| Keystone      Consolidated Industries, Inc.                |
|------------------------------------------------------------|
| (Exact      name of Registrant as specified in itscharter) |

| Delaware                                                                |   | 37-0364250                                 |
|-------------------------------------------------------------------------|--------|--------------------------------------------|
| (State      or other jurisdiction ofIncorporation      or organization) |   | (IRS      EmployerIdentification      No.) |

| 5430      LBJ Freeway, Suite 1740,Three      Lincoln Centre, Dallas, Texas |   | 75240-2697      |
|----------------------------------------------------------------------------|--------|-----------------|
| (Address      of principal executive offices)                              |   | (Zip      Code) |

| Registrant’s      telephone number, including area code:   | (972) 458-0028 |
|------------------------------------------------------------------|----------------|
|                                                             |           |
| Securities      registered pursuant to Section 12(b) of the Act: | None.          |

| Securities      registered pursuant to Section 12(g) of the Act: | Title of each class               |
|------------------------------------------------------------------|-----------------------------------|
|                                                             | Common      Stock, $.01 par value |

----

----

| ·   | Future      supply and demand for our 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 politicalconditions, |
|--------------------|-------------------------------------------------------|

| ·   | Competitive      products (including low-priced imports) and substitute      products, |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | Customer      and competitor strategies, |
|--------------------|------------------------------------------|

| ·   | The      impact of pricing and productiondecisions, |
|--------------------|-----------------------------------------------------|

| ·   | Environmental      matters (such as those requiring emission and discharge limits for      existing and new facilities), |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Government      regulations and possible changesthereof, |
|--------------------|----------------------------------------------------------|

| ·   | Significant      increases in the cost of providing medical coverage to      employees, |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | The      ultimate resolution of pendinglitigation, |
|--------------------|----------------------------------------------------|

| ·   | 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, supply disruptions and      transportation interruptions), |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      ability to renew or refinance credit facilities,  and |
|--------------------|----------------------------------------------------------------|

| ·   | Any      possible future litigation. |
|--------------------|--------------------------------------|

----

| ·   | Keystone      Steel & Wire (“KSW”), located in Peoria, Illinois, operates an      electric arc furnace mini-mill and manufactures and sells billets, wire      rod, industrial wire, coiled rebar and fabricated wire products to      agricultural, industrial, construction, commercial, original equipment      manufacturers and retail consumermarkets; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Engineered      Wire Products, Inc. (“EWP”), located in Upper Sandusky, Ohio, manufactures      and sells wire mesh in both roll and sheet form that is utilized 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ·   | 700      are represented by the Independent Steel Workers’ Alliance (the “ISWA”) at      KSW under an agreement expiring in May 2009;and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 60      are represented by Local Union #40, an Affiliate to the International      Brotherhood of Teamsters' Chauffeurs Warehousemen and Helpers of America,      AFL-CIO at EWP under an agreement expiring in November    2009. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   | Year Ended December    31,  |   |
|-------------------------------------------|--------|----------------------------------|--------|
|                                      |   | 2006                             |   |   | 2007 |   |   | 2008  |   |
|   Product                       |   | Percentof      TonsShipped       |   |   | PercentofSales |   |   | Percentof      TonsShipped |   |   | PercentofSales |   |   | Percentof      TonsShipped |   |   | PercentofSales |   |
|                                      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fabricated      wire products             |   |                             | 16.5   | % |   |   | 26.6 | % |   |   | 16.0 | % |   |   | 25.2 | % |   |   | 14.7 | % |   |   | 21.3 | % |
| Wire      mesh                            |   |                             | 10.0   |   |   |   | 13.5 |   |   |   | 9.0 |   |   |   | 11.7 |   |   |   | 9.2 |   |   |   | 11.3 |   |
| Nails      (1)                            |   |                             | 2.6    |   |   |   | 2.8 |   |   |   | 0.1 |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |
| Industrial      wire                      |   |                             | 11.2   |   |   |   | 12.6 |   |   |   | 10.1 |   |   |   | 11.2 |   |   |   | 10.4 |   |   |   | 12.1 |   |
|     Coiled      rebar |   |                             | 0.2    |   |   |   | 0.1 |   |   |   | 2.4 |   |   |   | 1.9 |   |   |   | 2.6 |   |   |   | 2.3 |   |
| Bar                                       |   |                             | -      |   |   |   | - |   |   |   | 1.3 |   |   |   | 1.3 |   |   |   | 3.1 |   |   |   | 3.0 |   |
| Wire      rod                             |   |                             | 51.6   |   |   |   | 40.1 |   |   |   | 61.0 |   |   |   | 48.5 |   |   |   | 58.5 |   |   |   | 48.8 |   |
| Billets                                   |   |                             | 7.9    |   |   |   | 4.3 |   |   |   | 0.1 |   |   |   | 0.1 |   |   |   | 1.5 |   |   |   | 1.2 |   |
|                                      |   |                             | 100.0  | % |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |
|                                      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                       |   | KSW                                      |   |   | EWP    |   |   | Calumet |   |
|----------------------------|--------|------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
|                       |   | %      of segments’ external sales |   |
|                       |   |                                     |   |   |   |   |   |    |   |
| Ten      largest customers |   |                                     | 55     | %      |   |   | 53     | %       |   |   | 50 | % |
|                       |   |                                     |   |   |   |   |   |    |   |   |   |   |
| Customer      > 10%     |   |                                     | 12     | %      |   |   | 10     | %       |   |   | - |   |

----

| ·   | the      breadth of our fabricated wire products, wire mesh and industrial wire      offerings; |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | our      ability to service diverse geographic and product markets;    and |
|--------------------|----------------------------------------------------------------------------|

| ·   | the      relatively low cost of our internal supply of wire  rod. |
|--------------------|-------------------------------------------------------------------|

----

----

----

| ·   | making      it more difficult for us to satisfy our obligations with respect to our      liabilities; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | increasing      our vulnerability to adverse general economic and industry      conditions; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | requiring      a portion of our cash flow from operations be used for the payment of      interest on our debt, therefore reducing our ability to use our cash flow      to fund working capital, capital expenditures, acquisitions and general      corporate requirements; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limiting      our ability to obtain additional financing to fund future working capital,      capital expenditures, acquisitions and general corporate      requirements; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limiting      our flexibility in planning for, or reacting to, changes in our business      and the industry in which we operate;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | placing      us at a competitive disadvantage relative to other less-leveraged      competitors. |
|--------------------|--------------------------------------------------------------------------------------------------|

----

----

|         Facility      Name      |      Location    |   | ApproximateSize(Square Feet) |      |          Products      Produced        |
|--------------------------------------------------------------------------------------------------|----------------------------------------------------------|--------|------------------------------|-----------|------------------------------------------------------------------------------------------------------------------------|
|                                                                                             |                                                     |   |                         |      |                                                                                                                   |
| Keystone      Steel & Wire                                                                   | Peoria,      IL                                          |   |                         | 1,951,000 |                                                                                                                   |     Fabricated      wire products, industrial wire, coiled rebar, wire rod and      billets |
| Engineered      Wire Products                                                                    | Upper      Sandusky, OH                             |   |                         | 126,000   |                                                                                                                   | Wire      mesh |
| Keystone-Calumet                                                                                 | Chicago      Heights, IL                                 |   |                         | 216,000   |                                                                                                                   | Steel      bar |
|                                                                                             |                                                     |   |                         |      |                                                                                                                   |   |
|                                                                                             |                                                     |   |                         | 2,293,000 |                                                                                                                   |   |

----

----

|                                          |   | High   |   |   | Low    |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                          |   |   |   |   |   |   |
| Year      ended December 31, 2007             |   |   |   |   |   |   |
|                                          |   |   |   |   |   |   |
|   First      quarter                |   | $      | 25.00  |   |   | $      | 14.50 |   |
|   Second      quarter               |   | $      | 23.74  |   |   | $      | 20.00 |   |
|   Third      quarter                |   | $      | 22.75  |   |   | $      | 18.00 |   |
|   Fourth      quarter               |   | $      | 19.52  |   |   | $      | 13.00 |   |
|                                          |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2008             |   |   |   |   |   |   |   |   |
|                                          |   |   |   |   |   |   |   |   |
|   First      quarter                |   | $      | 16.98  |   |   | $      | 9.35 |   |
|   Second      quarter               |   | $      | 12.45  |   |   | $      | 9.00 |   |
|   Third      quarter                |   | $      | 15.51  |   |   | $      | 10.35 |   |
|   Fourth      quarter               |   | $      | 10.50  |   |   | $      | 5.01 |   |
|                                          |   |   |   |   |   |   |   |   |
| First      Quarter 2009 through March 4, 2009 |   | $      | 6.25   |   |   | $      | 3.75 |   |

----

|                         |   | June      23, 2006 |   |   | December      31, 2006 |   |   | December      31, 2007 |   |   | December      31, 2008 |   |
|------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
|                         |   |               |   |   |                   |   |   |                   |   |   |                   |   |
| Keystone      common stock   |   | $                  | 100    |   |                   | $      | 750    |                   |   | $      | 725                    |   |   | $ | 300 |   |
| S&P      500 Index       |   |               | 100    |   |                   |   | 115    |                   |   |   | 121                    |   |   |   | 76 |   |
| S&P      500 Steel Index |   |               | 100    |   |                   |   | 117    |                   |   |   | 142                    |   |   |   | 69 |   |

----

|                                                                                       |   |  Years ended December      31,                  |    |
|--------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|
|                                                                                       |   | 2004                                                      |    |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                                                                       |   | (In      thousands, except per share and per ton amounts) |    |
| Statement      of Operations Data:                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      sales                                                                 |   | $                                                         | 364,335 |   |   | $ | 367,545 |   |   | $ | 440,540 |   |   | $ | 451,178 |   |   | $ | 562,693 |   |
|   Operating      income                                                          |   |                                                      | 31,486  |   |   |   | 20,193 |   |   |   | 79,750 |   |   |   | 97,972 |   |   |   | 110,493 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Defined      benefit pension credit                                            |   |                                                      | 6,752   |   |   |   | 11,710 |   |   |   | 55,978 |   |   |   | 80,443 |   |   |   | 73,923 |   |
|   OPEB      credit (expense)                                                     |   |                                                      | (20,909 | ) |   |   | (8,885 | ) |   |   | 8,297 |   |   |   | 8,526 |   |   |   | 8,474 |   |
|       Operating      income before pension and OPEB(4)       |   |                                                      | 45,643  |   |   |   | 17,368 |   |   |   | 15,475 |   |   |   | 9,003 |   |   |   | 28,096 |   |
|   Gain      on cancellation of debt                                              |   |                                                      | -       |   |   |   | 32,510 |   |   |   | - |   |   |   | 10,074 |   |   |   | - |   |
|   Gain      on legal settlement                                                  |   |                                                      | 5,284   |   |   |   | - |   |   |   | - |   |   |   | 5,400 |   |   |   | - |   |
|   Reorganization      costs                                                      |   |                                                      | (11,158 | ) |   |   | (10,308 | ) |   |   | (679 | ) |   |   | (190 | ) |   |   | (225 | ) |
|   Provision      for income taxes                                                |   |                                                      | (1,379  | ) |   |   | (430 | ) |   |   | (17,055 | ) |   |   | (37,619 | ) |   |   | (40,014 | ) |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      income                                                                |   | $                                                         | 16,060  |   |   | $ | 39,232 |   |   | $ | 57,732 |   |   | $ | 64,765 |   |   | $ | 66,114 |   |
|   Net      income available for common shares(1)                                 |   | $                                                         | 14,837  |   |   | $ | 39,232 |   |   | $ | 57,732 |   |   | $ | 64,765 |   |   | $ | 66,114 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Basic      net income available for common shares per share                          |   | $                                                         | 1.47    |   |   | $ | 4.12 |   |   | $ | 5.77 |   |   | $ | 6.48 |   |   | $ | 5.73 |   |
|  Diluted      net income available for common shares per share                        |   | $                                                         | .57     |   |   | $ | 1.88 |   |   | $ | 5.77 |   |   | $ | 6.48 |   |   | $ | 5.73 |   |
|   Weighted      average common and common equivalent shares outstanding(2): |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic                                                              |   |                                                      | 10,068  |   |   |   | 10,046 |   |   |   | 10,000 |   |   |   | 10,000 |   |   |   | 11,533 |   |
|     Diluted                                                            |   |                                                      | 28,043  |   |   |   | 22,029 |   |   |   | 10,000 |   |   |   | 10,000 |   |   |   | 11,533 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Other      Operating Data:                                                           |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Shipments      (000 tons):                                                     |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Fabricated      wire products                                      |   |                                                      | 116     |   |   |   | 101 |   |   |   | 112 |   |   |   | 103 |   |   |   | 86 |   |
|     Wire      mesh                                                     |   |                                                      | 71      |   |   |   | 71 |   |   |   | 67 |   |   |   | 58 |   |   |   | 54 |   |
|     Nails                                                              |   |                                                      | 28      |   |   |   | 17 |   |   |   | 18 |   |   |   | 1 |   |   |   | - |   |
|     Industrial      wire                                               |   |                                                      | 82      |   |   |   | 72 |   |   |   | 75 |   |   |   | 66 |   |   |   | 61 |   |
|     Coiled      rebar                                                  |   |                                                      | -       |   |   |   | - |   |   |   | 1 |   |   |   | 15 |   |   |   | 15 |   |
|     Bar                                                                |   |                                                      | -       |   |   |   | - |   |   |   | - |   |   |   | 9 |   |   |   | 18 |   |
|     Wire      rod                                                      |   |                                                      | 200     |   |   |   | 236 |   |   |   | 349 |   |   |   | 395 |   |   |   | 343 |   |
|     Billets                                                            |   |                                                      | 17      |   |   |   | 29 |   |   |   | 53 |   |   |   | 1 |   |   |   | 9 |   |
|       Total                                                  |   |                                                      | 514     |   |   |   | 526 |   |   |   | 675 |   |   |   | 648 |   |   |   | 586 |   |
|    Per-ton      selling prices:                                             |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Fabricated      wire products                                      |   | $                                                         | 984     |   |   | $ | 1,090 |   |   | $ | 1,037 |   |   | $ | 1,089 |   |   | $ | 1,380 |   |
|     Wire      mesh                                                     |   |                                                      | 829     |   |   |   | 881 |   |   |   | 870 |   |   |   | 896 |   |   |   | 1,168 |   |
|     Nails                                                              |   |                                                      | 759     |   |   |   | 742 |   |   |   | 692 |   |   |   | 834 |   |   |   | - |   |
|     Industrial      wire                                               |   |                                                      | 709     |   |   |   | 731 |   |   |   | 726 |   |   |   | 763 |   |   |   | 1,103 |   |
|     Coiled      rebar                                                  |   |                                                      | -       |   |   |   | - |   |   |   | 529 |   |   |   | 563 |   |   |   | 841 |   |
|     Bar                                                                |   |                                                      | -       |   |   |   | - |   |   |   | - |   |   |   | 663 |   |   |   | 946 |   |
|     Wire      rod                                                      |   |                                                      | 539     |   |   |   | 503 |   |   |   | 500 |   |   |   | 548 |   |   |   | 797 |   |
|     Billets                                                            |   |                                                      | 176     |   |   |   | 321 |   |   |   | 354 |   |   |   | 234 |   |   |   | 793 |   |
|       All      products in total                             |   |                                                      | 707     |   |   |   | 696 |   |   |   | 645 |   |   |   | 690 |   |   |   | 955 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Average      per-ton ferrous scrap purchase cost                          |   | $                                                         | 205     |   |   | $ | 220 |   |   | $ | 210 |   |   | $ | 239 |   |   | $ | 378 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Financial Data:                                                                 |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Capital      expenditures                                                      |   | $                                                         | 5,080   |   |   | $ | 9,772 |   |   | $ | 18,739 |   |   | $ | 16,602 |   |   | $ | 13,298 |   |
|   Depreciation      and amortization                                             |   |                                                      | 15,812  |   |   |   | 15,745 |   |   |   | 15,222 |   |   |   | 15,434 |   |   |   | 15,164 |   |
|                                                                                       |   |                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   |  As of December 31, |    |
|----------------------------------------------------------|--------|--------------------------|---------|
|                                                     |   | 2004                     |    |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                                     |   | (In      thousands)      |    |
| Balance      Sheet Data:                                 |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Working      capital                         |   | $                        | 11,910  |   |   | $ | 36,373 |   |   | $ | 31,776 |   |   | $ | 20,630 |   |   | $ | 55,886 |   |
|   Property,      plant and equipment, net |   |                     | 94,033  |   |   |   | 86,773 |   |   |   | 88,695 |   |   |   | 92,469 |   |   |   | 89,987 |   |
|   Total      assets(3)                         |   |                     | 323,282 |   |   |   | 358,364 |   |   |   | 763,936 |   |   |   | 763,023 |   |   |   | 249,733 |   |
|   Total      debt                              |   |                     | 65,985  |   |   |   | 99,895 |   |   |   | 76,448 |   |   |   | 91,577 |   |   |   | 31,630 |   |
|   Redeemable      preferred stock(2)           |   |                     | 2,112   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Stockholders’      equity(3)           |   |                     | 4,787   |   |   |   | 67,531 |   |   |   | 403,662 |   |   |   | 404,694 |   |   |   | 119,644 |   |

| (1)   |  Includes      the effect of dividends on preferred stock of $1.2 million in      2004.  We discontinued accruing dividends on our preferred stock      upon filing for Chapter 11 protection on February 26,      2004. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   |  All      of our outstanding common and preferred stock at August 31, 2005 was      cancelled in connection with our emergence from Chapter 11 on August 31,      2005, and at that time, we issued 10 million shares of a new issue of      common stock. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   |  We      adopted Statement of Financial Accounting Standards (“SFAS”) No. 158      effective December 31, 2006, and, as a result, amounts reported as of      December 31, 2006 and subsequent periods include the funded status of our      pension plan. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   |  Because      pension and other postretirement benefit (“OPEB”) expense or credits are      unrelated to the operating activities of our businesses, we measure and      evaluate the performance of our businesses using operating income before      pension and OPEB credit or expense.  As such, we believe the      presentation of operating income before pension and OPEB credit or expense      provides more useful information to investors.  Operating income      before pension and OPEB credit or expense is a non-GAAP measure of      profitability that is not in accordance with accounting principles      generally accepted in the United States of America (“GAAP”) and it should      not be considered in isolation or as a substitute for a measure prepared      in accordance with GAAP.  A reconciliation of operating income      as reported to operating income adjusted for pension and OPEB expense or      credit is set forth in the followingtable. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | Years ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2004                     |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                            |   | (In      thousands)      |   |
| Operating      income as reported               |   | $                        | 31,486 |   |   | $ | 20,193 |   |   | $ | 79,750 |   |   | $ | 97,972 |   |   | $ | 110,493 |   |
|   Defined      benefit pension credit |   |                     | (6,752 | ) |   |   | (11,710 | ) |   |   | (55,978 | ) |   |   | (80,443 | ) |   |   | (73,923 | ) |
|   OPEB      expense (credit)          |   |                     | 20,909 |   |   |   | 8,885 |   |   |   | (8,297 | ) |   |   | (8,526 | ) |   |   | (8,474 | ) |
| Operating      income before pension/OPEB       |   | $                        | 45,643 |   |   | $ | 17,368 |   |   | $ | 15,475 |   |   | $ | 9,003 |   |   | $ | 28,096 |   |

----

----

| ·   | lower      shipment volumes of fabricated wire products, wire mesh, industrial wire      and billets; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | higher      costs for ferrous scrap in 2007; |
|--------------------|----------------------------------------------|

| ·   | higher      electricity costs in 2007 due to deregulation in Illinois on January 1,      2007 after a ten-year rate freeze; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of wire rod and coiled rebar (generally lower margin      products); |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | higher      overall per-ton selling prices in 2007 implemented primarily in response      to increased cost for ferrousscrap; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | decreased      conversion costs in 2007 resulting from the overhaul of the wire rod mill      reheat furnace during the fourth quarter of  2006; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | decreased      cost of operations as 2006 was a 53-week year as compared to a 52-week      year in 2007; and |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | a      $5.4 million gain on legal settlement in2007. |
|--------------------|------------------------------------------------------|

----

| ·   | higher      per-ton product selling prices resulting from price increases we      implemented to offset our increased costs for ferrous scrap throughout the      year, as well as increased demand for domestic wire rod and industrial      wire during the first three quarters of 2008 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 during 2008; |
|--------------------|--------------------------------------------|

| ·   | cost      savings of $1.7 million resulting from a reduction-in-force during the      first quarter of 2008; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | income      of $.9 million related to obtaining an excise tax exemption in 2008 on      2007 electricity costs; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | lower      shipment volumes for the majority of our products due to customers holding      orders during the fourth quarter of 2008 as discussed    above; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased      costs for ferrous scrap and energy during2008; |
|--------------------|---------------------------------------------------------------|

| ·   | a      $1.2 million impairment charge during the fourth quarter of 2008 to reduce      certain inventories to net realizablevalue; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased      employee incentive compensation accruals as a result of increased      profitability during 2008; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | increased      costs for workers compensation and personal injury claims under our      general liability insurance in 2008;and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      legal settlement with a former insurance carrier of $5.4 million during      2007. |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | Keystone      Steel & Wire (“KSW”), located in Peoria, Illinois, operates an      electric arc furnace mini-mill and manufactures and sells billets, wire      rod, industrial wire, coiled rebar and fabricated wire products to      agricultural, industrial, construction, commercial, original equipment      manufacturers and retail consumermarkets; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Engineered      Wire Products, Inc. (“EWP”), located in Upper Sandusky, Ohio, manufactures      and sells wire mesh in both roll and sheet form that is utilized 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                        |   |  KSW           |     |   |  EWP |   |    |  Calumet |   |   |  Other(1) |   |   |  Total |    |
|-------------------------------------------------------------|--------|---------------------|----------|--------|-----------|--------|---------|---------------|--------|--------|----------------|--------|--------|-------------|---------|
|                                                        |   | (In      thousands) |     |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |
| For      the year ended December 31, 2006:                  |   |                |     |   |      |   |    |          |   |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |
|  Net      sales                                        |   | $                   | 412,866  |   |      | $      | 58,748  |          |   | $      | -              |   |   | $           | (31,074 | ) |   | $ | 440,540 |   |
|  Cost      of goods sold                               |   |                | (392,082 | )      |      |   | (45,397 | )             |   |   | -              |   |   |        | 31,760  |   |   |   | (405,719 | ) |
|    Gross      margin                         |   |                | 20,784   |   |      |   | 13,351  |          |   |   | -              |   |   |        | 686     |   |   |   | 34,821 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
|  Selling      and administrative      expense     |   |                | (14,226  | )      |      |   | (3,887  | )             |   |   | -              |   |   |        | (1,233  | ) |   |   | (19,346 | ) |
|  Operating      income (loss) before pension/OPEB |   | $                   | 6,558    |   |      | $      | 9,464   |          |   | $      | -              |   |   | $           | (547    | ) |   | $ | 15,475 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
| For      the year ended December 31, 2007:                  |   |                |     |   |      |   |    |          |   |   |           |   |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
|  Net      sales                                        |   | $                   | 426,652  |   |      | $      | 52,509  |          |   | $      | 5,659          |   |   | $           | (33,642 | ) |   | $ | 451,178 |   |
|  Cost      of goods sold                               |   |                | (413,556 | )      |      |   | (41,189 | )             |   |   | (6,651         | )      |   |        | 33,488  |   |   |   | (427,908 | ) |
|    Gross      margin (loss)                  |   |                | 13,096   |   |      |   | 11,320  |          |   |   | (992           | )      |   |        | (154    | ) |   |   | 23,270 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
|  Selling      and administrative      expense     |   |                | (14,026  | )      |      |   | (3,618  | )             |   |   | (399           | )      |   |        | (1,624  | ) |   |   | (19,667 | ) |
|  Gain      on legal settlement                         |   |                | -        |   |      |   | -       |          |   |   | -              |   |   |        | 5,400   |   |   |   | 5,400 |   |
|  Operating      income (loss) before pension/OPEB |   | $                   | (930     | )      |      | $      | 7,702   |          |   | $      | (1,391         | )      |   | $           | 3,622   |   |   | $ | 9,003 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
| For      the year ended December 31, 2008:                  |   |                |     |   |      |   |    |          |   |   |           |   |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
|  Net      sales                                        |   | $                   | 542,106  |   |      | $      | 63,433  |          |   | $      | 17,165         |   |   | $           | (60,011 | ) |   | $ | 562,693 |   |
|  Cost      of goods sold                               |   |                | (494,776 | )      |      |   | (54,676 | )             |   |   | (18,981        | )      |   |        | 57,236  |   |   |   | (511,197 | ) |
|    Gross      margin (loss)                  |   |                | 47,330   |   |      |   | 8,757   |          |   |   | (1,816         | )      |   |        | (2,775  | ) |   |   | 51,496 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |
|  Selling      and administrative      expense     |   |                | (15,156  | )      |      |   | (3,419  | )             |   |   | (1,113         | )      |   |        | (3,712  | ) |   |   | (23,400 | ) |
|  Operating      income (loss) before pension/OPEB |   | $                   | 32,174   |   |      | $      | 5,338   |          |   | $      | (2,929         | )      |   | $           | (6,487  | ) |   | $ | 28,096 |   |
|                                                        |   |                |     |   |      |   |    |          |   |   |           |   |   |        |    |   |   |   |   |   |

----

|                                                         |   |                  |     |
|--------------------------------------------------------------|--------|-----------------------|----------|
|                                                         |   | 2006                  |     |   | %      ofsales |   |   | 2007 |   |   | %      ofsales |   |   | 2008 |   |   | %      ofsales |   |
|                                                         |   | ($      in thousands) |     |
|                                                         |   |                  |     |
| Net      sales                                               |   | $                     | 412,866  |   |   |   | 100.0 | % |   | $ | 426,652 |   |   |   | 100.0 | % |   | $ | 542,106 |   |   |   | 100.0 | % |
| Cost      of goods sold                                      |   |                  | (392,082 | ) |   |   | (95.0 | ) |   |   | (413,556 | ) |   |   | (96.9 | ) |   |   | (494,776 | ) |   |   | (91.3 | ) |
|   Gross      margin                                |   |                  | 20,784   |   |   |   | 5.0 |   |   |   | 13,096 |   |   |   | 3.1 |   |   |   | 47,330 |   |   |   | 8.7 |   |
|                                                         |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative                              |   |                  | (14,226  | ) |   |   | (3.4 | ) |   |   | (14,026 | ) |   |   | (3.3 | ) |   |   | (15,156 | ) |   |   | (2.8 | ) |
|   Operating      income (loss) before pension/OPEB |   | $                     | 6,558    |   |   |   | 1.6 | % |   | $ | (930 | ) |   |   | (0.2 | )% |   | $ | 32,174 |   |   |   | 5.9 | % |
|                                                         |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                    |   | 2006   |   |   | 2007   |   |   | 2008   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Sales      volume (000 tons):                           |   |   |   |   |   |   |   |   |   |
|   Fabricated      wire products               |   |   | 112    |   |   |   | 103    |   |   |   | 86 |   |
|   Nails                                       |   |   | 18     |   |   |   | 1      |   |   |   | - |   |
|   Industrial      wire                        |   |   | 76     |   |   |   | 66     |   |   |   | 61 |   |
|   Coiled      rebar                           |   |   | 1      |   |   |   | 15     |   |   |   | 15 |   |
|   Wire      rod                               |   |   | 409    |   |   |   | 448    |   |   |   | 398 |   |
|   Billets                                     |   |   | 60     |   |   |   | 15     |   |   |   | 35 |   |
|     Total                           |   |   | 676    |   |   |   | 648    |   |   |   | 595 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Per-ton      selling prices:                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fabricated      wire products               |   | $      | 1,037  |   |   | $      | 1,089  |   |   | $ | 1,380 |   |
|   Nails                                       |   |   | 692    |   |   |   | 834    |   |   |   | - |   |
|   Industrial      wire                        |   |   | 717    |   |   |   | 763    |   |   |   | 1,103 |   |
|   Coiled      rebar                           |   |   | 529    |   |   |   | 563    |   |   |   | 841 |   |
|   Wire      rod                               |   |   | 496    |   |   |   | 545    |   |   |   | 797 |   |
|   Billets                                     |   |   | 359    |   |   |   | 445    |   |   |   | 657 |   |
|     All      products               |   |   | 603    |   |   |   | 653    |   |   |   | 906 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton ferrous scrap purchase cost   |   | $      | 210    |   |   | $      | 239    |   |   | $ | 378 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      electricity cost per kilowatt hour(1) |   | $      | 0.04   |   |   | $      | 0.05   |   |   | $ | 0.05 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      natural gas cost per therm(1)              |   | $      | 0.77   |   |   | $      | 0.76   |   |   | $ | 0.95 |   |

----

| ·   | lower      shipment volumes of fabricated wire products as a result of a softening of      the market due to price pressure and weather conditions causing the      cancellation of agricultural relatedprojects; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      shipment volumes of nails due to the discontinuance of our nail      manufacturing operations as increased foreign competition had resulted in      market prices that minimized the profitability of our nail      business; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      shipment volumes of industrial wire due to lower market demand as a result      of both an increase in imported finished products that adversely affected      our customers’ sales volumes and our increased selling    prices; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      shipment volumes of billets due to competitor production problems during      2006; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of coiled rebar as we continued to obtain coiled rebar      production certifications from various states and further penetrate the      market; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of wire rod due to lower quantities of import product      available for sale and higher prices for import products;    and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | shipment      volumes of all products were partially impacted by an extra week of      operations during 2006 as it was a 53-week year compared to a 52-week year      in 2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of industrial wire due to increased domestic demand as a      result of higher prices for import products as well as the weak U.S.      dollar; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of coiled rebar due to acceptance of our product in the      market with a larger number of customers than in  2007; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of billets primarily due to increased demand from Calumet      and a non-recurring 5,000 ton sale to a new customer;  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      shipment volumes of fabricated wire products as a result of customer      resistance to our price increases. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

----

| ·   | decreased      conversion costs in 2007 resulting from the overhaul of the wire rod mill      reheat furnace during the fourth quarter of 2006;  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | decreased      cost of operations as 2006 was a 53-week year as compared to a 52-week      year in 2007. |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | a      34% decline in zinc costs; |
|--------------------|-----------------------------------|

| ·   | cost      savings of approximately $2.5 million resulting from KSW’s      reduction-in-force during the first quarter of 2008 partially offset by      the related $.8 million severanceexpense; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | income      of approximately $.9 million related to KSW obtaining an excise tax      exemption in 2008 on 2007 electricitycosts; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 in2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | 2006                  |    |   | %      ofsales |   |   | 2007   |   |   | %      ofsales |   |   | 2008   |   |   | %      ofsales |   |
|------------------------------------------------------------|--------|-----------------------|---------|--------|----------------|--------|--------|--------|--------|--------|----------------|--------|--------|--------|--------|--------|----------------|--------|
|                                                       |   | ($      in thousands) |    |
|                                                       |   |                  |    |   |           |   |   |   |   |   |           |   |   |   |   |   |           |   |
| Net      sales                                             |   | $                     | 58,748  |   |           |   | 100.0  | %      |   | $      | 52,509         |   |   |   | 100.0  | %      |           | $      | 63,433 |   |   |   | 100.0 | % |
| Cost      of goods sold                                    |   |                  | (45,397 | )      |           |   | (77.3  | )      |   |   | (41,189        | )      |   |   | (78.4  | )      |           |   | (54,676 | ) |   |   | (86.2 | ) |
|   Gross      margin                              |   |                  | 13,351  |   |           |   | 22.7   |   |   |   | 11,320         |   |   |   | 21.6   |   |           |   | 8,757 |   |   |   | 13.8 |   |
|                                                       |   |                  |    |   |           |   |   |   |   |   |           |   |   |   |   |   |           |   |   |   |   |   |   |   |
| Selling      and administrative                            |   |                  | (3,887  | )      |           |   | (6.6   | )      |   |   | (3,618         | )      |   |   | (6.9   | )      |           |   | (3,419 | ) |   |   | (5.4 | ) |
|   Operating      income before pension/OPEB |   | $                     | 9,464   |   |           |   | 16.1   | %      |   | $      | 7,702          |   |   |   | 14.7   | %      |           | $      | 5,338 |   |   |   | 8.4 | % |
|                                                       |   |                  |    |   |           |   |   |   |   |   |           |   |   |   |   |   |           |   |   |   |   |   |   |   |

|                                                        |   | 2006   |   |   | 2007   |   |   | 2008   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Sales      volume (000 tons) -                              |   |   |   |   |   |   |   |   |   |
|   Wire      mesh                                  |   |   | 67     |   |   |   | 58     |   |   |   | 54 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Per-ton      selling prices -                               |   |   |   |   |   |   |   |   |   |   |   |   |
|   Wire      mesh                                  |   | $      | 870    |   |   | $      | 896    |   |   | $ | 1,168 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton wire rod  purchase      cost |   | $      | 504    |   |   | $      | 547    |   |   | $ | 835 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   | 2007                  |       |   | %      ofsales |   |       | 2008   |   |   | %      ofsales |   |
|----------------------------------------------------------|--------|-----------------------|------------|--------|----------------|--------|------------|--------|--------|--------|----------------|--------|
|                                                     |   | ($      in thousands) |       |
|                                                     |   |                  |       |   |           |   |       |   |   |   |           |   |
| Net      sales                                           |   | $                     | 5,659      |   |           |   | 100.0      | %      |   | $      | 17,165         |   |   |   | 100.0 | % |
| Cost      of goods sold                                  |   |                  | (6,651     | )      |           |   | (117.5     | )      |   |   | (18,981        | )      |   |   | (110.6 | ) |
|   Gross      margin (loss)                     |   |                  | (992       | )      |           |   | (17.5      | )      |   |   | (1,816         | )      |   |   | (10.6 | ) |
|                                                     |   |                  |       |   |           |   |       |   |   |   |           |   |   |   |   |   |
| Selling      and administrative                          |   |                  |  (399 | )      |           |   |  (7.1 | )      |   |   | (1,113         | )      |   |   |  (6.5 | ) |
|   Operating      loss before pension/OPEB |   | $                     | (1,391     | )      |           |   | (24.6      | )%     |   | $      | (2,929         | )      |   |   | (17.1 | )% |

|                                                |   | 2007   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                |   |   |   |   |   |   |
| Sales      volume (000 tons) -                      |   |   |   |   |   |   |
|   Bar                                     |   |   | 9      |   |   |   | 18 |   |
|                                                |   |   |   |   |   |   |   |   |
| Per-ton      selling prices -                       |   |   |   |   |   |   |   |   |
|   Bar                                     |   | $      | 663    |   |   | $      | 946 |   |
|                                                |   |   |   |   |   |   |   |   |
| Average      per-ton billet purchase      cost |   | $      | 408    |   |   | $      | 614 |   |

----

|                                |   | 2006                  |   |   | 2007   |   |   | 2008   |   |
|-------------------------------------|--------|-----------------------|--------|--------|--------|--------|--------|--------|--------|
|                                |   | ($      in thousands) |   |
|                                |   |                  |   |   |   |   |   |   |   |
| Average      debt balance           |   | $                     | 89,375 |   |   | $      | 95,483 |   |   | $ | 68,169 |   |
|                                |   |                  |   |   |   |   |   |   |   |   |   |   |
| Weighted      average interest rate |   |                  | 5.0    | %      |   |   | 6.2    | %      |   |   | 5.0 | % |

----

| ·   | lower      operating income before pension/OPEB in 2007 of $6.5    million; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | final      payments of $4.3 million in 2007 to certain of our pre-petition creditors      from our 2004 bankruptcy; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | lower      reorganization costs of $3.6 million paid in  2007; |
|--------------------|----------------------------------------------------------------|

| ·   | higher      net cash used due to relative changes in our accounts receivable in 2007      of $37.9 million primarily due to an abnormally high accounts receivable      balance at both December 31, 2005 and December 31, 2007 as a result of      exceptional demand at the end of 2005 and 2007 (the seasonality of our      business generally results in lower accounts receivable at the end of each      year); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      net cash generated from relative changes in our inventory in 2007 of $2.0      million due to exceptional demand at the end of 2007;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | more      cash generated from accounts payable of $4.0 million in 2007 primarily due      to an increase in the cost of ferrous scrap at the end of 2007 as compared      to the end of 2006 and better credit terms with certain      vendors. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | higher      operating income before pension/OPEB in 2008 of approximately $19.1      million; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | lower      OPEB payments of $1.3 million in 2008 as a result of amendments to the      1114 Agreement and one of our pension plans to create supplemental pension      benefits in lieu of us paying the benefits granted by the 1114      agreement; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | final      payments of $4.3 million in 2007 to certain of our pre-petition creditors      from our 2004 bankruptcy; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | higher      net cash provided by relative changes in our accounts receivable in 2008      of $51.7 million primarily due to an abnormally low accounts receivable      balance at December 31, 2008 as a result of customers limiting orders      during the fourth quarter of 2008 as discussed above compared to an      abnormally high accounts receivable balance at December 31, 2007 due to      abnormally high demand at the end of2007; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      net cash used due to relative changes in our inventory in 2008 of $28.8      million primarily due to increased costs of ferrous scrap and energy as      well as higher levels of inventory as customers limited orders during the      fourth quarter of 2008 as discussedabove; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      net cash used due to relative changes in our accounts payable in 2008 of      $10.4 million as a result of purchasing significantly less ferrous scrap      and energy at the end of 2008 as we substantially lowered production      levels due to the rapid decline in product demand during the fourth      quarter of 2008; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      net cash provided by relative changes in our accrued liabilities of $10.3      million in 2008 due in part to higher accruals for employee incentive      compensation and workers compensation in2008; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      cash paid for income taxes in 2008 of $2.7 million due to our increased      profitability. |
|--------------------|---------------------------------------------------------------------------------------------------------|

----

| ·   | $4.6      million on our Wachovia Term Loans,and |
|--------------------|--------------------------------------------------|

| ·   | $.8      million on our 8% Notes. |
|--------------------|-----------------------------------|

| ·   | $8.6      million on our 8% Notes, |
|--------------------|------------------------------------|

| ·   | $5.2      million on our Wachovia Term Loans, |
|--------------------|-----------------------------------------------|

| ·   | $2.7      million on our UC Note, and |
|--------------------|---------------------------------------|

| ·   | $1.5      million on our County Term Loan. |
|--------------------|--------------------------------------------|

| ·   | $8.1      million on our 8% Notes, |
|--------------------|------------------------------------|

| ·   | $5.3      million on our Wachovia Term Loans, |
|--------------------|-----------------------------------------------|

| ·   | $2.5      million on our UC Note, and |
|--------------------|---------------------------------------|

| ·   | $1.1      million on our County Term Loan. |
|--------------------|--------------------------------------------|

----

|                           |   | Payment due date    |   |
|--------------------------------|--------|---------------------|--------|
|  Contractual commitment   |   | 2009                |   |   |   | 2010/2011 |   |   |   | 2012/2013 |   |   | 2014      and after |   |   | Total |   |
|                           |   | (In      thousands) |   |
|                           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indebtedness:                  |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Principal    |   | $                   | 15,584 |   |   | $ | 11,439 |   |   | $ | 2,950 |   |   | $ | 1,908 |   |   | $ | 31,881 |   |
|    Interest     |   |                | 1,208  |   |   |   | 1,047 |   |   |   | 384 |   |   |   | 25 |   |   |   | 2,664 |   |
|                           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      leases          |   |                | 488    |   |   |   | 189 |   |   |   | 2 |   |   |   | - |   |   |   | 679 |   |
|                           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product      supply agreements |   |                | 1,200  |   |   |   | 2,400 |   |   |   | 300 |   |   |   | - |   |   |   | 3,900 |   |
|                           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      taxes              |   |                | 1,116  |   |   |   |  - |   |   |   | - |   |   |   | - |   |   |   | 1,116 |   |
|                           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                          |   | $                   | 19,596 |   |   | $ | 15,075 |   |   | $ | 3,636 |   |   | $ | 1,933 |   |   | $ | 40,240 |   |

----

|                                                     |   |  December 31,  |   |
|----------------------------------------------------------|--------|---------------------|--------|
|                                                     |   | 2007                |   |   | 2008 |   |
|                                                     |   | (In      thousands) |   |
|                                                     |   |                |   |   |   |   |
| Working      capital                                     |   | $                   | 20,630 |   |   | $ | 55,886 |   |
| Outstanding      balance under revolving credit facility |   |                | 46,261 |   |   |   | 3,264 |   |
|                                                     |   |                |   |   |   |   |   |   |
| Additional      borrowing availability                   |   |                | 22,836 |   |   |   | 46,500 |   |

----

----

|                          Discount      rates used      for:                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Obligations      atDecember      31, 2006 and expense in      2007                                                                                                                                                                                                                                                   | Obligations      atDecember      31, 2007 and expense in      2008    | Obligations      atDecember      31, 2008 and expense in      2009    |
|                                                                                                                                                                                                                                                                                                                                     |   |   |
| 5.8%                                                                                                                                                                                                                                                                                                                                     | 6.3% | 6.2% |

----

----

----

----

|                                                                   |   | Contracted Maturity Date |   |   | Estimated Fair      Value |   |
|------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------------------------------|--------|
|                                                                   |   | 2009                     |   |   | 2010                           |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | Thereafter |   |   | Total |   |   | December 31, 2008 |   |
|                                                                   |   | ($      In thousands)    |   |   |                           |   |
| Fixed-rate      debt -                                                 |   |                     |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Principal      amount                                      |   | $                        | 10,251 |   |                           | $      | 1,230 |   |   | $ | 1,324 |   |   | $ | 1,421 |   |   | $ | 1,529 |   |   | $ | 1,908 |   |   | $ | 17,663 |   |   | $ | 14,161 |   |
|                                                                   |   |                     |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted-average    interest      rate |   |                     | 0.8    | %      |                           |   | 7.5 | % |   |   | 7.5 | % |   |   | 7.5 | % |   |   | 7.5 | % |   |   | 3.2 | % |   |   | 3.2 | % |   |   |   |   |
|                                                                   |   |                     |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable-rate      debt-                                               |   |                     |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Principal      amount                                      |   | $                        | 5,333  |   |                           | $      | 8,885 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 14,218 |   |   | $ | 14,218 |   |
|                                                                   |   |                     |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted-average    interest      rate |   |                     | 5.0    | %      |                           |   | 5.2 | % |   |   | - | % |   |   | - | % |   |   | - | % |   |   | - | % |   |   | 5.1 | % |   |   |   |   |

----

| ·   | pertain      to the maintenance of records that in reasonable detail accurately and      fairly reflect our transactions and dispositions of our      assets, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provide      reasonable assurance that transactions are recorded as necessary to permit      preparation of financial statements in accordance with GAAP, and that our      receipts and expenditures are made only in accordance with authorizations      of our management and directors,and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provide      reasonable assurance regarding prevention or timely detection of      unauthorized acquisition, use or disposition of our assets that could have      a material effect on our Consolidated Financial  Statements. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Exhibit No. | Exhibit Item                                                                                                                                                                                                                                                                                   |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1         | Amended      and Restated Certificate of Incorporation of the Registrant dated January      18, 2008, as filed with the Secretary of State of      Delaware.  (Incorporated by reference to Exhibit 99.1 to the      Registrant's Report on Form 8-K dated January 18, 2008).   |
| 3.2         | Amended      and Restated Bylaws of the Registrant dated August 31,      2005.  (Incorporated by reference to Exhibit 3.6 to the      Registrant's Annual Report on Form 10-K for the year ended December 31,      2003).                                                       |
| 4.1         | Loan      Agreement dated as of March 13, 2002 between Registrant and the County of      Peoria, Illinois.  (Incorporated by reference to Exhibit 4.17 to      the Registrant's Annual Report on Form 10-K for the year ended December      31, 2001).                          |
| 4.2         | Subordinate      Security Agreement dated as of March 13, 2002 made by Registrant in favor      of the County of Peoria, Illinois.  (Incorporated by reference      to Exhibit 4.18 to the Registrant's Annual Report on Form 10-K for the      year ended December 31, 2001).  |
| 4.3         | First      Amendment to Loan dated as of April 4, 2007 by and between the Registrant      and the County of Peoria, Illinois. (Incorporated by reference to Exhibit      4.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter      ended March 31, 2007).          |

----

| Exhibit No. | Exhibit Item                                                                                                                                                                                                                                                                                                                                                                        |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.4         | Second      Amendment to Loan dated as of May 22, 2007 by and between the Registrant      and the County of Peoria, Illinois. (Incorporated by reference to Exhibit      4.1 to the Registrant’s Report on Form 8-K dated May 24,      2007).                                                                                                                            |
| 4.5         | Form      of Registrant’s 8% Subordinated Secured Note dated as of March 15,      2002.  (Incorporated by reference to Exhibit 4.23 to the      Registrant's Annual Report on Form 10-K for the year endedDecember      31, 2001).                                                                                                                             |
| 4.6         | Indenture      Dated as of March 15, 2002, related to Registrant’s 8% Subordinated      Secured Notes Between Registrant as Issuer, and U.S. Bank National      Association, as Trustee.  (Incorporated by reference to Exhibit      4.24 to the Registrant's Annual Report on Form 10-K for the year ended      December 31, 2001).                           |
| 4.7         | Supplemental      Indenture No. 1 dated as of August 31, 2005, related to Registrant’s 8%      Subordinated Secured Notes between Registrant as issuer, and U.S. Bank      National Association as Trustee.  (Incorporated by reference to      Exhibit 4.42 to the Registrant’s Annual Report on Form 10-K for the year      ended December 31, 2005).  |
| 4.8         | Loan      and Security Agreement dated August 31, 2005 by and between the Registrant      and Wachovia Capital Finance Corporation      (Central).  (Incorporated by reference to Exhibit 4.51 to the      Registrant’s Annual Report on Form 10-K for the year ended December 31,      2003).                                                                 |
| 4.9         | First      Amendment to Loan and Security Agreement dated as of June 30, 2006 by and      between the Registrant and Wachovia Capital Finance Corporation (Central).      (Incorporated by reference to Exhibit 4.7 to the Registrant’s Annual      Report on Form 10-K for the year ended December 31, 2006).                                                           |
| 4.10        | Amendment      No. 2 to Loan and Security Agreement dated as of March 23, 2007 by and      between the Registrant and Wachovia Capital Finance Corporation (Central).      (Incorporated by reference to Exhibit 4.8 to the Registrant’s Annual      Report on Form 10-K for the year ended December 31, 2006).                                                          |
| 4.11        | Promissory      Note dated August 31, 2005, from Registrant to Jack B. Fishman Esq. as      trustee for holders of Class A6 claims. (Incorporated by reference to      Exhibit 4.54 to the Registrant’s Annual Report on Form 10-K for the year      ended December 31, 2005).                                                                                           |
| 4.12        | Securities      Pledge Agreement dated August 31, 2005, by and between Registrant and Jack      B. Fishman Esq. as trustee for holders of Class A6 claims. (Incorporated      by reference to Exhibit 4.55 to the Registrant’s Annual Report on Form      10-K for the year ended December 31, 2005).                                                                    |

----

| Exhibit No. | Exhibit Item                                                                                                                                                                                                                                                                                                                                                                                                   |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1        | Agreement      Regarding Shared Insurance between Registrant, CompX International Inc.,      Contran Corporation, Kronos Worldwide, Inc., NL Industries, Inc., Titanium      Metals Corp. and Valhi, Inc. dated as of October 30,      2003.  (Incorporated by reference to Exhibit 10.1 to the      Registrant’s Annual Report on Form 10-K for the year ended December 31,      2003).  |
| 10.2        | The      Combined Master Retirement Trust between Contran Corporation and Harold C.      Simmons as amended and restated effective September 30, 2005.      (Incorporated by reference to Exhibit 10.2 to the Registrant’s Annual      Report on Form 10-K for the year ended December 31, 2006).                                                                                                   |
| 10.3        | Keystone      Consolidated Industries, Inc. Master Retirement Trust I between the      Registrant and U.S. Bank National Association as amended and restated      effective January 1, 2006. (Incorporated by reference to Exhibit 10.3 to      the Registrant’s Annual Report on Form 10-K for the year ended December      31, 2006).                                                             |
| 10.4        | Keystone      Consolidated Industries, Inc. Master Retirement Trust II between the      Registrant and U.S. Bank National Association as amended and restated      effective January 1, 2006. (Incorporated by reference to Exhibit 10.4 to      the Registrant’s Annual Report on Form 10-K for the year ended December      31, 2006).                                                            |
| 10.5*       | Form      of Deferred Compensation Agreement between the Registrant and certain      executive officers.  (Incorporated by reference to Exhibit 10.1      to the Registrant's Quarterly Report on Form 10-Q (File No. 1-3919) for      the quarter ended March 31, 1999).                                                                                                                       |
| 10.6        | Intercorporate      Services Agreement dated as of January 1, 2007 by and between Registrant      and Contran Corporation.  (Incorporated by reference to Exhibit      10.6 to the Registrant’s Annual Report on Form 10-K for the year ended      December 31, 2007).                                                                                                                    |
| 14.1        | Amended      Code of Business Conduct and Ethics dated August 14, 2007 (Incorporated by      reference to Exhibit 14.1 to the Registrant’s Annual Report on Form 10-K      for the year ended December 31, 2007).                                                                                                                                                                                   |
| 21.1        | Subsidiaries      of the Company                                                                                                                                                                                                                                                                                                                                                                          |
| 31.1        | Certification                                                                                                                                                                                                                                                                                                                                                                                             |
| 31.2        | Certification                                                                                                                                                                                                                                                                                                                                                                                             |
| 32.1        | Certification                                                                                                                                                                                                                                                                                                                                                                                             |

|   | *Management      contract, compensatory plan oragreement. |
|--------|-----------------------------------------------------------|

----

| KEYSTONE      CONSOLIDATED INDUSTRIES, INC.(Registrant)   /s/ GLENN R.      SIMMONS                                                        Glenn      R. SimmonsChairman      of the Board |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  /s/ GLENN R.      SIMMONS                                                  Glenn      R. SimmonsChairman      of the Board   |  /s/ STEVEN L.      WATSON                                                                    Steven      L. WatsonDirector                                                                                                                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   /s/ THOMAS E.      BARRY                                                  Thomas      E. BarryDirector                 |   /s/ DONALD P.      ZIMA                                                                         Donald      P. ZimaDirector                                                                                                                                                            |
|   /s/ PAUL M. BASS,      JR.                                                    Paul      M. Bass, Jr.Director |   /s/ DAVID L.      CHEEK                                                                            David      L. CheekPresident      and Chief Executive Officer                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                         |   /s/ BERT E. DOWNING,      JR.                                                                  Bert      E. Downing, Jr.Vice      President, Chief Financial      Officer,      Corporate Controller and              Treasurer (Principal Accounting      and Financial      Officer) |

----

|                                                                                                                                                                                                          |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                                                                                                                                                          | Page      |
|                                                                                                                                                                                                          |      |
|                                                                                                                                                                                                          |      |
|      Report      of Independent Registered Public Accounting Firm                                                                                                                    | F-2       |
|                                                                                                                                                                                                          |      |
|      Consolidated      Balance Sheets –        December      31, 2007 and 2008                                                         |  F-4 |
|                                                                                                                                                                                                          |      |
|      Consolidated      Statements of Operations -       Years      ended December 31, 2006, 2007 and 2008                                         |  F-6 |
|                                                                                                                                                                                                          |      |
|      Consolidated      Statements of Comprehensive Income (Loss) -       Years      ended December 31, 2006, 2007 and 2008                        |  F-7 |
|                                                                                                                                                                                                          |      |
|      Consolidated      Statements of Stockholders' Equity       Years      ended December 31, 2006, 2007 and 2008                                 |  F-8 |
|                                                                                                                                                                                                          |      |
|      Consolidated      Statements of Cash Flows –        Years      ended December 31, 2006, 2007 and 2008                             |  F-9 |
|                                                                                                                                                                                                          |      |
|      Notes      to Consolidated Financial Statements                                                                                                                                 | F-11      |
|                                                                                                                                                                                                          |      |
|                                                                                                                                                                                                          |      |
| We      omitted Schedules I, II, III and IV because they are not applicable or the      required amounts are either not material or are presented in the Notes to      the Consolidated Financial Statements. |      |

----

----

----

|                                                                               |   | December 31, |    |
|------------------------------------------------------------------------------------|--------|--------------|---------|
| ASSETS                                                                             |   | 2007         |    |   | 2008 |   |
|                                                                               |   |         |    |   |   |   |
|                                                                               |   |         |    |   |   |   |
| Current      assets:                                                               |   |         |    |   |   |   |
|   Accounts      receivable, net of allowances of      $335 and $165 |   | $            | 54,891  |   |   | $ | 26,612 |   |
|   Inventories                                                            |   |         | 53,551  |   |   |   | 70,858 |   |
|   Deferred      income taxes                                             |   |         | 10,055  |   |   |   | 14,373 |   |
|   Prepaid      expenses and other                                        |   |         | 2,465   |   |   |   | 2,724 |   |
|                                                                               |   |         |    |   |   |   |   |   |
|     Total      current assets                                  |   |         | 120,962 |   |   |   | 114,567 |   |
|                                                                               |   |         |    |   |   |   |   |   |
| Property,      plant and equipment:                                                |   |         |    |   |   |   |   |   |
|   Land                                                                   |   |         | 1,272   |   |   |   | 1,468 |   |
|   Buildings      and improvements                                        |   |         | 58,946  |   |   |   | 59,598 |   |
|   Machinery      and equipment                                           |   |         | 315,874 |   |   |   | 317,573 |   |
|   Construction      in progress                                          |   |         | 3,675   |   |   |   | 9,421 |   |
|                                                                               |   |         | 379,767 |   |   |   | 388,060 |   |
|   Less      accumulated depreciation                                     |   |         | 287,298 |   |   |   | 298,073 |   |
|                                                                               |   |         |    |   |   |   |   |   |
|     Net      property, plant and equipment                     |   |         | 92,469  |   |   |   | 89,987 |   |
|                                                                               |   |         |    |   |   |   |   |   |
| Other      assets:                                                                 |   |         |    |   |   |   |   |   |
|   Restricted      investments                                            |   |         | 2,245   |   |   |   | 2,277 |   |
|   Pension      asset                                                     |   |         | 545,656 |   |   |   | 41,651 |   |
|   Other,      net                                                        |   |         | 1,691   |   |   |   | 1,251 |   |
|                                                                               |   |         |    |   |   |   |   |   |
|     Total      other assets                                    |   |         | 549,592 |   |   |   | 45,179 |   |
|                                                                               |   |         |    |   |   |   |   |   |
|                                                                               |   |         |    |   |   |   |   |   |
|     Total      assets                                          |   | $            | 763,023 |   |   | $ | 249,733 |   |
|                                                                               |   |         |    |   |   |   |   |   |

----

| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                                              |   | December 31,  |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                                                                                                                                                   |   | 2007               |    |   | 2008 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |
| Current      liabilities:                                                                                                                                                                                              |   |               |    |   |   |   |
|   Notes      payable and current maturities of  long-term      debt                                                                                                                                |   | $                  | 62,175  |   |   | $ | 18,848 |   |
|   Accounts      payable                                                                                                                                                                                      |   |               | 14,078  |   |   |   | 7,776 |   |
|   Accrued      OPEB cost                                                                                                                                                                                     |   |               | 4,482   |   |   |   | 1,372 |   |
|   Income      taxes payable                                                                                                                                                                                  |   |               | -       |   |   |   | 1,116 |   |
|   Other      accrued liabilities                                                                                                                                                                             |   |               | 19,597  |   |   |   | 29,569 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
|     Total      current liabilities                                                                                                                                                                 |   |               | 100,332 |   |   |   | 58,681 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
| Noncurrent      liabilities:                                                                                                                                                                                           |   |               |    |   |   |   |   |   |
|   Long-term      debt                                                                                                                                                                                        |   |               | 29,402  |   |   |   | 12,782 |   |
|   Accrued      pension cost                                                                                                                                                                                  |   |               | -       |   |   |   | 1,319 |   |
|   Accrued      OPEB cost                                                                                                                                                                                     |   |               | 27,167  |   |   |   | 42,560 |   |
|   Deferred      income taxes                                                                                                                                                                                 |   |               | 194,728 |   |   |   | 8,284 |   |
|   Other                                                                                                                                                                                                      |   |               | 6,700   |   |   |   | 6,463 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
|     Total      noncurrent liabilities                                                                                                                                                              |   |               | 257,997 |   |   |   | 71,408 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
| Stockholders'      equity:                                                                                                                                                                                             |   |               |    |   |   |   |   |   |
|   Common      stock $.01 par value; 11,000,000 shares authorized and 10,000,000 shares      issued at December 31, 2007; 20,000,000 shares authorized and 12,500,000      shares issued at December 31, 2008 |   |               | 100     |   |   |   | 125 |   |
|   Additional      paid-in capital                                                                                                                                                                            |   |               | 75,423  |   |   |   | 100,111 |   |
|   Accumulated      other comprehensive income (loss)                                                                                                                                                         |   |               | 215,462 |   |   |   | (160,415 | ) |
|   Retained      earnings                                                                                                                                                                                     |   |               | 114,505 |   |   |   | 180,619 |   |
|   Treasury      stock, at cost – 398,068 shares                                                                                                                                                        |   |               | (796    | ) |   |   | (796 | ) |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
|     Total      stockholders' equity                                                                                                                                                                |   |               | 404,694 |   |   |   | 119,644 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |
|     Total      liabilities and stockholders’ equity                                                                                                                                          |   | $                  | 763,023 |   |   | $ | 249,733 |   |
|                                                                                                                                                                                                                   |   |               |    |   |   |   |   |   |

----

|                                                                      |   | Years Ended December 31, |         |
|---------------------------------------------------------------------------|--------|--------------------------|--------------|
|                                                                      |   | 2006                     |         |   | 2007 |   |   | 2008 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |
| Net      sales                                                            |   | $                        | 440,540      |   |   | $ | 451,178 |   |   | $ | 562,693 |   |
| Cost      of goods sold                                                   |   |                     | (405,719     | ) |   |   | (427,908 | ) |   |   | (511,197 | ) |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|     Gross      margin                                 |   |                     | 34,821       |   |   |   | 23,270 |   |   |   | 51,496 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Other      operating income (expenses):                                   |   |                     |         |   |   |   |   |   |   |   |   |   |
|   Selling      expense                                          |   |                     | (6,864       | ) |   |   | (6,682 | ) |   |   | (7,227 | ) |
|   General      and administrative expense                       |   |                     | (12,482      | ) |   |   | (12,985 | ) |   |   | (16,173 | ) |
|   Defined      benefit pension credit                           |   |                     | 55,978       |   |   |   | 80,443 |   |   |   | 73,923 |   |
|   Other      postretirement benefit credit                      |   |                     | 8,297        |   |   |   | 8,526 |   |   |   | 8,474 |   |
|   Gain      on legal settlement                                 |   |                     | -            |   |   |   | 5,400 |   |   |   | - |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|     Total      other operating income                 |   |                     | 44,929       |   |   |   | 74,702 |   |   |   | 58,997 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Operating      income                                                     |   |                     | 79,750       |   |   |   | 97,972 |   |   |   | 110,493 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Nonoperating      income (expense):                                       |   |                     |         |   |   |   |   |   |   |   |   |   |
|   Interest      expense                                         |   |                     | (4,720       | ) |   |   | (6,073 | ) |   |   | (3,798 | ) |
|   Other,      net                                               |   |                     | 436          |   |   |   | 601 |   |   |   | (342 | ) |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|     Total      nonoperating income (expense)          |   |                     | (4,284       | ) |   |   | (5,472 | ) |   |   | (4,140 | ) |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|   Income      before income taxes and reorganization items |   |                     |  75,466 |   |   |   |  92,500 |   |   |   |  106,353 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Reorganization      items:                                                |   |                     |         |   |   |   |   |   |   |   |   |   |
|   Reorganization      costs                                     |   |                     | (679         | ) |   |   | (190 | ) |   |   | (225 | ) |
|   Gain      on cancellation of debt                             |   |                     | -            |   |   |   |  10,074 |   |   |   | - |   |
|     Total      reorganization items                   |   |                     | (679         | ) |   |   |  9,884 |   |   |   | (225 | ) |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|   Income      before income taxes                               |   |                     | 74,787       |   |   |   | 102,384 |   |   |   | 106,128 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                           |   |                     | (17,055      | ) |   |   | (37,619 | ) |   |   | (40,014 | ) |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
|     Net      income                                   |   | $                        | 57,732       |   |   | $ | 64,765 |   |   | $ | 66,114 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Basic      and diluted income per share                                   |   | $                        | 5.77         |   |   | $ | 6.48 |   |   | $ | 5.73 |   |
|                                                                      |   |                     |         |   |   |   |   |   |   |   |   |   |
| Basic      and diluted weighted average shares outstanding           |   |                     | 10,000       |   |   |   | 10,000 |   |   |   | 11,533 |   |

----

|                                                                                  |   | Years ended December 31, |    |
|---------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                  |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                                                  |   |                     |    |   |   |   |   |   |   |
| Net      income                                                                       |   | $                        | 57,732  |   |   | $ | 64,765 |   |   | $ | 66,114 |   |
|                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                   |   |
|   Defined      benefit pension plans                                        |   |                     | -       |   |   |   | (57,439 | ) |   |   | (358,021 | ) |
|   Other      postretirement benefit plans                                   |   |                     | -       |   |   |   | (5,498 | ) |   |   | (17,856 | ) |
|                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      other comprehensive income (loss), net             |   |                     | -       |   |   |   | (62,937 | ) |   |   | (375,877 | ) |
|                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|        Comprehensive      income (loss)            |   | $                        | 57,732  |   |   | $ | 1,828 |   |   | $ | (309,763 | ) |
|                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |
|                                                                                  |   |
| Accumulated      other comprehensive income (loss), net of tax:                       |   |
|                                                                                  |   |
| Defined      benefit pension plans:                                                   |   |
|          Balance at beginning of year                                  |   | $                        | -       |   |   | $ | 222,202 |   |   | $ | 164,763 |   |
|     Other      comprehensive income (loss):                       |   |
|        Plan      amendment                         |   |                     | -       |   |   |   | (48 | ) |   |   | (23 | ) |
|        Net      actuarial loss arising during year |   |                     | -       |   |   |   | (48,651 | ) |   |   | (352,019 | ) |
|        Amortization      of prior service cost     |   |                     | -       |   |   |   | 767 |   |   |   | 767 |   |
|        Amortization      of net actuarial gains    |   |                     | -       |   |   |   | (9,507 | ) |   |   | (6,746 | ) |
|     Adoption      of SFAS No. 158                                 |   |                     | 222,202 |   |   |   | - |   |   |   | - |   |
|     Balance      at end of year                                   |   | $                        | 222,202 |   |   | $ | 164,763 |   |   | $ | (193,258 | ) |
|                                                                                  |   |
| Defined      OPEB plans:                                                              |   |
|     Balance      at beginning of year                             |   | $                        | -       |   |   | $ | 56,197 |   |   | $ | 50,699 |   |
|          Other comprehensive income (loss):                            |   |                     |    |   |   |   |   |   |   |   |   |   |
|        Plan      amendment                         |   |                     | -       |   |   |   | - |   |   |   | (14,232 | ) |
|        Net      actuarial gain arising during year |   |                     | -       |   |   |   | 1,129 |   |   |   | 3,326 |   |
|        Amortization      of prior service credit   |   |                     | -       |   |   |   | (11,009 | ) |   |   | (10,802 | ) |
|        Amortization      of net actuarial losses   |   |                     | -       |   |   |   | 4,382 |   |   |   | 3,852 |   |
|     Adoption      of SFAS No. 158                                 |   |                     | 56,197  |   |   |   | - |   |   |   | - |   |
|     Balance      at end of year                                   |   | $                        | 56,197  |   |   | $ | 50,699 |   |   | $ | 32,843 |   |
|                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total      accumulated other comprehensive income (loss):                             |   |
|     Balance      at beginning of year                             |   | $                        | -       |   |   | $ | 278,399 |   |   | $ | 215,462 |   |
|     Other      comprehensive income (loss)                        |   |                     | -       |   |   |   | (62,937 | ) |   |   | (375,877 | ) |
|     Adoption      of SFAS No. 158                                 |   |                     | 278,399 |   |   |   | - |   |   |   | - |   |
|     Balance      at end of year                                   |   | $                        | 278,399 |   |   | $ | 215,462 |   |   | $ | (160,415 | ) |

----

|                                                      |   | Common stock |        |   | Additionalpaid-in |   |     | Accumulated      other comprehensive |   |   | Retained      earnings |   |   |  Treasury        |     |   |   |   |
|-----------------------------------------------------------|--------|--------------|-------------|--------|-------------------|--------|----------|--------------------------------------|--------|--------|------------------------|--------|--------|-----------------------|----------|--------|--------|--------|
|                                                      |   | Shares       |        |   | Amount            |   |     | capital                              |   |   | income (loss)          |   |   | (accumulated deficit) |     |   | stock  |   |   | Total |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |
| Balance      – December 31, 2005                    |   |         | 10,000      |   |              | $      | 100      |                                 |   | $      | 75,423                 |   |   | $                     | -        |   |   | $      | (7,992 | ) |   | $ | - |   |   | $ | 67,531 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | -        |   |   |   | 57,732 |   |   |   | - |   |   |   | 57,732 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adoption      of SFAS No. 158                             |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | 278,399  |   |   |   | - |   |   |   | - |   |   |   | 278,399 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      – December 31, 2006                    |   |         | 10,000      |   |              |   | 100      |                                 |   |   | 75,423                 |   |   |                  | 278,399  |   |   |   | 49,740 |   |   |   | - |   |   |   | 403,662 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | -        |   |   |   | 64,765 |   |   |   | - |   |   |   | 64,765 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury      stock acquired                              |   |         | (398        | )      |              |   | -        |                                 |   |   | -                      |   |   |                  | -        |   |   |   | - |   |   |   | (796 | ) |   |   | (796 | ) |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive loss, net                        |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | (62,937  | )      |   |   | - |   |   |   | - |   |   |   | (62,937 | ) |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      – December 31, 2007                    |   |         | 9,602       |   |              |   | 100      |                                 |   |   | 75,423                 |   |   |                  | 215,462  |   |   |   | 114,505 |   |   |   | (796 | ) |   |   | 404,694 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                           |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | -        |   |   |   | 66,114 |   |   |   | - |   |   |   | 66,114 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock, net of issuance costs |   |         |  2,500 |   |              |   |  25 |                                 |   |   | 24,688                 |   |   |                  |  -  |   |   |   | - |   |   |   |  - |   |   |   |  24,713 |   |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive loss, net                        |   |         | -           |   |              |   | -        |                                 |   |   | -                      |   |   |                  | (375,877 | )      |   |   | - |   |   |   | - |   |   |   | (375,877 | ) |
|                                                      |   |         |        |   |              |   |     |                                 |   |   |                   |   |   |                  |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      – December 31, 2008                    |   |         | 12,102      |   |              | $      | 125      |                                 |   | $      | 100,111                |   |   | $                     | (160,415 | )      |   | $      | 180,619 |   |   | $ | (796 | ) |   | $ | 119,644 |   |

----

|                                                                             |   | Years ended December 31, |    |
|----------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                             |   | 2006                |    |   | 2007 |   |   | 2008 |   |
|                                                                             |   |                     |    |   |   |   |   |   |   |
| Cash      flows from operating activities:                                       |   |                     |    |   |   |   |   |   |   |
|   Net      income                                                      |   | $                        | 57,732  |   |   | $ | 64,765 |   |   | $ | 66,114 |   |
|   Depreciation      and amortization                                   |   |                     | 15,222  |   |   |   | 15,434 |   |   |   | 15,164 |   |
|   Deferred      income taxes                                           |   |                     | 17,317  |   |   |   | 37,474 |   |   |   | 35,821 |   |
|   Defined      benefit pension credit                                  |   |                     | (55,978 | ) |   |   | (80,443 | ) |   |   | (73,923 | ) |
|   OPEB      credit                                                     |   |                     | (8,297  | ) |   |   | (8,526 | ) |   |   | (8,474 | ) |
|   OPEB      payments                                                   |   |                     | (3,931  | ) |   |   | (3,800 | ) |   |   | (2,458 | ) |
|   Gain      on cancellation of debt                                    |   |                     | -       |   |   |   | (10,074 | )  |   |   | - |   |
|   Payment      to pre-petition creditors                               |   |                     | -       |   |   |   | (4,312 | ) |   |   | - |   |
|   Reorganization      costs accrued                                    |   |                     | 679     |   |   |   | 190 |   |   |   | 225 |   |
|   Reorganization      costs paid                                       |   |                     | (3,722  | ) |   |   | (164 | ) |   |   | (266 | ) |
|   Impairment      of inventory                                         |   |                     | -       |   |   |   | 240 |   |   |   | 1,165 |   |
|   Impairment      of long-lived assets                                 |   |                     | 529     |   |   |   | - |   |   |   | - |   |
|   Other,      net                                                      |   |                     | 1,111   |   |   |   | 909 |   |   |   | 560 |   |
|   Change      in assets and liabilities (net of acquisition):     |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Accounts      receivable                                 |   |                     | 14,610  |   |   |   | (23,261 | ) |   |   | 28,449 |   |
|     Inventories                                              |   |                     | 8,348   |   |   |   | 10,311 |   |   |   | (18,472 | ) |
|     Accounts      payable                                    |   |                     | 94      |   |   |   | 4,131 |   |   |   | (6,302 | ) |
|     Accrued      liabilities                                 |   |                     | 1,229   |   |   |   | (545 | ) |   |   | 9,714 |   |
|     Income      taxes                                        |   |                     | (800    | ) |   |   | (201 | ) |   |   | 1,178 |   |
|     Other,      net                                          |   |                     | (686    | ) |   |   | 477 |   |   |   |  (197 | ) |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net      cash provided by operating activities           |   |                     | 43,457  |   |   |   | 2,605 |   |   |   | 48,298 |   |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Capital      expenditures                                            |   |                     | (18,739 | ) |   |   | (16,602 | ) |   |   | (13,298 | ) |
|   Acquisition      of CaluMetals’ assets                         |   |                     | -       |   |   |   | (6,240 | ) |   |   | - |   |
|   Restricted      investments, net                                     |   |                     | (1,348  | ) |   |   | 4,901 |   |   |   | (32 | ) |
|   Other,      net                                                      |   |                     | 108     |   |   |   |  1,159 |   |   |   |  437 |   |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net      cash used in investing activities               |   |                     | (19,979 | ) |   |   | (16,782 | ) |   |   | (12,893 | ) |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Issuance      of common stock                                        |   |                     | -       |   |   |   | - |   |   |   | 24,713 |   |
|   Revolving      credit facility, net                                  |   |                     | (18,439 | ) |   |   | 28,526 |   |   |   | (42,997 | ) |
|   Other      notes payable and long-term debt:                         |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Additions                                                |   |                     | 468     |   |   |   | 4,065 |   |   |   | - |   |
|     Principal      payments                                  |   |                     | (5,477  | ) |   |   | (18,025 | ) |   |   | (16,962 | ) |
|   Deferred      financing costs paid                                   |   |                     | (30     | ) |   |   | (389 | ) |   |   |  (159 | ) |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Net      cash provided by (used in) financing activities |   |                     | (23,478 | ) |   |   |  14,177 |   |   |   | (35,405 | ) |
|                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |

----

|                                                                                       |   | Years ended December 31, |   |
|--------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                       |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                                       |   |                     |   |   |   |   |   |   |   |
| Cash      and cash equivalents:                                                            |   |                     |   |   |   |   |   |   |   |
|   Net      change from operations, investing and      financing activities  |   |                     | -      |   |   |   | - |   |   |   | - |   |
|                                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Balance      at beginning of year                                              |   |                     | -      |   |   |   | - |   |   |   | - |   |
|                                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Balance      at end of year                                                    |   | $                        | -      |   |   | $ | - |   |   | $ | - |   |
|                                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures:                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Cash      paid for:                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Interest,      net of amounts capitalized                          |   | $                        | 3,950  |   |   | $ | 5,681 |   |   | $ | 3,581 |   |
|     Income      taxes, net                                             |   |                     | 179    |   |   |   | 347 |   |   |   | 3,015 |   |
|   Non-cash      issuance of debt for acquisition of CaluMetals’assets |   |                     | -      |   |   |   | 781 |   |   |   | - |   |

----

----

----

----

| ·   | Keystone      Steel & Wire (“KSW”), located in Peoria, Illinois, operates an      electric arc furnace mini-mill and manufactures and sells billets, wire      rod, industrial wire, coiled rebar and fabricated wire products to      agricultural, industrial, construction, commercial, original equipment      manufacturers and retail consumermarkets; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Engineered      Wire Products, Inc. (“EWP”), located in Upper Sandusky, Ohio, manufactures      and sells wire mesh in both roll and sheet form that is utilized 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.  See Note  3. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                |   |  Years ended December      31,  |    |
|-----------------------------------------------------|--------|-------------------------------------------|---------|
|                                                |   | 2006                                      |    |   | 2007 |   |   | 2008 |   |
|                                                |   | (In      thousands)                       |    |
|                                                |   |                                      |    |   |   |   |   |   |   |
| Net      sales:                                     |   |                                      |    |   |   |   |   |   |   |
|   KSW                                     |   | $                                         | 412,866 |   |   | $ | 426,652 |   |   | $ | 542,106 |   |
|   EWP                                     |   |                                      | 58,748  |   |   |   | 52,509 |   |   |   | 63,433 |   |
|   Calumet                                 |   |                                      | -       |   |   |   | 5,659 |   |   |   | 17,165 |   |
|   Elimination      of intersegment sales  |   |                                      | (31,074 | ) |   |   | (33,642 | ) |   |   | (60,011 | ) |
|                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |
|     Total      net sales        |   | $                                         | 440,540 |   |   | $ | 451,178 |   |   | $ | 562,693 |   |
|                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Operating      income (loss):                       |   |                                      |    |   |   |   |   |   |   |   |   |   |
|   KSW                                     |   | $                                         | 6,558   |   |   | $ | (930 | ) |   | $ | 32,174 |   |
|   EWP                                     |   |                                      | 9,464   |   |   |   | 7,702 |   |   |   | 5,338 |   |
|   Calumet                                 |   |                                      | -       |   |   |   | (1,391 | ) |   |   | (2,929 | ) |
|   Defined      benefit pension credit     |   |                                      | 55,978  |   |   |   | 80,443 |   |   |   | 73,923 |   |
|   OPEB      credit                        |   |                                      | 8,297   |   |   |   | 8,526 |   |   |   | 8,474 |   |
|   Gain      on legal settlement           |   |                                      | -       |   |   |   | 5,400 |   |   |   | - |   |
|   Other(1)                                |   |                                      | (547    | ) |   |   | (1,778 | ) |   |   | (6,487 | ) |
|                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |
|     Total      operating income |   |                                      | 79,750  |   |   |   | 97,972 |   |   |   | 110,493 |   |
|                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Nonoperating      income (expense):                 |   |                                      |    |   |   |   |   |   |   |   |   |   |
|   Interest      expense                   |   |                                      | (4,720  | ) |   |   | (6,073 | ) |   |   | (3,798 | ) |
|   Other,      net                         |   |                                      | 436     |   |   |   | 601 |   |   |   | (342 | ) |
|   Reorganization      costs               |   |                                      | (679    | ) |   |   | (190 | ) |   |   | (225 | ) |
|   Gain      on cancellation of debt       |   |                                      | -       |   |   |   | 10,074 |   |   |   | - |   |
|                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                     |   | $                                         | 74,787  |   |   | $ | 102,384 |   |   | $ | 106,128 |   |

----

|                          |   | December 31,        |    |
|-------------------------------|--------|---------------------|---------|
|                          |   | 2006                |    |   | 2007 |   |   | 2008 |   |
|                          |   | (In      thousands) |    |
| Total      assets:            |   |                |    |   |   |   |   |   |   |
|   KSW               |   | $                   | 162,439 |   |   | $ | 164,182 |   |   | $ | 150,021 |   |
|   EWP               |   |                | 19,381  |   |   |   | 24,189 |   |   |   | 24,758 |   |
|   Calumet           |   |                | -       |   |   |   | 11,641 |   |   |   | 15,793 |   |
|   Corporate         |   |                | 582,116 |   |   |   | 563,011 |   |   |   | 59,161 |   |
|                          |   |                |    |   |   |   |   |   |   |   |   |   |
|     Total |   | $                   | 763,936 |   |   | $ | 763,023 |   |   | $ | 249,733 |   |
|                          |   |                |    |   |   |   |   |   |   |   |   |   |

|                                |   |  Years ended December      31,  |      |
|-------------------------------------|--------|-------------------------------------------|-----------|
|                                |   | 2006                                      |      |   | 2007 |   |   | 2008 |   |
|                                |   | (In      thousands)                       |      |
| Depreciation      and amortization: |   |                                      |      |   |   |   |   |   |   |
|   KSW                     |   | $                                         | 13,897    |   |   | $ | 13,618 |   |   | $ | 12,754 |   |
|   EWP                     |   |                                      | 1,040     |   |   |   | 1,477 |   |   |   | 1,913 |   |
|   Calumet                 |   |                                      | -         |   |   |   | 181 |   |   |   | 375 |   |
|   Corporate               |   |                                      |  285 |   |   |   |  158 |   |   |   | 122 |   |
|                                |   |                                      |      |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                         | 15,222    |   |   | $ | 15,434 |   |   | $ | 15,164 |   |
|                                |   |                                      |      |   |   |   |   |   |   |   |   |   |
| Capital      expenditures:          |   |                                      |      |   |   |   |   |   |   |   |   |   |
|   KSW                     |   | $                                         | 12,290    |   |   | $ | 9,027 |   |   | $ | 11,516 |   |
|   EWP                     |   |                                      | 6,388     |   |   |   | 6,807 |   |   |   | 845 |   |
|   Calumet                 |   |                                      | -         |   |   |   | 588 |   |   |   | 915 |   |
|   Corporate               |   |                                      | 61        |   |   |   | 180 |   |   |   | 22 |   |
|                                |   |                                      |      |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                         | 18,739    |   |   | $ | 16,602 |   |   | $ | 13,298 |   |
|                                |   |                                      |      |   |   |   |   |   |   |   |   |   |

|                          |   | Years ended December 31, |    |
|-------------------------------|--------|--------------------------|---------|
|                          |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                          |   | (In      thousands)      |    |
|                          |   |                     |    |   |   |   |   |   |   |
| United      States            |   | $                        | 431,122 |   |   | $ | 444,518 |   |   | $ | 550,928 |   |
| Canada                        |   |                     | 8,036   |   |   |   | 5,145 |   |   |   | 7,992 |   |
| Mexico                        |   |                     | -       |   |   |   | - |   |   |   | 2,338 |   |
| Other                         |   |                     | 1,382   |   |   |   | 1,515 |   |   |   | 1,435 |   |
|                          |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total |   | $                        | 440,540 |   |   | $ | 451,178 |   |   | $ | 562,693 |   |

----

|                                           |   |  December 31,  |   |
|------------------------------------------------|--------|--------------------------|--------|
|                                           |   | 2007                     |   |   | 2008 |   |
|                                           |   | (In      thousands)      |   |
|                                           |   |                     |   |   |   |   |
|   Raw      materials                 |   | $                        | 6,954  |   |   | $ | 9,635 |   |
|   Billets                            |   |                     | 8,158  |   |   |   | 10,191 |   |
|   Wire      rods                     |   |                     | 12,897 |   |   |   | 24,225 |   |
|   Work      in process               |   |                     | 5,079  |   |   |   | - |   |
|   Finished      products             |   |                     | 24,855 |   |   |   | 40,303 |   |
|   Supplies                           |   |                     | 19,900 |   |   |   | 20,938 |   |
|                                           |   |                     |   |   |   |   |   |   |
|     Inventory      at FIFO |   |                     | 77,843 |   |   |   | 105,292 |   |
|     Less      LIFO reserve |   |                     | 24,292 |   |   |   | 34,434 |   |
|                                           |   |                     |   |   |   |   |   |   |
|       Total      |   | $                        | 53,551 |   |   | $ | 70,858 |   |
|                                           |   |                     |   |   |   |   |   |   |

|                                                 |   | December 31,        |   |
|------------------------------------------------------|--------|---------------------|--------|
|                                                 |   | 2007                |   |   | 2008 |   |
|                                                 |   | (In      thousands) |   |
|                                                 |   |                |   |   |   |   |
| Wachovia      revolving credit facility              |   | $                   | 46,261 |   |   | $ | 3,264 |   |
| 8%      Notes                                        |   |                | 17,160 |   |   |   | 9,108 |   |
| UC      Note                                         |   |                | 2,501  |   |   |   | - |   |
| Term      loans:                                     |   |                |   |   |   |   |   |   |
|   Wachovia                                 |   |                | 16,286 |   |   |   | 10,953 |   |
|   County                                   |   |                | 8,499  |   |   |   | 7,441 |   |
| Other                                                |   |                | 870    |   |   |   | 864 |   |
|                                                 |   |                |   |   |   |   |   |   |
|     Total      debt              |   |                | 91,577 |   |   |   | 31,630 |   |
|     Less      current maturities |   |                | 62,175 |   |   |   | 18,848 |   |
|                                                 |   |                |   |   |   |   |   |   |
|     Total      long-term debt    |   | $                   | 29,402 |   |   | $ | 12,782 |   |

----

----

|     Year ending      December 31, |   | Amount              |   |
|-------------------------------------------------------|--------|---------------------|--------|
|                                                  |   | (In      thousands) |   |
|                                                  |   |                |   |
| 2009                                                  |   | $                   | 18,848 |   |
| 2010                                                  |   |                | 5,351  |   |
| 2011                                                  |   |                | 2,062  |   |
| 2012                                                  |   |                | 1,696  |   |
| 2013                                                  |   |                | 1,585  |   |
| 2014 and    thereafter                                |   |                | 2,339  |   |
| Total                                                 |   | $                   | 31,881 |   |

----

|                                                                  |   | Years ended December 31, |      |
|-----------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                  |   | 2006                     |      |   | 2007 |   |   | 2008 |   |
|                                                                  |   | (In      thousands)      |      |
|                                                                  |   |                     |      |   |   |   |   |   |   |
| Expected      tax provision, at statutory rate                        |   | $                        | 26,175    |   |   | $ | 35,835 |   |   | $ | 37,146 |   |
| U.S.      state income taxes, net                                     |   |                     | 2,432     |   |   |   | 2,444 |   |   |   | 2,842 |   |
| Deferred      tax asset valuation allowance                           |   |                     | (10,675   | ) |   |   | - |   |   |   | - |   |
| Release      of contingency reserve                                   |   |                     | (1,011    | ) |   |   | - |   |   |   | - |   |
| Other,      net                                                       |   |                     |  134 |   |   |   | (660 | ) |   |   | 26 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                       |   | $                        | 17,055    |   |   | $ | 37,619 |   |   | $ | 40,014 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes:                                      |   |                     |      |   |   |   |   |   |   |   |   |   |
|   Currently      payable (refundable):                      |   |                     |      |   |   |   |   |   |   |   |   |   |
|     U.S.      federal                             |   | $                        | 273       |   |   | $ | (45 | ) |   | $ | 3,453 |   |
|     U.S.      state                               |   |                     | (535      | ) |   |   |  190 |   |   |   | 740 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
|      Net      currently payable (refundable) |   |                     | (262      | ) |   |   | 145 |   |   |   | 4,193 |   |
|   Deferred      income taxes, net                           |   |                     | 17,317    |   |   |   | 37,474 |   |   |   | 35,821 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                       |   | $                        | 17,055    |   |   | $ | 37,619 |   |   | $ | 40,014 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Comprehensive      provision for income taxes      allocable to: |   |                     |      |   |   |   |   |   |   |   |   |   |
|    Net      income                                     |   | $                        | 17,055    |   |   | $ | 37,619 |   |   | $ | 40,014 |   |
|    Other      comprehensive income (loss):             |   |                     |      |   |   |   |   |   |   |   |   |   |
|       Pension      plans                |   |                     | 133,947   |   |   |   | (34,626 | ) |   |   | (215,823 | ) |
|       OPEB      plans                   |   |                     | 33,877    |   |   |   | (3,315 | ) |   |   | (10,764 | ) |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                        | 184,879   |   |   | $ | (322 | ) |   | $ | 186,573 |   |

|                                                                                        |   |  December 31,  |        |
|---------------------------------------------------------------------------------------------|--------|---------------------|-------------|
|                                                                                        |   | 2007                |        |   | 2008 |   |
|                                                                                        |   | Assets              |        |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                                                        |   | (In      thousands) |        |
|                                                                                        |   |                |        |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences relating to:                                       |   |                |        |   |   |   |   |   |   |   |   |   |
|   Inventories                                                                     |   | $                   | 4,492       |   |   | $ | - |   |   | $ | 6,806 |   |   | $ | - |   |
|   Property      and equipment                                                     |   |                | -           |   |   |   | (12,389 | ) |   |   | - |   |   |   | (12,819 | ) |
|   Pension      asset                                                              |   |                | -           |   |   |   | (205,222 | ) |   |   | - |   |   |   | (15,169 | ) |
|   Accrued      OPEB cost                                                          |   |                | 11,775      |   |   |   | - |   |   |   | 16,398 |   |   |   | - |   |
|   Accrued      liabilities                                                        |   |                | 6,207       |   |   |   | - |   |   |   | 8,809 |   |   |   | - |   |
|   Other      deductible differences                                               |   |                | 2,010       |   |   |   | - |   |   |   | 1,264 |   |   |   | - |   |
|   Net      operating loss carryforwards                                           |   |                | 2,457       |   |   |   | - |   |   |   | 11 |   |   |   | - |   |
|   Alternative      minimum tax and other credit carryforwards                |   |                |  5,997 |   |   |   |  - |   |   |   |  789 |   |   |   |  - |   |
|                                                                                        |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Gross      deferred tax assets / (liabilities)                 |   |                | 32,938      |   |   |   | (217,611 | ) |   |   | 34,077 |   |   |   | (27,988 | ) |
|     Reclassification,      principally netting by tax jurisdiction |   |                | (22,883     | ) |   |   |  22,883 |   |   |   | (19,704 | ) |   |   |  19,704 |   |
|                                                                                        |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net      deferred tax asset / (liability)                           |   |                | 10,055      |   |   |   | (194,728 | )  |   |   | 14,373 |   |   |   | (8,284 | )  |
|     Less      current deferred tax asset                                |   |                | 10,055      |   |   |   | - |   |   |   | 14,373 |   |   |   |  - |   |
|                                                                                        |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Noncurrent      deferred tax liability                              |   | $                   | -           |   |   | $ | (194,728 | ) |   | $ | - |   |   | $ | (8,284 | )   |

----

|                                                                                                                                                                                                     |   | Years ended December 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                                                                                                     |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                                                                                                                                                                     |   | (In      thousands)      |    |
|                                                                                                                                                                                                     |   |                     |    |   |   |   |   |   |   |
| Increase      (decrease) in valuation allowance:                                                                                                                                                         |   |                     |    |   |   |   |   |   |   |
|    Increase      in certain deductible temporary differences which the Company      believes        do not meet the "more-likely-than-not" recognition      criteria: |   |
|       Recognized      in net income                                                                                                                                        |   | $                        | (10,675 | ) |   | $ | - |   |   | $ | - |   |
|                                                                                                                                                                                                     |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                     |   | $                        | (10,675 | ) |   | $ | - |   |   | $ | - |   |

----

|                   |   | PensionBenefits     |    |   | OtherBenefits |   |
|------------------------|--------|---------------------|---------|--------|---------------|--------|
|                   |   | (In      thousands) |    |
|                   |   |                |    |   |          |   |
| 2009      (1)          |   | $                   | 31,600  |   |          | $      | 1,370 |   |
| 2010                   |   |                | 28,500  |   |          |   | 4,340 |   |
| 2011                   |   |                | 28,600  |   |          |   | 4,240 |   |
| 2012                   |   |                | 28,500  |   |          |   | 4,150 |   |
| 2013                   |   |                | 28,500  |   |          |   | 4,040 |   |
| 2014      – 2018 |   |                | 139,400 |   |          |   | 18,720 |   |

----

|                                                                                                 |   | Pension Benefits    |     |   |  Other Benefits  |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------|----------|--------|----------------------------|--------|
|                                                                                                 |   | 2007                |     |   | 2008                       |   |   | 2007 |   |   | 2008 |   |
|                                                                                                 |   | (In      thousands) |     |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |
| Change      in projected benefit obligations      ("PBO"):                                      |   |                |     |   |                       |   |   |   |   |   |   |   |
|          Balance at beginning of the year                                             |   | $                   | 376,884  |   |                       | $      | 369,020 |   |   | $ | 35,162 |   |   | $ | 31,649 |   |
|          Service cost                                                                 |   |                | 3,724    |   |                       |   | 3,130 |   |   |   | 204 |   |   |   | 128 |   |
|          Interest cost                                                                |   |                | 21,893   |   |                       |   | 22,568 |   |   |   | 1,892 |   |   |   | 2,119 |   |
|          Plan amendment                                                               |   |                | 78       |   |                       |   | 37 |   |   |   | - |   |   |   | 23,228 |   |
|          Actuarial gains                                                              |   |                | (5,817   | )      |                       |   | (5,576 | ) |   |   | (1,809 | ) |   |   | (5,332 | ) |
|          Benefits paid                                                                |   |                | (27,742  | )      |                       |   | (30,303 | ) |   |   | (3,800 | ) |   |   | (2,458 | ) |
|          1114 Agreement benefits extinguished by increased pension      benefits |   |                |  -  |   |                       |   |  5,402 |   |   |   |  - |   |   |   | (5,402 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Balance at end of the      year                                                                      |   | $                   | 369,020  |   |                       | $      | 364,278 |   |   | $ | 31,649 |   |   | $ | 43,932 |   |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Change      in plan assets:                                                                          |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|          Fair value at beginning of the year                                          |   | $                   | 934,163  |   |                       | $      | 914,676 |   |   | $ |  - |   |   | $ | - |   |
|          Actual return on plan assets                                                 |   |                | 8,255    |   |                       |   | (479,763 | ) |   |   | - |   |   |   | - |   |
|          Employer contributions                                                       |   |                | -        |   |                       |   | - |   |   |   | 3,800 |   |   |   | 2,458 |   |
|          Benefits paid                                                                |   |                | (27,742  | )      |                       |   | (30,303 | ) |   |   | (3,800 | ) |   |   | (2,458 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Fair value at end of the      year                                                                   |   | $                   | 914,676  |   |                       | $      | 404,610 |   |   | $ | - |   |   | $ | - |   |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Funded      status                                                                                   |   | $                   | 545,656  |   |                       | $      | 40,332 |   |   | $ | (31,649 | ) |   | $ | (43,932 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Amounts      recognized in the Consolidated Balance Sheets:                                          |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Pension      asset                                                                                   |   | $                   | 545,656  |   |                       | $      | 41,651 |   |   | $ | - |   |   | $ |  - |   |
|          Noncurrent accrued pension costs                                             |   |                | -        |   |                       |   | (1,319 | ) |   |   | - |   |   |   | - |   |
|          Accrued OPEB costs:                                                          |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|             Current                                                    |   |                | -        |   |                       |   | - |   |   |   | (4,482 | ) |   |   | (1,372 | ) |
|             Noncurrent                                                 |   |                | -        |   |                       |   | - |   |   |   | (27,167 | ) |   |   | (42,560 | ) |
|                                                                                                 |   |                | 545,656  |   |                       | $      | 40,332 |   |   |   | (31,649 | ) |   |   | (43,932 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|   Accumulated      other comprehensive income:                                        |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Prior service cost      (credit)                                                                     |   |                | 12,553   |   |                       |   | 11,361 |   |   |   | (186,446 | ) |   |   | (148,921 | ) |
| Actuarial losses      (gains)                                                                        |   |                | (276,637 | )      |                       |   | 298,400 |   |   |   | 105,187 |   |   |   | 96,279 |   |
|                                                                                                 |   |                | (264,084 | )      |                       |   | 309,761 |   |   |   | (81,259 | ) |   |   | (52,642 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|  Total                                                                                          |   | $                   | 281,572  |   |                       | $      | 350,093 |   |   | $ | (112,908 | ) |   | $ | (96,574 | ) |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”) of pension plans                            |   | $                   | 364,021  |   |                       | $      | 359,780 |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
| Pension      plan for which the accumulated benefit obligation exceeds plan      assets:             |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |
|    Projected      benefit obligation                                                  |   | $                   | -        |   |                       | $      | 100,525 |   |   |   |   |   |   |   |   |   |
|    Accumulated      benefit obligation                                                |   |                | -        |   |                       |   | 96,026 |   |   |   |   |   |   |   |   |   |
|    Fair      value of plan assets                                                     |   |                | -        |   |                       |   | 99,206 |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                |     |   |                       |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                    |   | Pension Benefits    |    |   | Other Benefits |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|----------------|--------|
|                                                                                                    |   | 2007                |    |   | 2008           |   |   | 2007 |   |   | 2008 |   |
|                                                                                                    |   | (In      thousands) |    |
| Changes      in plan assets and benefit obligations recognized      in other comprehensive income: |   |                |    |   |           |   |   |   |   |   |   |   |
| Plan      amendment                                                                                     |   | $                   | (78     | )      |           | $      | (37 | ) |   | $ | - |   |   | $ | (22,812 | ) |
| Net      actuarial gain (loss) arising during the year                                                  |   |                | (77,978 | )      |           |   | (564,224 | ) |   |   | 1,809 |   |   |   | 5,332 |   |
| Amortization      of unrecognized:                                                                      |   |                |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost      (credit)                                      |   |                | 1,229   |   |           |   | 1,229 |   |   |   | (17,646 | ) |   |   | (17,313 | ) |
|     Net      actuarial losses (gains)                                               |   |                | (15,238 | )      |           |   | (10,813 | ) |   |   | 7,024 |   |   |   | 6,176 |   |
|                                                                                                    |   |                |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                           |   | $                   | (92,065 | )      |           | $      | (573,845 | ) |   | $ | (8,813 | ) |   | $ | (28,617 | ) |

|                                                 |   | Pension Benefits    |    |   | Other Benefits |   |
|------------------------------------------------------|--------|---------------------|---------|--------|----------------|--------|
|                                                 |   | 2006                |    |   | 2007           |   |   | 2008 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                                 |   | (In      thousands) |    |
|                                                 |   |                |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      cost                                    |   | $                   | 3,569   |   |           | $      | 3,724 |   |   | $ | 3,130 |   |   | $ | 247 |   |   | $ | 204 |   |   | $ | 128 |   |
| Interest      cost                                   |   |                | 21,041  |   |           |   | 21,893 |   |   |   | 22,568 |   |   |   | 1,972 |   |   |   | 1,892 |   |   |   | 2,119 |   |
| Expected      return on plan assets                  |   |                | (73,152 | )      |           |   | (92,051 | ) |   |   | (90,037 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization      of:                                |   |                |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Prior      service cost (credit)         |   |                | 1,126   |   |           |   | 1,229 |   |   |   | 1,229 |   |   |   | (17,645 | ) |   |   | (17,646 | ) |   |   | (17,313 | ) |
|   Net      actuarial losses (gains)        |   |                | (8,562  | )      |           |   | (15,238 | ) |   |   | (10,813 | ) |   |   | 7,129 |   |   |   | 7,024 |   |   |   | 6,176 |   |
| Settlement      of 2006 1114 Agreement benefits |   |                |  - |   |           |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  416 |   |
| Total      benefit cost (credit)                     |   | $                   | (55,978 | )      |           | $      | (80,443 | ) |   | $ | (73,923 | ) |   | $ | (8,297 | ) |   | $ | (8,526 | ) |   | $ | (8,474 | ) |
|                                                 |   |                |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                               |   | Pension Benefits |   |   | Other Benefits |   |
|------------------------------------|--------|------------------|--------|--------|----------------|--------|
|                               |   | 2007             |   |   | 2008           |   |   | 2007 |   |   | 2008 |   |
|                               |   |             |   |   |           |   |   |   |   |   |   |   |
| Discount      rate                 |   |             | 6.3    | %      |           |   | 6.2 | % |   |   | 6.3 | % |   |   | 6.2 | % |
| Rate      of compensation increase |   |             | 3.0    | %      |           |   | 3.4 | % |   |   | - |   |   |   | - |   |

----

|                                |   | Pension Benefits |   |   | Other Benefits |   |
|-------------------------------------|--------|------------------|--------|--------|----------------|--------|
|                                |   | 2006             |   |   | 2007           |   |   | 2008 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
|                                |   |             |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount      rate                  |   |             | 6.0    | %      |           |   | 5.8 | % |   |   | 6.3 | % |   |   | 5.5 | % |   |   | 5.8 | % |   |   | 6.5 | % |
| Expected      return on plan assets |   |             | 10.0   | %      |           |   | 10.0 | % |   |   | 10.0 | % |   |   | - |   |   |   | - |   |   |   | - |   |
| Rate      of compensation increase  |   |             | 3.0    | %      |           |   | 3.0 | % |   |   | 3.0 | % |   |   | - |   |   |   | - |   |   |   | - |   |

----

|                                |   | Years ended December 31, |   |
|-------------------------------------|--------|--------------------------|--------|
|                                |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                |   | (In      thousands)      |   |
|                                |   |                     |   |   |   |   |   |   |   |
| Balance      at beginning of period |   | $                        | 15,412 |   |   | $ | 13,252 |   |   | $ | 5,282 |   |
| Expense                             |   |                     | -      |   |   |   | - |   |   |   | 504 |   |
| Payments,      net                  |   |                     | (2,160 | ) |   |   | (3,288 | ) |   |   | (661 | ) |
| Cancellation      of debt           |   |                     | -      |   |   |   | (4,682 | ) |   |   | - |   |
|                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of period       |   | $                        | 13,252 |   |   | $ | 5,282 |   |   | $ | 5,125 |   |

----

----

|        |   | Lease commitment    |   |
|-------------|--------|---------------------|--------|
|        |   | (In      thousands) |   |
|        |   |                |   |
| 2009        |   | $                   | 488    |   |
| 2010        |   |                | 133    |   |
| 2011        |   |                | 56     |   |
| 2012        |   |                | 2      |   |
|  Total |   | $                   | 679    |   |

----

|                       |   | KSW                             |   |       | EWP    |   |   | Calumet |   |
|----------------------------|--------|---------------------------------|--------|------------|--------|--------|--------|---------|--------|
|                       |   | %      of segments’ sales |   |
|                       |   |                            |   |       |   |   |   |    |   |
| Ten      largest customers |   |                            | 55     | %          |   |   | 53     | %       |   |   | 50 | % |
|                       |   |                            |   |       |   |   |   |    |   |   |   |   |
| Customer      > 10%     |   |                            | 12     | %      (1) |   |   | 10     | %       |   |   | - |   |

|                                           |   |  December 31,  |   |
|------------------------------------------------|--------|--------------------------|--------|
|                                           |   | 2007                     |   |   | 2008 |   |
|                                           |   | (In      thousands)      |   |
| Current:                                       |   |                     |   |   |   |   |
|   Employee      benefits             |   | $                        | 10,881 |   |   | $ | 19,656 |   |
|   Self      insurance                |   |                     | 3,755  |   |   |   | 5,936 |   |
|   Environmental                      |   |                     | 217    |   |   |   | 455 |   |
|   Other                              |   |                     | 4,744  |   |   |   | 3,522 |   |
|                                           |   |                     |   |   |   |   |   |   |
| Total                                          |   | $                        | 19,597 |   |   | $ | 29,569 |   |
|                                           |   |                     |   |   |   |   |   |   |
| Noncurrent:                                    |   |                     |   |   |   |   |   |   |
|   Environmental                      |   | $                        | 5,065  |   |   | $ | 4,670 |   |
|   Workers      compensation payments |   |                     | 1,494  |   |   |   | 1,621 |   |
|   Other                              |   |                     | 141    |   |   |   | 172 |   |
|                                           |   |                     |   |   |   |   |   |   |
| Total                                          |   | $                        | 6,700  |   |   | $ | 6,463 |   |

----

----

----

|                                                    |   | March 31,                                  |    |   | June 30, |   |    | September 30, |   |   | December 31, |   |
|---------------------------------------------------------|--------|--------------------------------------------|---------|--------|----------|--------|---------|---------------|--------|--------|--------------|--------|
|                                                    |   | (In      thousands, except per share data) |    |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |
| Year      ended December 31, 2007:                      |   |                                       |    |   |     |   |    |          |   |   |         |   |
|   Net      sales                              |   | $                                          | 113,098 |   |     | $      | 122,665 |          |   | $      | 103,358      |   |   | $ | 112,057 |   |
|   Gross      profit                           |   |                                       | 6,367   |   |     |   | 6,668   |          |   |   | 6,435        |   |   |   | 3,800 |   |
|   Gain      on legal settlement               |   |                                       | -       |   |     |   | 5,400   |          |   |   | -            |   |   |   | - |   |
|   Gain      on cancellation of debt           |   |                                       | -       |   |     |   | -       |          |   |   | 9,031        |   |   |   | 1,043 |   |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
|   Net      income                             |   | $                                          | 14,464  |   |     | $      | 17,241  |          |   | $      | 19,806       |   |   | $ | 13,254 |   |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
|   Basic      and diluted net income per share |   | $                                          | 1.45    |   |     | $      | 1.72    |          |   | $      | 1.98         |   |   | $ | 1.33 |   |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
| Year      ended December 31, 2008:                      |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
|   Net      sales                              |   | $                                          | 134,139 |   |     | $      | 178,027 |          |   | $      | 183,209      |   |   | $ | 67,318 |   |
|   Gross      profit                           |   |                                       | 7,126   |   |     |   | 21,737  |          |   |   | 26,342       |   |   |   | (3,709 | ) |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
|   Net      income                             |   | $                                          | 13,610  |   |     | $      | 21,919  |          |   | $      | 23,975       |   |   | $ | 6,610 |   |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |
|   Basic      and diluted net income per share |   | $                                          | 1.39    |   |     | $      | 1.81    |          |   | $      | 1.98         |   |   | $ | 0.55 |   |
|                                                    |   |                                       |    |   |     |   |    |          |   |   |         |   |   |   |   |   |

----

| ·   | an      increase in our LIFO reserve and cost of goods sold of $1.0 million ($.7      million, net of tax), a $0.07 decrease in earnings per share as compared      to the quarterly pro-rata change that we would have recorded based on the      third quarter inventory projections;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      decrease in our defined benefit pension credit of $1.1 million ($.7      million, net of tax), a $0.07 decrease in earnings per share as compared      to the quarterly credits recorded throughout the  year. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      increase in our LIFO reserve and cost of goods sold of $4.1 million ($2.6      million, net of tax), a $0.22 decrease in earnings per share as compared      to the quarterly pro-rata change that we would have recorded based on the      third quarter inventoryprojections; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      impairment charge to reduce Calumet’s inventory to its net realizable      value of $1.2 million ($.7 million, net of tax), a $0.06 decrease in      earnings per share; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | income      related to KSW obtaining an excise tax exemption on 2007 and 2008      electricity costs of $2.2 million ($1.3 million, net of tax), a $0.12      increase in earnings per share. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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