DALLAS, Nov. 6 /PRNewswire-FirstCall/ -- Keystone Consolidated Industries, Inc. (OTC Bulletin Board: KYCN), reported net income of $24.0 million, or $1.98 per diluted share, in the third quarter of 2008 as compared to $19.8 million, or $1.98 per diluted share, in the third quarter of 2007. The increase in net income was due primarily to the net effects of increased selling prices and shipment volumes in 2008, higher costs for ferrous scrap, energy and employee incentive compensation in 2008, a lower pension credit in 2008 and a $9.0 million gain on cancellation of debt in 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
                                                      September 30,
                                                      (In thousands)

                                                     2007         2008
    Operating income as reported                  $23,882      $39,053
       Defined benefit pension credit             (20,379)     (18,467)
       OPEB credit                                 (2,201)      (2,006)

    Operating income before pension and OPEB       $1,302      $18,580

The Company's sales volumes and average per-ton selling prices for the third quarter of 2007 and 2008 were as follows:

                                       Sales Volume        Average Selling
                                                                Prices
                                       Three months          Three months
                                          ended                 ended
                                      September  30,        September  30,
                                      2007      2008        2007      2008
                                       (000 tons)             (Per ton)
    Fabricated wire products          20        20        $1,109    $1,578
    Wire mesh                         16        14           912     1,348
    Industrial wire                   14        17           785     1,302
    Coiled rebar                       3         7           584       921
    Bar                                3         4           621     1,147
    Wire rod                          91        95           555       965
    Billets                            -         8             -       852
      All products                   147       165           695     1,106

Operating income before pension and OPEB for the third quarter of 2008 was significantly higher than operating income before pension and OPEB for the third quarter of 2007 primarily due to the net effects of the following factors:

    -- higher average per-ton product selling prices resulting from price
       increases Keystone implemented to offset increased costs for ferrous
       scrap as well as increased demand for domestic wire rod and industrial
       wire as discussed below;
    -- higher shipment volumes primarily due to lower quantities of import
       product available for sale and higher prices for import products as
       well as the weak U.S. dollar;
    -- decreased costs for zinc;
    -- cost savings of approximately $500,000 in 2008, resulting from a
       reduction-in-force at Keystone's largest manufacturing facility during
       the first quarter of 2008;
    -- increased costs for ferrous scrap and energy;
    -- higher costs in 2008 for certain excise taxes as a result of the
       expiration of certain exemptions for which Keystone previously
       qualified;
    -- increased employee incentive compensation accruals as a result of
       increased profitability; and
    -- increased costs for workers compensation and personal injury claims
       under our general liability insurance.

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 plans' assets decreased $19.5 million during 2007.

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:

    -- 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 (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
       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, 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:

    -- 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    Nine months ended
                                       September 30,         September 30,
                                      2007       2008       2007      2008
                                                   (unaudited)

    Net sales                       $103,358   $183,209   $339,121   $495,375
    Cost of goods sold               (96,923)  (156,867)  (319,651)  (440,170)

      Gross margin                     6,435     26,342     19,470     55,205

    Other operating income (expense):
      Selling expense                 (1,601)    (2,575)    (5,032)    (6,338)
      General and administrative
       expense                        (3,532)    (5,187)   (10,253)   (12,850)
      Defined benefit pension credit  20,379     18,467     61,136     55,401
      Other postretirement benefit
       credit                          2,201      2,006      6,602      6,542
      Gain on legal settlement             -          -      5,400          -

        Total other operating income  17,447     12,711     57,853     42,755

    Operating income                  23,882     39,053     77,323     97,960

    Non operating income (expense):
      Interest expense                (1,630)      (879)    (4,619)    (3,124)
      Other income, net                  447        435        999        835

        Total non operating expense   (1,183)      (444)    (3,620)    (2,289)

    Income before income taxes and
     reorganization items             22,699     38,609     73,703     95,671

    Reorganization items:
      Reorganization costs                (3)      (129)      (115)      (231)
      Gain on cancellation of debt     9,031          -      9,031          -
        Total reorganization items     9,028       (129)     8,916       (231)

      Income before income taxes      31,727     38,480     82,619     95,440

    Provision for income taxes       (11,921)   (14,505)   (31,108)   (35,936)

      Net income                     $19,806    $23,975    $51,511    $59,504

    Basic and diluted income per share $1.98      $1.98      $5.15      $5.25

    Basic and diluted weighted average
     shares outstanding               10,000     12,102     10,000     11,336

SOURCE Keystone Consolidated Industries, Inc.