction, transportation, 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
March 31,
2007 2008
(unaudited)
Net sales $113,098 $134,139
Cost of goods sold (106,731) (127,013)
Gross margin 6,367 7,126
Other operating income (expense):
Selling expense (1,678) (1,871)
General and administrative expense (2,976) (3,673)
Defined benefit pension credit 20,378 18,996
Other postretirement benefit credit 2,200 2,198
Total other operating income 17,924 15,650
Operating income 24,291 22,776
Nonoperating income (expense):
Interest expense (1,197) (1,313)
Interest and other income, net 138 390
Total nonoperating expense (1,059) (923)
Income before income taxes 23,232 21,853
Provision for income taxes (8,768) (8,243)
Net income $14,464 $13,610
Basic and diluted income per share $1.45 $1.39
Basic and diluted weighted average
shares outstanding 10,000 9,794
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