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
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 AUGUST, 2004.
I. FINANCIAL SUMMARY
CASH RECEIPTS AND DISBURSEMENTS
-------------------------------
FVSW KCI DEMI JLP SWC SWCI Total
---- --- ---- --- --- ---- -----
A. CASH ON HAND START OF MONTH $0 $7,757,287 $0 $0 ($23,144) ($3,000) $7,731,143
-----------------------------------------------------------------
B. RECEIPTS 0 65,497,157 0 0 28,942 3,000 65,529,099
C. DISBURSEMENTS 0 64,024,479 0 0 5,189 0 64,029,668
-----------------------------------------------------------------
D. NET RECEIPTS (DISBURSEMENTS) 0 1,472,678 0 0 23,753 3,000 1,499,431
-----------------------------------------------------------------
E. CASH ON HAND END OF MONTH $0 $9,229,965 $0 $0 $609 $0 $9,230,574
=================================================================
Note 1 - KCI Cash On Hand At End of Month includes $7,892,490 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 and Disbursement exclude transfers between KCI cash
accounts of $67,501,574.
PROFIT AND LOSS STATEMENT
-------------------------
ACCRUAL BASIS
-------------
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
A NET SALES $0 $32,193,565 $0 $0 $1,528,791 $0 $33,722,356 ($1,516,639) $32,205,717
B. COST OF SALES 0 24,356,447 0 0 1,099,897 0 25,456,344 (1,516,639) 23,939,705
---------------------------------------------------------------------------------------------
C. GROSS PROFIT 0 7,837,118 0 0 428,894 0 8,266,012 0 8,266,012
D. TOTAL OPERATING EXPENSES 3,549 5,336,065 0 60,000 354,991 7,450 5,762,055 (199,268) 5,562,787
---------------------------------------------------------------------------------------------
E. NET INCOME (LOSS) FROM OPERATION (3,549) 2,501,053 0 (60,000) 73,903 (7,450) 2,503,957 199,268 2,703,225
F. NON-OPERATING, NON-RECURRING
REVENUEE(EXPENSES)) 7,581 (983,062) 60,000 0 91,793 0 (823,688) (199,268) (1,022,956)
---------------------------------------------------------------------------------------------
H. NET INCOME (LOSS) $4,032 $1,517,991 $60,000 ($60,000) $165,696 ($7,450) $1,680,269 $0 $1,680,269
=============================================================================================
Page 1
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) $32,193,565 $1,528,791 $33,722,356 ($1,516,639) $32,205,717
---------------------------------------------------------------------------------------------
Less: Cost of Goods Sold:
Beginning Inventory at Cost 42,400,855 2,344,034 44,744,889 44,744,889
Add: Purchases 27,194,167 1,239,626 28,433,793 (1,516,639) 26,917,154
Less: Ending Inventory at Cost 45,238,575 2,483,763 47,722,338 47,722,338
---------------------------------------------------------------------------------------------
Cost of Good Sold 0 24,356,447 0 0 1,099,897 0 25,456,344 (1,516,639) 23,939,705
---------------------------------------------------------------------------------------------
Gross Profit 0 7,837,118 0 0 428,894 0 8,266,012 0 8,266,012
---------------------------------------------------------------------------------------------
Less: Operating Expenses:
Officer Compensation 40,577 40,577 40,577
Salaries and Wages -- Other Employees 1,104,643 82,479 1,187,122 1,187,122
Employee Benefits and Pensions 105 1,427,804 27,163 53 1,455,125 1,455,125
Payroll Taxes 94,021 13,227 107,248 107,248
Real Estate Taxes 12,231 10,472 (193) 22,510 22,510
Federal and State Income Taxes 0 0 0
Rent and Lease Expense 43,729 1,602 45,331 45,331
Interest Expense 361,297 60,000 421,297 (188,399) 232,898
Insurance 83,929 12,730 96,659 96,659
Automobile Expense 0 0 0 0
Utilities 162,189 8,476 482 171,147 171,147
Depreciation and Amortization 3,444 1,097,687 89,877 5,915 1,196,923 1,196,923
Repairs and Maintenance 179,967 37,103 0 217,070 217,070
Advertising 29,709 29,709 29,709
Supplies, Office Expense and
Photocopies 99,287 6,020 105,307 105,307
Bad Debts 0 0 0
Miscellaneous 0 598,995 0 0 65,842 1,193 666,030 (10,869) 655,161
---------------------------------------------------------------------------------------------
Total Operating Expenses 3,549 5,336,065 0 60,000 354,991 7,450 5,762,055 (199,268) 5,562,787
---------------------------------------------------------------------------------------------
Net Income (Loss) From Operations (3,549) 2,501,053 0 (60,000) 73,903 (7,450) 2,503,957 199,268 2,703,225
---------------------------------------------------------------------------------------------
B. Not Related to Business Operations:
----------------------------------
Revenue:
Interest Income 581 10,228 60,000 128,399 199,208 (188,399) 10,809
Net Gain (Loss) on Sale of Assets 0 0
Other 7,000 44,706 0 0 0 0 51,706 (10,869) 40,837
---------------------------------------------------------------------------------------------
Total Non-Operating Revenue 7,581 54,934 60,000 0 128,399 0 250,914 (199,268) 51,646
---------------------------------------------------------------------------------------------
Expenses:
Legal and Professional Fees 0 1,037,996 0 0 36,606 0 1,074,602 0 1,074,602
Other 0 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total Non-Operating Expenses 0 1,037,996 0 0 36,606 0 1,074,602 0 1,074,602
---------------------------------------------------------------------------------------------
Net Income (Loss) For Period $4,032 $1,517,991 $60,000 ($60,000) $165,696 ($7,450) $1,680,269 $0 $1,680,269
=============================================================================================
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 2
IV. BALANCE SHEET
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
ASSETS
------
Current
- -------
Cash $9,229,965 $609 $9,230,574 $9,230,574
Inventory 53,582 28,217,994 2,678,953 30,950,529 30,950,529
Accounts Receivable 37,199,567 822,832 38,022,399 38,022,399
Prepaid Expenses 1,645,104 32,688 1,264 1,679,056 1,679,056
Other - Exhibit E 76,425 2,933,464 14,969,793 0 325,617 0 18,305,299 (15,295,410) 3,009,889
--------------------------------------------------------------------------------------------------------------
Total Current
Assets 130,007 79,226,094 14,969,793 0 3,860,699 1,264 98,187,857 (15,295,410) 82,892,447
--------------------------------------------------------------------------------------------------------------
Fixed
- -----
Property and
Equipment 1,175,330 323,682,561 21,617,420 2,829,738 349,305,049 349,305,049
Accumulated
Depreciation (722,125)(240,224,597) (16,738,012) (2,342,030) (260,026,764) (260,026,764)
--------------------------------------------------------------------------------------------------------------
Total Fixed
Assets 453,205 83,457,964 0 0 4,879,408 487,708 89,278,285 0 89,278,285
--------------------------------------------------------------------------------------------------------------
Other
- -----
Restricted
Investments 5,709,134 248,296 5,957,430 5,957,430
Prepaid Pension Asset 133,146,393 133,146,393 133,146,393
Deferred Financing
Costs 1,412,817 1,412,817 1,412,817
Goodwill 751,508 751,508 751,508
Other - Exhibit F 115,000 39,619,719 0 0 2,246,871 0 41,981,590 (41,173,674) 807,916
---------------------------------------------------------------------------------------------------------------
Total Other
Assets 115,000 180,639,571 0 0 2,495,167 0 183,249,738 (41,173,674) 142,076,064
---------------------------------------------------------------------------------------------------------------
Total Assets $698,212 $343,323,629 $14,969,793 $0 $11,235,274 $488,972 $370,715,880 ($56,469,084) $314,246,796
===============================================================================================================
Page 3
IV. BALANCE SHEET (con't)
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
LIABILITIES
-----------
Current
- -------
Pre-Petition
Accounts Payable 19,509,121 1,010,672 54,503 20,574,296 20,574,296
Post-Petition
Accounts Payable 11,310,223 120,630 2,600 11,433,453 11,433,453
Pre-Petition
Accounts Payable-
Affiliates (2,649,073) 87,913,118 5,774,107 15,552,291 (89,758,156) (1,459,080) 15,373,207 (14,904,350) 468,857
Post-Petition
Accounts Payable-
Affiliates (114,701) 3,242,734 256,882 291,481 (128,689) (144,560) 3,403,147 (391,060) 3,012,087
Pre-Petition
Accrued Expenses-
Exhibit G 3,183 18,042,936 35,632 (36,000) 6,668,380 64,082 24,778,213 0 24,778,213
Post-Petition
Accrued Expenses-
Exhibit H 0 13,471,511 0 0 253,791 (1,564) 13,723,738 0 13,723,738
Post-Petition
Accrued
Professional Fees 2,793,512 2,939 2,796,451 2,796,451
Post-Petition
Accrued
Other Taxes-
Exhibit M 0 (5,298) 0 0 54,782 1,881 51,365 0 51,365
Pre-Petition Notes
Payable
and Current 0 0
Maturities of
Long Term Debt 28,149,055 20,290 28,169,345 28,169,345
Post-Petition
Notes Payable
and Current 0 0
Maturities of
Long Term Debt 25,945,589 (15,743) 25,929,846 25,929,846
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 11,845,805 11,845,805 11,845,805
Post petition
accrued pref.
Stock dividends 3,673,528 3,673,528 3,673,528
---------------------------------------------------------------------------------------------------------------
Total Current
Liabilities (2,760,591) 237,332,835 6,066,621 15,962,772 (81,473,442) (1,482,138) 173,646,057 (15,295,410) 158,350,647
---------------------------------------------------------------------------------------------------------------
Page 4
IV. BALANCE SHEET (con't)
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
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 33,000 110,576,486 1,617,588 9,430,087 121,657,161 121,657,161
Accrued Pension
Cost 2,206,114 2,206,114 2,206,114
Pre-Petition
Accrued Expenses-
Exhibit I 0 11,096,137 3,573,908 0 0 0 14,670,045 0 14,670,045
Post-Petition
Accrued Expenses-
Exhibit J 0 805,794 (184,511) 0 0 0 621,283 0 621,283
---------------------------------------------------------------------------------------------------------------
Total
Long Term
Liabilities 33,000 156,865,292 3,389,397 1,617,588 9,430,087 0 171,335,364 0 171,335,364
---------------------------------------------------------------------------------------------------------------
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 37,551,968 27,579,007 65,130,975 (27,579,007) 37,551,968
Accumulated
Deficit 3,415,803 (101,324,592) 5,513,769 (19,827,226) 83,637,801 1,970,110 (26,614,335) (39,274,975) (65,889,310)
Treasury Stock (12,125) (33,557,453) (33,569,578) 33,557,453 (12,125)
---------------------------------------------------------------------------------------------------------------
Total
Stockholders'
Equity
(Deficit) 3,425,803 (52,986,498) 5,513,775 (17,580,360) 83,278,629 1,971,110 23,622,459 (41,173,674) (17,551,215)
---------------------------------------------------------------------------------------------------------------
Total
Liabilities &
Stockholders'
Equity
(Deficit) $698,212 $343,323,629 $14,969,793 $0 $11,235,274 $488,972 $370,715,880 ($56,469,084) $314,246,796
===============================================================================================================
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 5
EXHIBIT E
OTHER CURRENT ASSETS
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Interest Receivable $1,425 $1,425 $1,425
Note Receivable 75,000 75,000 75,000
Intercompany Receivable 2,898,671 14,969,793 325,617 18,194,081 (15,295,410) 2,898,671
Short Term Investments 20,428 20,428 20,428
Receivable From EB Plans 4,935 4,935 4,935
Stop Loss Receivable 8,930 8,930 8,930
Security Deposit 500 500 500
----------------------------------------------------------------------------------------------------
$76,425 $2,933,464 $14,969,793 $0 $325,617 $0 $18,305,299 ($15,295,410) $3,009,889
====================================================================================================
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 364,866 364,866 364,866
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 $39,619,719 $0 $0 $2,246,871 $0 $41,981,590 ($41,173,674) $807,916
====================================================================================================
Page 6
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 3,545,958 (168) 3,545,790 3,545,790
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 295,464 487,932 783,396 783,396
Self-Insurance Liability 2,727,354 5,050,166 7,777,520 7,777,520
Pensions 0 15,704 15,704 15,704
Salaries/Wages 77,616 47,300 124,916 124,916
Holiday Pay/Vacations 552,492 127,854 680,346 680,346
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 0 28,615 28,615 28,615
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 0 32,865 5,973 38,838 38,838
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 1,155,976 1,155,976 1,155,976
Manufacturing Misc 0 0 0
EPA 7,917,448 7,917,448 7,917,448
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 34,102 34,102 34,102
----------------------------------------------------------------------------------------------------
$3,183 $18,042,936 $35,632 ($36,000) $6,668,380 $64,082 $24,778,213 $0 $24,778,213
====================================================================================================
EXHIBIT H
POST PETITION ACCRUED EXPENSES - CURRENT
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
Abandoned Real Estate Exp 154 26,700 26,854 26,854
Pensions 0 48,419 48,419 48,419
Salaries/Wages 1,402,552 13,551 1,416,103 1,416,103
Holiday Pay/Vacations 3,439,386 24,582 3,463,968 3,463,968
Defined Contribution Plan 937,941 34,971 972,912 972,912
Medical Insurance 135,848 14,089 (2,635) 147,302 147,302
Utilities 334,570 66,461 1,071 402,102 402,102
Legal 111,565 111,565 111,565
Professional Fees 197,574 197,574 197,574
Goods Received Not Invoiced 1,970,737 1,970,737 1,970,737
Worker's Compensation 430,007 430,007 430,007
Unearned Revenue 8,269 8,269 8,269
Sales Rebates/Discounts 1,089,614 1,089,614 1,089,614
Abanondon Property 0 0 0
Miscellaneous 2,077,684 25,018 2,102,702 2,102,702
Accrued Bank Service Charge 14,775 14,775 14,775
Accrued Self-Insurance Losses 238,575 238,575 238,575
Accrued Interest 326,706 326,706 326,706
Accrued Travel 0 0 0
Accrued Profit Sharing 733,054 733,054 733,054
Accrued Management Fees 22,500 22,500 22,500
----------------------------------------------------------------------------------------------------
$0 $13,471,511 $0 $0 $253,791 ($1,564) $13,723,738 $0 $13,723,738
====================================================================================================
Page 7
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 0
----------------------------------------------------------------------------------------------------
$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 $804,317 $804,317 $804,317
Long Term Disability 1,477 1,477 1,477
Environmental (184,511) (184,511) (184,511)
----------------------------------------------------------------------------------------------------
$0 $805,794 ($184,511) $0 $0 $0 $621,283 $0 $621,283
====================================================================================================
EXHIBIT M
POST PETITION ACCRUED OTHER TAXES
Sub Elimin-
FVSW KCI DEMI JLP SWC SWCI Total ations Total
---- --- ---- --- --- ---- ----- ------ -----
FICA - Employer ($88,300) 843 ($87,457) ($87,457)
Federal Unemployment Taxes 0 (3,078) (3,078) (3,078)
State Unemployment Taxes 0 (18,407) (18,407) (18,407)
Property Tax 210,267 72,756 1,881 284,904 284,904
Sales/Use Tax 513 2,668 3,181 3,181
Accrued State Franchise Tax (88,515) (88,515) (88,515)
Miscellaneous (39,263) (39,263) (39,263)
----------------------------------------------------------------------------------------------------
$0 ($5,298) $0 $0 $54,782 $1,881 $51,365 $0 $51,365
====================================================================================================