This Monthly Financial Report (the "Financial Report") is limited in scope,
covers a limited time period and has been prepared soley for purposes of
complying with the monthly reporting requirements of the United States
Bankruptcy Court for the Eastern District of Wisconsin in Milwaukee. Keystone
Consolidated Industries, Inc's ("Keystone") wholly-owned subsidiary, Engineered
Wire Products, Inc. ("EWP") has not filed for protection under Chapter 11 of
Title 11 of the United States Bankruptcy Code, and financial information for EWP
has been omitted from the Financial Report. The Financial Report is unaudited
and does not purport to show the financial statements of Keystone or any of its
subsidiaries in accordance with accounting principles generally accepted in the
United States ("GAAP"), and therefore excludes items required by GAAP, such as
certain reclassifications, eliminations, accruals and disclosure items. Undue
reliance should not be placed upon the Financial Report. There can be no
assurance that such information is complete.
MONTHLY FINANCIAL REPORT
OFFICE OF THE U.S. TRUSTEE
EASTERN DISTRICT OF WISCONSIN
Case Name: FV Steel & Wire Company ("FVSW") Case No: 04-22421-SVK
Keystone Consolidated Industries, Inc. ("KCI") 04-22422-SVK
DeSoto Environmental Management, Inc. ("DEMI") 04-22423-SVK
J.L. Prescott Company ("JLP") 04-22424-SVK
Sherman Wire Company ("SWC") 04-22425-SVK
Sherman Wire of Caldwell, Inc.("SWCI") 04-22426-SVK
FOR MONTH OF MAY, 2004
I. FINANCIAL SUMMARY
CASH RECEIPTS AND DISBURSEMENTS
-------------------------------
FVSW KCI DEMI JLP SWC SWCI Total
---- --- ---- --- --- ---- -----
A. CASH ON HAND START OF MONTH $0 $4,440,819 $0 $0 ($3,213) ($2,264) $4,435,342
-------------------------------------------------------------------
B. RECEIPTS 0 104,500,661 0 0 10,700 2,264 104,513,625
-------------------------------------------------------------------
C. DISBURSEMENTS 0 103,011,360 0 0 9,879 0 103,021,239
-------------------------------------------------------------------
D. NET RECEIPTS (DISBURSEMENTS) 0 1,489,301 0 0 821 2,264 1,492,386
-------------------------------------------------------------------
E. CASH ON HAND END OF MONTH $0 $5,930,120 $0 $0 ($2,392) $0 $5,927,728
===================================================================
Note 1 - KCI Cash On Hand At End of Month includes $6,770,537 of cash held in
escrow for PSC Metals, Inc. pending resolution of disputed ferrous scrap
ownership. (See U.S. Bank - Portland, Oregon accounts # 15365681004 and #
436000100).
Note 2 - KCI Receipts include $27,125,000 of advances on its Revolving Line of
Credit (RLC).
Note 3 - KCI Disbursements include $28,839,695 of payments on its RLC.
Note 4 - KCI Receipts and Disbursements include transfers from and to,
respectively KCI accounts of $48,616,436.
Note 5 - SWC Receipts and KCI Disbursements include transfers from KCI to SWC of
$6,733.
CASH DISBURSEMENT RECONCILIATION
--------------------------------
FVSW KCI DEMI JLP SWC SWCI Total
---- --- ---- --- --- ---- -----
Per Schedule of Receipts and Disbursements 0 103,011,360 0 0 9,879 0 103,021,239
Less:
Payments on Revolving Credit Facility (28,839,695) (28,839,695)
Transfers to other cash accounts (48,623,169) (48,623,169)
----------------------------------------------------------------------------
Net Cash Disbursements $0 $25,548,496 $0 $0 $9,879 $0 $25,558,375
============================================================================
Page 1 of 9
PROFIT AND LOSS STATEMENT
-------------------------
ACCRUAL BASIS
-------------
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
A NET SALES $0 $29,659,741 $0 $0 $1,428,028 $0 $31,087,769 ($1,985,697) $29,102,072
B. COST OF SALES 0 21,153,985 0 0 1,092,760 0 22,246,745 (1,985,697) 20,261,048
---------------------------------------------------------------------------------------------
C. GROSS PROFIT 0 8,505,756 0 0 335,268 0 8,841,024 0 8,841,024
D. TOTAL OPERATING EXPENSES 3,549 5,162,225 0 60,250 296,937 16,946 5,539,907 (199,867) 5,340,040
---------------------------------------------------------------------------------------------
E. NET INCOME (LOSS) FROM OPERATIONS (3,549) 3,343,531 0 (60,250) 38,331 (16,946) 3,301,117 199,867 3,500,984
F. NON-OPERATING, NON-RECURRING
REVENUE(EXPENSES) 7,994 (1,172,667) 60,000 0 128,998 0 (975,675) (199,867) (1,175,542)
---------------------------------------------------------------------------------------------
H. NET INCOME (LOSS) $4,445 $2,170,864 $60,000 ($60,250) $167,329 ($16,946) $2,325,442 $0 $2,325,442
=============================================================================================
Page 2 of 9
II. PROFIT & LOSS STATEMENT (ACCRUAL BASIS)
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
A. Related to Business Operations:
-------------------------------
Total Revenue (Sales) $29,659,741 $1,428,028 $31,087,769 ($1,985,697) $29,102,072
---------------------------------------------------------------------------------------------
Less: Cost of Goods Sold:
Beginning Inventory at Cost 39,571,621 1,742,652 41,314,273 41,314,273
Add: Purchases 25,297,153 1,625,715 26,922,868 (1,985,697) 24,937,171
Less: Ending Inventory at Cost 43,714,789 2,275,607 45,990,396 45,990,396
---------------------------------------------------------------------------------------------
Cost of Goods Sold 0 21,153,985 0 0 1,092,760 0 22,246,745 (1,985,697) 20,261,048
---------------------------------------------------------------------------------------------
Gross Profit 0 8,505,756 0 0 335,268 0 8,841,024 0 8,841,024
---------------------------------------------------------------------------------------------
Less: Operating Expenses:
Officer Compensation 40,577 0 40,577 40,577
Salaries and Wages --
Other Employees 1,100,401 87,250 1,187,651 1,187,651
Employee Benefits and Pensions 105 1,123,600 32,349 5,666 1,161,720 1,161,720
Payroll Taxes 94,272 14,299 108,571 108,571
Real Estate Taxes 12,231 14,618 726 27,575 27,575
Federal and State Income Taxes 0 0 0 0 0
Rent and Lease Expense 1,972 2,361 1,099 5,432 5,432
Interest Expense 448,070 60,000 0 508,070 (188,998) 319,072
Insurance 48,464 12,730 61,194 61,194
Automobile Expense 0 492 492 492
Utilities 240,578 10,109 780 251,467 251,467
Depreciation and Amortization 3,444 1,130,471 90,386 5,915 1,230,216 1,230,216
Repairs and Maintenance 118,615 6,327 124,942 124,942
Advertising 25,681 0 25,681 25,681
Supplies, Office Expense
and Photocopies 121,341 3,824 125,165 125,165
Bad Debts 0 0 0 0
Miscellaneous 0 655,952 0 250 22,192 2,760 681,154 (10,869) 670,285
---------------------------------------------------------------------------------------------
Total Operating Expenses 3,549 5,162,225 0 60,250 296,937 16,946 5,539,907 (199,867) 5,340,040
---------------------------------------------------------------------------------------------
Net Income (Loss) From Operations (3,549) 3,343,531 0 (60,250) 38,331 (16,946) 3,301,117 199,867 3,500,984
---------------------------------------------------------------------------------------------
B. Not Related to Business Operations:
-----------------------------------
Revenue:
Interest Income 994 3,557 60,000 128,998 193,549 (188,998) 4,551
Net Gain (Loss) on Sale of Assets 0 0
Other 7,000 45,226 0 0 0 0 52,226 (10,869) 41,357
---------------------------------------------------------------------------------------------
Total Non-Operating Revenue 7,994 48,783 60,000 0 128,998 0 245,775 (199,867) 45,908
---------------------------------------------------------------------------------------------
Expenses:
Legal and Professional Fees 0 1,221,450 0 0 0 0 1,221,450 0 1,221,450
Other 0 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total Non-Operating Expenses 0 1,221,450 0 0 0 0 1,221,450 0 1,221,450
---------------------------------------------------------------------------------------------
Net Income (Loss) For Period $4,445 $2,170,864 $60,000 ($60,250) $167,329 ($16,946) $2,325,442 $0 $2,325,442
=============================================================================================
Note 1 - Beginning and ending inventory balances shown above do not include
reserves related to LIFO and obsolescence that are reflected in the inventory
balances shown on the Balance Sheet.
Note 2 - Interest income at DEMI and SWC is based on the balance of intercompany
receivables.
Page 3 of 9
IV. BALANCE SHEET
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
ASSETS
------
Current
- -------
Cash $5,930,120 ($2,392) $5,927,728 $5,927,728
Inventory 53,582 26,694,209 2,470,797 29,218,588 29,218,588
Accounts Receivable 30,556,462 615,734 31,172,196 31,172,196
Prepaid Expenses 871,085 92,368 1,264 964,717 964,717
Other - Exhibit E 76,988 2,147,798 14,789,793 0 312,483 0 17,327,062 (15,102,276) 2,224,786
---------------------------------------------------------------------------------------------------------------
Total Current
Assets 130,570 66,199,674 14,789,793 0 3,488,990 1,264 84,610,291 (15,102,276) 69,508,015
---------------------------------------------------------------------------------------------------------------
Fixed
- -----
Property and
Equipment 1,175,330 323,147,343 21,589,653 2,829,738 348,742,064 348,742,064
Accumulated
Depreciation (710,932)(236,914,770) (16,446,567)(2,322,805) (256,395,074) (256,395,074)
---------------------------------------------------------------------------------------------------------------
Total Fixed
Assets 464,398 86,232,573 0 0 5,143,086 506,933 92,346,990 0 92,346,990
---------------------------------------------------------------------------------------------------------------
Other
- -----
Restricted
Investments 5,556,917 401,599 5,958,516 5,958,516
Prepaid Pension
Asset 130,748,674 130,748,674 130,748,674
Deferred Financing
Costs 1,467,767 1,467,767 1,467,767
Goodwill 751,508 751,508 751,508
Other - Exhibit F 115,000 39,632,719 0 0 2,246,873 0 41,994,590 (41,173,674) 820,916
---------------------------------------------------------------------------------------------------------------
Total Other
Assets 115,000 178,157,585 0 0 2,648,472 0 180,921,055 (41,173,674) 139,747,381
---------------------------------------------------------------------------------------------------------------
Total Assets $709,968 $330,589,832 $14,789,793 $0 $11,280,548 $508,197 $357,878,336 ($56,275,950)$301,602,386
===============================================================================================================
Page 4 of 9
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
LIABILITIES
-----------
Current
- -------
Pre-Petition
Accounts Payable 19,269,155 883,776 54,503 20,207,434 20,207,434
Post-Petition
Accounts Payable 8,720,883 115,681 1,500 8,838,064 8,838,064
Pre-Petition
Accounts Payable-
Affiliates (2,649,073) 90,315,476 5,774,107 15,552,291 (89,758,156)(1,459,080) 17,775,565 (14,904,350) 2,871,215
Post-Petition
Accounts Payable-
Affilliates (98,419) 312,712 6,760 180,750 334,282 (172,483) 563,602 (197,926) 365,676
Pre-Petition
Accrued Expenses-
Exhibit G 3,183 20,954,686 35,632 (36,000) 6,668,380 64,082 27,689,963 0 27,689,963
Post-Petition
Accrued Expenses-
Exhibit H 0 11,781,823 0 0 200,843 3,223 11,985,889 0 11,985,889
Pre-Petition Notes
Payable and Current 0 0
Maturities of Long
Term Debt 28,154,477 20,290 28,174,767 28,174,767
Post-Petition Notes
Payable and Current 0 0
Maturities of Long
Term Debt 36,791,578 (9,364) 36,782,214 36,782,214
Accrued OPEB Cost 11,441,001 155,000 297,662 11,893,663 11,893,663
Income Taxes Payable 0 0
Pre-petition accrued
pref. Stock
dividends 11,651,342 11,651,342 11,651,342
Post petition
accrued pref.
Stock dividends 1,484,975 1,484,975 1,484,975
---------------------------------------------------------------------------------------------------------------
Total Current
Liabilities (2,744,309) 240,878,108 5,816,499 15,852,041 (81,246,606)(1,508,255) 177,047,478 (15,102,276) 161,945,202
---------------------------------------------------------------------------------------------------------------
Long-Term
- ---------
Pre-Petition
Long Term Debt 32,180,761 32,180,761 32,180,761
Post-Petition
Long Term Debt 0 0
Accrued OPEB Cost 33,000 105,553,101 1,620,194 9,309,976 116,516,271 116,516,271
Accrued Pension Cost 1,386,700 1,386,700 1,386,700
Pre-Petition
Accrued Expenses-
Exhibit I 0 11,096,137 3,473,908 0 0 0 14,570,045 0 14,570,045
Post-Petition
Accrued Expenses-
Exhibit J 0 517,246 (6,230) 0 0 0 511,016 0 511,016
---------------------------------------------------------------------------------------------------------------
Total Long Term
Liabilities 33,000 150,733,945 3,467,678 1,620,194 9,309,976 0 165,164,793 0 165,164,793
---------------------------------------------------------------------------------------------------------------
Page 5 of 9
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Preferred Stock 2,112,000 2,112,000 2,112,000
- --------------- ---------------------------------------------------------------------------------------------------------------
STOCKHOLDERS'
EQUITY (DEFICIT)
Common Stock 10,000 10,798,251 6 2,246,866 5,619,274 1,000 18,675,397 (7,877,145) 10,798,252
Additional Paid-In
Capital 39,934,984 27,579,007 67,513,991 (27,579,007) 39,934,984
Accumulated Deficit 3,411,277 (113,855,331) 5,405,610 (19,719,101) 83,576,348 2,015,452 (39,165,745) (39,274,975) (78,440,720)
Treasury Stock (12,125) (33,557,453) (33,569,578) 33,557,453 (12,125)
---------------------------------------------------------------------------------------------------------------
Total
Stockholders'
Equity (Deficit) 3,421,277 (63,134,221) 5,405,616 (17,472,235) 83,217,176 2,016,452 13,454,065 (41,173,674) (27,719,609)
---------------------------------------------------------------------------------------------------------------
Total Liabilities
& Stockholders'
Equity (Deficit) $709,968 $330,589,832 $14,689,793 $0 $11,280,546 $508,197 $357,778,336 ($56,275,950)$301,502,386
===============================================================================================================
Note 1 - Inventory balances above reflect reserves related to LIFO and
obslescence that are not reflected in the inventory balances shown on the Profit
& Loss Statement.
Note 2 - Substantially all Current and Long Term Accrued OPEB (Future Retiree
Medical) Costs were incurred pre-petition.
Page 6 of 9
EXHIBIT E
OTHER CURRENT ASSETS
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Interest Receivable $1,988 $1,988 $1,988
Note Receivable 75,000 75,000 75,000
Intercompany Receivable 2,115,645 14,789,793 312,483 17,217,921 (15,102,276) 2,115,645
Short Term Investments 20,428 20,428 20,428
Receivable From EB Plans 2,295 2,295 2,295
Stop Loss Receivable 8,930 8,930 8,930
Security Deposit 500 500 500
---------------------------------------------------------------------------------------------------
$76,988 $2,147,798 $14,789,793 $0 $312,483 $0 17,327,062 ($15,102,276)$2,224,786
===================================================================================================
EXHIBIT F
OTHER LONG TERM ASSETS
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Note Receivable $115,000 $115,000 $115,000
Rail Cars 377,866 377,866 377,866
Investment in Sherman
Wire Corp. 38,915,803 38,915,803 (38,915,803) 0
Investment in Fox Valley
Steel & Wire 10,000 10,000 (10,000) 0
Investment in Sherman
Wire of Caldwell Inc. 1,000 1,000 (1,000) 0
Investment in J.L. Prescott
/DEMI 2,246,871 2,246,871 (2,246,871) 0
Long Term Insurance
Receivable 323,250 323,250 323,250
Deposits 4,800 4,800 4,800
0 0
-------------------------------------------------------------------------------------------------------
$115,000 $39,632,719 $0 $0 $2,246,871 $0 $41,994,590 ($41,173,674) $820,916
=======================================================================================================
Page 7 of 9
EXHIBIT G
PRE-PETITION ACCRUED EXPENSES - CURRENT
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Income Taxes $3,183 $35,632 ($36,000) ($70,091) ($67,276) ($67,276)
Worker Comp Exp 3,636,595 (168) 3,636,427 3,636,427
Missar Pension 0 19,935 19,935 19,935
Unclaimed Property 6,487 17,540 24,027 24,027
Abandoned Real Estate Exp 0 658,744 658,744 658,744
Legal and Professional Fees 311,879 487,932 799,811 799,811
Self-Insurance Liability 2,535,714 5,050,166 7,585,880 7,585,880
Pensions 0 15,704 15,704 15,704
Salaries/Wages 77,616 47,300 124,916 124,916
Holiday Pay/Vacations 1,719,548 127,854 1,847,402 1,847,402
FICA - Employer 0 3,257 3,257 3,257
Federal Unemployment Taxes 0 3,397 3,397 3,397
State Unemployment Taxes 0 20,577 20,577 20,577
Defined Contribution Plan 1,321,074 28,615 1,349,689 1,349,689
Medical Insurance 86,560 88,737 16,419 191,716 191,716
Utilities 0 5,049 (110) 4,939 4,939
Volume Incentive Plan 0 72,000 72,000 72,000
Property Tax 76,173 32,865 5,973 115,011 115,011
Sales/Use Tax 0 8,124 1,800 9,924 9,924
Customer Overpayments 0 50,843 50,843 50,843
Other - Plant Shut-Down 0 40,000 40,000 40,000
Goods received not invoiced 0 0 0
Unearned Revenue 0 0 0
Sales Rebates/Discounts 1,556,885 1,556,885 1,556,885
Manufacturing Misc 0 0 0
EPA 7,948,500 7,948,500 7,948,500
Medical Insurance 951,800 951,800 951,800
Accrued State Franchise Tax 206,742 206,742 206,742
Accrued Bank Service Charge (9,925) (9,925) (9,925)
Accrued Interest 454,639 454,639 454,639
Accrued travel 40,223 40,223 40,223
Accrued taxes - other 34,176 34,176 34,176
-------------------------------------------------------------------------------------------------------
$3,183 $20,954,686 $35,632 ($36,000) $6,668,380 $64,082 $27,689,963 $0 $27,689,963
=======================================================================================================
EXHIBIT H
POST PETITION ACCRUED EXPENSES - CURRENT
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Abandoned Real Estate Exp 153 12,600 12,753 12,753
Pensions 0 24,602 24,602 24,602
Salaries/Wages 864,750 (875) 863,875 863,875
Holiday Pay/Vacations 2,411,794 19,489 2,431,283 2,431,283
FICA - Employer (158,121) 2,728 (155,393) (155,393)
Federal Unemployment Taxes 0 (2,743) (2,743) (2,743)
State Unemployment Taxes 0 (11,684) (11,684) (11,684)
Defined Contribution Plan 588,284 18,915 607,199 607,199
Medical Insurance 308,930 25,258 (1,804) 332,384 332,384
Utilities 231,536 76,177 646 308,359 308,359
Property Tax 94,345 52,507 4,381 151,233 151,233
Sales/Use Tax 963 1,224 2,187 2,187
Legal 30,000 (17,355) 12,645 12,645
Professional Fees 135,487 135,487 135,487
Goods Received Not Invoiced 1,645,622 1,645,622 1,645,622
Worker's Compensation (46,551) (46,551) (46,551)
Unearned Revenue 5,384 5,384 5,384
Accrued Self-Insurance Losses 211,483 211,483 211,483
Accrued Interest 237,907 237,907 237,907
Accrued Travel 0 0 0
Accrued Restructuring Costs 2,875,048 2,875,048 2,875,048
Accrued Management Fees 11,250 11,250 11,250
-----------------------------------------------------------------------------------------------
$0 $11,781,823 $0 $0 $200,843 $3,223 $11,985,889 $0 $11,985,889
===============================================================================================
Page 8 of 9
EXHIBIT I
PRE-PETITION ACCRUED EXPENSES - LONG TERM
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Environmental 3,127,000 3,573,908 6,700,908 6,700,908
Workmans Compensation 1,846,775 1,846,775 1,846,775
Accrued Deferred Interest Exp. 781,715 781,715 781,715
L/T Deferred Compensation 15,660 15,660 15,660
Long Term Disability 32,987 32,987 32,987
L/T Deferred Tax Liability 5,292,000 5,292,000 5,292,000
-----------------------------------------------------------------------------------------------
$0 $11,096,137 $3,573,908 $0 $0 $0 $14,670,045 $0 $14,670,045
===============================================================================================
EXHIBIT J
POST PETITION ACCRUED EXPENSES - LONG TERM
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Workmans Compensation $517,019 $517,019 $517,019
Long Term Disability 227 227 227
Environmental (6,230) (6,230) (6,230)
-----------------------------------------------------------------------------------------------
$0 $517,246 ($6,230) $0 $0 $0 $511,016 $0 $511,016
===============================================================================================
Page 9 of 9