SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934




For the quarterly period March 31, 2001          Commission file number 1-3919
                         --------------                                 ------




                    Keystone Consolidated Industries, Inc.
------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)




          Delaware                                            37-0364250
---------------------------------------------             ------------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                           Identification No.)

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



Registrant's telephone number, including area code:            (972) 458-0028
                                                        ---------------------




Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during  the  preceding  12  months,  and (2) has  been  subject  to such  filing
requirements for the past 90 days.

                           Yes   X                            No _____
                               -----

Number of shares of common stock outstanding at May 14, 2001: 10,061,969




<PAGE>




                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                                      INDEX

                                                                       Page
                                                                      Number

PART I.        FINANCIAL INFORMATION

  Item 1.  Financial Statements

           Consolidated Balance Sheets - December 31, 2000
            and March 31, 2001                                          3-4

           Consolidated Statements of Operations - Three months
            ended March 31, 2000 and 2001                                5

           Consolidated Statements of Cash Flows - Three months
            ended March 31, 2000 and 2001                                6

           Consolidated Statement of Stockholders' Equity -
            Three months ended March 31, 2001                            7

           Notes to Consolidated Financial Statements                   8-11

  Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                        12-17


PART II. OTHER INFORMATION

  Item 1.  Legal Proceedings                                             18

  Item 6.  Exhibits and Reports on Form 8-K                              18


<PAGE>


                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>
                                                      December 31,      March 31,
                                   ASSETS                  2000            2001
                                                       -----------       -------

Current assets:
<S>                                                      <C>            <C>
  Notes and accounts receivable ..................       $ 21,813       $ 39,776
  Inventories ....................................         52,004         47,886
  Deferred income taxes ..........................         16,828         16,006
  Prepaid expenses and other .....................            786            843
                                                         --------       --------

     Total current assets ........................         91,431        104,511
                                                         --------       --------

Property, plant and equipment ....................        367,695        365,038
Less accumulated depreciation ....................        222,999        225,526
                                                         --------       --------

     Net property, plant and equipment ...........        144,696        139,512
                                                         --------       --------

Other assets:
  Restricted investments .........................          5,969          6,122
  Prepaid pension cost ...........................        126,506        127,256
  Deferred income taxes ..........................         10,696         14,168
  Deferred financing costs .......................          2,685          2,574
  Goodwill .......................................            877            845
  Other ..........................................          2,843          3,097
                                                         --------       --------

     Total other assets ..........................        149,576        154,062
                                                         --------       --------

                                                         $385,703       $398,085
                                                         ========       ========
</TABLE>






<PAGE>


          See accompanying notes to consolidated financial statements.

                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)


<TABLE>
<CAPTION>
       LIABILITIES AND STOCKHOLDERS' EQUITY
                                                    December 31,       March 31,
                                                        2000             2001
                                                     -----------        -------

Current liabilities:
  Notes payable and current maturities of
<S>                                                  <C>              <C>
    long-term debt ...........................       $  45,728        $  53,173
  Accounts payable ...........................          34,614           48,618
  Accounts payable to affiliates .............            --                 16
  Accrued OPEB cost ..........................           8,767            8,767
  Other accrued liabilities ..................          41,565           37,046
                                                     ---------        ---------

      Total current liabilities ..............         130,674          147,620
                                                     ---------        ---------

Noncurrent liabilities:
  Long-term debt .............................         100,280          100,244
  Accrued OPEB cost ..........................          98,015           98,045
  Negative goodwill ..........................          21,353           21,014
  Other ......................................           9,323            8,803
                                                     ---------        ---------

      Total noncurrent liabilities ...........         228,971          228,106
                                                     ---------        ---------

Minority interest ............................            --                  7
                                                     ---------        ---------

Stockholders' equity:
  Common stock ...............................          10,792           10,792
  Additional paid-in capital .................          53,071           53,071
  Accumulated deficit ........................         (37,793)         (41,499)
  Treasury stock, at cost ....................             (12)             (12)
                                                     ---------        ---------

      Total stockholders' equity .............          26,058           22,352
                                                     ---------        ---------

                                                     $ 385,703        $ 398,085
                                                     =========        =========
</TABLE>




<PAGE>


                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                             Three months ended
                                                                 March 31,
                                                             2000         2001
                                                             ----         ----
Revenues and other income:
<S>                                                        <C>         <C>
  Net sales ............................................   $ 96,422    $ 77,763
  Interest .............................................        126          71
  Other, net ...........................................         22          77
                                                           --------    --------
                                                             96,570      77,911
                                                           --------    --------
Costs and expenses:
  Cost of goods sold ...................................     89,981      76,357
  Selling ..............................................      1,800       1,607
  General and administrative ...........................      5,024       3,286
  Overfunded defined benefit pension credit ............       (736)       (750)
  Interest .............................................      3,713       3,746
                                                           --------    --------
                                                             99,782      84,246
                                                           --------    --------

                                                             (3,212)     (6,335)

    Equity in losses of unconsolidated equity affiliate         (31)       --
                                                           --------    --------

      Loss before income taxes .........................     (3,243)     (6,335)

Income tax benefit .....................................     (1,320)     (2,636)

Minority interest in after-tax earnings ................          9           7
                                                           --------    --------

    Net loss ...........................................   $ (1,932)   $ (3,706)
                                                           ========    ========

Basic and diluted net loss per share ...................   $   (.19)   $   (.37)
                                                           ========    ========

Basic and diluted shares outstanding ...................      9,971      10,062
                                                           ========    ========
</TABLE>





<PAGE>


                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                             Three months ended
                                                                  March 31,
                                                             2000         2001
                                                             ----         ----

Cash flows from operating activities:
<S>                                                        <C>         <C>
  Net loss .............................................   $ (1,932)   $ (3,706)
  Depreciation and amortization ........................      4,558       4,559
  Amortization of deferred financing costs .............        119         119
  Deferred income taxes ................................     (1,310)     (2,651)
  Other, net ...........................................       (302)        186
  Change in assets and liabilities:
    Notes and accounts receivable ......................    (17,478)    (18,476)
    Inventories ........................................      5,948       3,380
    Prepaid pension cost ...............................       (736)       (750)
    Accounts payable ...................................      6,615      14,371
    Other, net .........................................     (4,194)     (5,037)
                                                           --------    --------

      Net cash used by operating activities ............     (8,712)     (8,005)
                                                           --------    --------

Cash flows from investing activities:
  Capital expenditures .................................     (2,910)       (197)
  Proceeds from sale of business unit ..................       --           757
  Other, net ...........................................        (82)         36
                                                           --------    --------

      Net cash provided (used) by investing activities .     (2,992)        596
                                                           --------    --------

Cash flows from financing activities:
  Revolving credit facilities, net .....................     12,192       7,668
  Other notes payable and long-term debt:
    Additions ..........................................         17        --
    Principal payments .................................       (505)       (259)
                                                           --------    --------

      Net cash provided by financing activities ........     11,704       7,409
                                                           --------    --------

Net change in cash and cash equivalents ................       --          --

Cash and cash equivalents, beginning of period .........       --          --
                                                           --------    --------

Cash and cash equivalents, end of period ...............   $   --      $   --
                                                           ========    ========

Supplemental disclosures:
  Cash paid for:
    Interest, net of amount capitalized ................   $  6,039    $  6,030
    Income taxes (refund received) .....................         28        (184)

  Common stock contributed to employee benefit plan ....   $    794    $   --

  Note received in connection with sale
   of business unit ....................................   $   --      $    440
</TABLE>



<PAGE>


                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                        Three months ended March 31, 2001
                                 (In thousands)


<TABLE>
<CAPTION>
                                       Additional
                                Common   paid-in Accumulated Treasury
                                Stock    capital   deficit     stock     Total

<S>                            <C>       <C>       <C>         <C>     <C>
Balance - December 31, 2000    $10,792   $53,071   $(37,793)   $(12)   $ 26,058

Net loss ...................      --        --       (3,706)    --       (3,706)
                               -------   -------   --------    ----    --------

Balance - March 31, 2001 ...   $10,792   $53,071   $(41,499)   $(12)   $ 22,352
                               =======   =======   ========    ====    ========
</TABLE>





<PAGE>





                     KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and basis of presentation:

     The consolidated balance sheet of Keystone  Consolidated  Industries,  Inc.
("Keystone"  or the  "Company") at December 31, 2000 has been condensed from the
Company's  audited   consolidated   financial   statements  at  that  date.  The
consolidated balance sheet at March 31, 2001 and the consolidated  statements of
operations and cash flows for the interim periods ended March 31, 2000 and 2001,
and the consolidated  statement of  stockholders'  equity for the interim period
ended March 31, 2001, have each been prepared by the Company,  without audit. In
the opinion of management, all adjustments,  consisting only of normal recurring
adjustments,  necessary to present fairly the consolidated  financial  position,
results of  operations  and cash flows  have been  made.  However,  it should be
understood  that  accounting  measurements  at interim dates may be less precise
than at year end.  The results of  operations  for the  interim  periods are not
necessarily  indicative  of the  operating  results for a full year or of future
operations.

     Certain information  normally included in financial  statements prepared in
accordance with accounting  principles  generally  accepted in the United States
has  been  condensed  or  omitted.  The  accompanying   consolidated   financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 2000 (the "Annual Report").

     At March 31,  2001,  Contran  Corporation  ("Contran")  and other  entities
related to Mr.  Harold C. Simmons,  beneficially  own  approximately  50% of the
Company.  Substantially  all of  Contran's  outstanding  voting stock is held by
trusts  established for the benefit of certain children and grandchildren of Mr.
Simmons,  of which Mr.  Simmons is sole  trustee.  Keystone  may be deemed to be
controlled by Contran and Mr. Simmons.

     Effective  January 1, 2001,  the Company  adopted  Statement  of  Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging  Activities,  as  amended.  Under  SFAS No.  133,  all  derivatives  are
recognized  as either  assets or  liabilities  and  measured at fair value.  The
accounting  for changes in fair value of derivates will depend upon the intended
use of the derivative,  and such changes are recognized  either in net income or
other comprehensive income. As permitted by the transition  requirements of SFAS
No. 133, as amended, the Company has exempted from the scope of SFAS No. 133 all
host contracts  containing  embedded  derivatives  which were issued or acquired
prior to January 1, 1999. Keystone is not a party to any significant  derivative
or  hedging  instrument  covered  by SFAS No. 133 and  therefore  the  Company's
financial statements were not impacted by adopting SFAS No. 133.

     In January 2001,  Keystone's  wholly-owned  subsidiary,  Fox Valley Steel &
Wire  ("Fox  Valley")  sold its  business  which  was  located  in  Hortonville,
Wisconsin.  The Company did not record any significant  gain or loss as a result
of the  sale.  Fox  Valley  manufactured  industrial  wire and  fabricated  wire
products  (primarily ladder rods and nails).  Fox Valley's revenues in the first
three months of 2000 amounted to $2.5 million.  During the first three months of
2000, Fox Valley recorded an operating loss of $124,000.


<PAGE>


Note 2 - Inventories:

     Inventories are stated at the lower of cost or market. At December 31, 2000
and March 31, 2001, the last-in, first-out ("LIFO") method was used to determine
the cost of approximately  76% and 74%,  respectively,  of total inventories and
the first-in,  first-out or average cost methods were used to determine the cost
of other inventories.

<TABLE>
<CAPTION>
                                                        December 31,     March 31,
                                                            2000           2001
                                                          --------       -------
                                                               (In thousands)

Steel and wire products:
<S>                                                        <C>           <C>
  Raw materials ....................................       $11,101       $11,283
  Work in process ..................................         9,492         8,949
  Finished goods ...................................        23,954        20,833
  Supplies .........................................        15,520        15,088
                                                           -------       -------
                                                            60,067        56,153

  Less LIFO reserve ................................        11,083        11,104
                                                           -------       -------

                                                            48,984        45,049

Lawn and garden products - finished goods ..........         3,020         2,837
                                                           -------       -------

                                                           $52,004       $47,886
                                                           =======       =======
</TABLE>

Note 3 - Notes payable and long-term debt:

<TABLE>
<CAPTION>
                                                      December 31,      March 31,
                                                         2000              2001
                                                       --------          -------
                                                              (In thousands)

<S>                                                    <C>              <C>
Senior Secured Notes .........................         $100,000         $100,000
Commercial credit agreements:
  Revolving credit facilities:
    Keystone .................................           37,772           43,678
    EWP ......................................            4,203            5,540
    Garden Zone ..............................            2,819            3,244
  Term loan - EWP ............................              164             --
Other ........................................            1,050              955
                                                       --------         --------
                                                        146,008          153,417
  Less current maturities ....................           45,728           53,173
                                                       --------         --------

                                                       $100,280         $100,244
                                                       ========         ========
</TABLE>




<PAGE>


Note 4 - Income taxes:

     Summarized below are (i) the differences between the income tax benefit and
the amounts that would be expected using the U.S.  federal  statutory income tax
rate of 35%, and (ii) the components of the income tax benefit.

<TABLE>
<CAPTION>
                                                             Three months ended
                                                                  March 31,
                                                            2000           2001
                                                            ----           ----
                                                               (In thousands)

<S>                                                        <C>          <C>
Expected tax benefit, at statutory rate ..............     $(1,135)     $(2,217)
U. S. state income taxes, net ........................         (73)        (138)
Amortization of goodwill and negative goodwill .......        (108)        (108)
Other, net ...........................................          (4)        (173)
                                                           -------      -------

Income tax benefit ...................................     $(1,320)     $(2,636)
                                                           =======      =======

Comprehensive income tax benefit:
  Currently refundable:
    U.S. federal .....................................     $   (10)     $    (9)
    U.S. state .......................................        --             24
                                                           -------      -------
      Net currently refundable .......................         (10)          15

  Deferred income taxes, net .........................      (1,310)      (2,651)
                                                           -------      -------

                                                           $(1,320)     $(2,636)
                                                           =======      =======
</TABLE>


Note 5 - Other accrued liabilities:

<TABLE>
<CAPTION>
                                                       December 31,     March 31,
                                                           2000            2001
                                                         --------        -------
                                                               (In thousands)

Current:
<S>                                                       <C>            <C>
  Employee benefits ..............................        $12,137        $10,988
  Environmental ..................................          8,398          8,334
  Self insurance .................................          7,993          7,892
  Interest .......................................          4,160          1,756
  Accrued maintenance ............................           --            1,005
  Legal and professional .........................            836            920
  Disposition of former facilities ...............            384            400
  Unearned revenue ...............................          3,008            153
  Other ..........................................          4,649          5,598
                                                          -------        -------

                                                          $41,565        $37,046
                                                          =======        =======
Noncurrent:
  Environmental ..................................        $ 8,395        $ 7,916
  Other ..........................................            928            887
                                                          -------        -------

                                                          $ 9,323        $ 8,803
                                                          =======        =======
</TABLE>

     Keystone generally  undertakes  planned major maintenance  activities on an
annual  basis,  usually  in  the  fourth  quarter  of  each  year.  These  major
maintenance  activities are conducted  during a shut-down of the Company's steel
and rod  mills.  Repair  and  maintenance  costs  estimated  to be  incurred  in
connection  with these  planned  major  maintenance  activities  are  accrued in
advance on a straight-line basis throughout the year and are included in cost of
goods sold.

Note 6 - Operations:

     The Company's operations are comprised of two segments; the manufacture and
sale of carbon steel rod, wire and wire products for  agricultural,  industrial,
construction,  commercial,  original equipment manufacturers and retail consumer
markets and the distribution of wire,  plastic and wood lawn and garden products
to retailers through its 51% owned subsidiary, Garden Zone LLC ("Garden Zone").

     Keystone is also engaged in a scrap recycling joint venture through its 50%
interest in Alter Recycling Company,  L.L.C.  ("ARC"), an unconsolidated  equity
affiliate.

<TABLE>
<CAPTION>
                                                            Three months ended
                                                                March 31,
                                                          2000             2001
                                                          ----             ----
                                                              (In thousands)

Revenues:
<S>                                                    <C>             <C>
  Steel and wire products ......................       $ 94,193        $ 75,313
  Lawn and garden products .....................          2,261           2,798
                                                       --------        --------
                                                         96,454          78,111
  Elimination of intersegment revenues .........            (32)           (348)
                                                       --------        --------

                                                       $ 96,422        $ 77,763
                                                       ========        ========
Loss before income taxes:
  Operating profit (loss):
    Steel and wire products ....................       $    767        $ (3,407)
    Lawn and garden products ...................            113              78
                                                       --------        --------
                                                            880          (3,329)

  Equity in loss of ARC ........................            (31)           --

  General corporate items:
    Interest income ............................            126              71
    General income (expense), net ..............           (505)            669
  Interest expense .............................         (3,713)         (3,746)
                                                       --------        --------

                                                       $ (3,243)       $ (6,335)
                                                       ========        ========
</TABLE>

Note 7 - Contingencies:

     At March 31, 2001, the Company's  financial  statements  reflected  accrued
liabilities  of  $16.3  million  for  estimated   remedial  costs  arising  from
environmental  issues.  There is no assurance  regarding  the  ultimate  cost of
remedial measures that might eventually be required by environmental authorities
or  that  additional   environmental   hazards,   requiring   further   remedial
expenditures,  might not be asserted  by such  authorities  or private  parties.
Accordingly,  the  ultimate  costs of remedial  measures  may exceed the amounts
currently accrued.

     For additional  information  related to commitments and contingencies,  see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and the Annual Report.



<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS:

     Keystone  believes it is a leading  manufacturer  of steel  fabricated wire
products, industrial wire and carbon steel rod for the agricultural, industrial,
construction,  original  equipment  manufacturer  and retail  consumer  markets.
Historically,  the Company has experienced  greater sales and profits during the
first  half of the  year due to the  seasonality  of  sales  in  principal  wire
products markets,  including the agricultural and construction markets. Keystone
is also engaged in the  distribution  of wire,  plastic and wood lawn and garden
products to retailers through Garden Zone and in scrap recycling through ARC.

     As  provided  by the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995,  the Company  cautions  that  statements in this
Quarterly  Report on Form 10-Q relating to matters that are not historical facts
including, but not limited to, statements found in this "Management's Discussion
And  Analysis  Of  Financial   Condition   And  Results  Of   Operations",   are
forward-looking  statements that represent  management's  belief and assumptions
based on currently  available  information.  Forward-looking  statements  can be
identified by the use of words such as "believes",  "intends",  "may", "should",
"could", "anticipates", "expected", or comparable terminology, or by discussions
of strategies or trends.  Although Keystone believes the expectations  reflected
in such forward-looking statements are reasonable, it cannot give any assurances
that these  expectations  will prove to be  correct.  Such  statements  by their
nature involve  substantial  risks and  uncertainties  that could  significantly
impact expected results,  and actual future results could differ materially from
those described in such forward-looking statements.  While it is not possible to
identify all factors,  Keystone  continues to face many risks and uncertainties.
Among the factors that could cause actual  future  results to differ  materially
are the risks and  uncertainties  discussed in this  Quarterly  Report and those
described  from time to time in the Company's  other filings with the Securities
and Exchange Commission, including, but not limited to, future supply and demand
for the Company's products (including  cyclicality thereof),  customer inventory
levels,  changes in raw  material and other  operating  costs (such as scrap and
energy)  general  economic  conditions,   competitive  products  and  substitute
products,  customer  and  competitor  strategies,  the  impact  of  pricing  and
production  decisions,  the  possibility  of  labor  disruptions,  environmental
matters (such as those requiring  emission and discharge  standards for existing
and new facilities),  government  regulations and possible changes therein,  any
significant increases in the cost of providing medical coverage to employees and
retirees,   the   ultimate   resolution   of  pending   litigation,   successful
implementation of the Company's capital  improvements plan,  international trade
policies of the United States and certain  foreign  countries,  and any possible
future  litigation  and  other  risks and  uncertainties  as  discussed  in this
Quarterly  Report and the Annual  Report,  including,  without  limitation,  the
section referenced above. Should one or more of these risks materialize, (or the
consequences of such a development worsen) or should the underlying  assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected. Keystone disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of new information,  future events
or otherwise.



<PAGE>


     The following table sets forth Keystone's steel and wire production,  sales
volume and pricing data for the periods indicated:

<TABLE>
<CAPTION>
                                                             Three months ended
                                                                  March 31,
                                                             2000           2001
                                                             ----           ----

Production volume (000 tons):
<S>                                                           <C>            <C>
  Billets ........................................            196            163
  Carbon steel rod ...............................            197            150

Sales volume (000 tons):
  Fabricated wire products .......................             82             71
  Industrial wire ................................             36             27
  Carbon steel rod ...............................             81             64
                                                             ----           ----

                                                              199            162
                                                             ====           ====

Per ton selling prices:
  Fabricated wire products .......................           $681           $671
  Industrial wire ................................            447            430
  Carbon steel rod ...............................            267            250
  All steel and wire products ....................            471            464
</TABLE>

     The  following  table sets forth the  components of the Company's net sales
for the periods indicated.

<TABLE>
<CAPTION>
                                                             Three months ended
                                                                 March 31,
                                                               (In millions)
                                                           2000             2001
                                                           ----             ----

Steel and wire products:
<S>                                                        <C>             <C>
  Fabricated wire products .....................           $56.2           $47.5
  Industrial wire ..............................            16.1            11.4
  Carbon steel rod .............................            21.6            16.2
  Other ........................................              .3              .2
                                                           -----           -----
                                                            94.2            75.3

Lawn and garden products .......................             2.2             2.5
                                                           -----           -----
                                                           $96.4           $77.8
                                                           =====           =====
</TABLE>

     The following  table sets forth  selected  operating  data of Keystone as a
percentage of net sales for the periods indicated.

<TABLE>
<CAPTION>
                                                            Three months ended
                                                                March 31,
                                                           2000          2001
                                                           ----          ----

<S>                                                        <C>           <C>
Net sales ..........................................       100.0%        100.0%
Cost of goods sold .................................        93.3          98.2
                                                           -----         -----
Gross profit .......................................         6.7%          1.8%
                                                           =====         =====

Selling expense ....................................         1.9%          2.1%
General and administrative expense .................         5.2%          4.2%
Overfunded defined benefit pension credit ..........         (.8)%        (1.0)%

Loss before income taxes ...........................        (3.4)%        (8.1)%
Income tax benefit .................................        (1.4)         (3.4)
                                                           -----         -----

Net loss ...........................................        (2.0)%        (4.7)%
                                                           =====         =====
</TABLE>


<PAGE>


     Billet production of 163,000 tons during the first quarter of 2001 declined
17% from 2000's first  quarter  record  production  level of 196,000  tons.  The
production  decline was due  primarily to a breakout that occurred at Keystone's
electric  arc  furnace  during  March.  This  breakout  resulted  in lost billet
production of approximately  17,000 tons.  Keystone did not purchase any billets
during the first quarter of either year. Rod production  declined 24% to 150,000
tons  from  197,000  tons in the 2000  first  quarter.  The 2000  quarter's  rod
production  was a record for Keystone in a first quarter and the second  highest
produced in a single quarter. The decline in rod production was due primarily to
the lower billet production and intentional production  curtailments designed to
avoid using high cost  natural gas and to allow billet  inventories  to build in
anticipation of planned outages for repair and maintenance projects in the steel
mill during the first quarter.

     Net sales of $77.8  million  in the 2001 first  quarter  were down 19% from
$96.4 million  during the same period in 2000. The decline in sales was due to a
19% decline in shipments of the Company's steel and wire products  combined with
a 1%  overall  decrease  in  steel  and wire  product  per-ton  selling  prices.
Shipments of carbon steel rod declined 20% while per-ton  selling  prices of rod
declined 6%.  Industrial  wire shipments  during 2001 declined 26% from the 2000
quarter  while  per-ton  selling  prices  declined 4%.  Fabricated  wire product
shipments  declined  14% during the 2001 first  quarter as  compared to the 2000
first quarter while per-ton selling prices declined 1%.

     Gross profit  during the 2001 first  quarter  declined to $1.4 million from
$6.4 million in the 2000 first  quarter as the Company's  gross margin  declined
from 6.7% in the 2000 period to 1.8% in the 2001 first quarter. This decrease in
gross margin was due primarily to lower sales volume,  the lower overall per-ton
selling price of the Company's steel and wire products, higher natural gas costs
and the adverse effect of the furnace  breakout,  all partially  offset by lower
costs for scrap  steel,  Keystone's  primary raw  material  and $1.6  million of
insurance proceeds received in 2001 from business  interruption policies related
to incidents in prior years.  The lower  per-ton  selling price of the Company's
steel and wire products during the 2001 first quarter  adversely  impacted gross
profit by $1.1 million while the negative  variance in natural gas costs between
the 2000  and 2001  first  quarters  adversely  impacted  gross  profit  by $2.9
million. The adverse effect of the furnace breakout amounted to $800,000.

     Selling  expenses  in the 2001 first  quarter of $1.6  million  were,  as a
percentage of sales,  comparable  with selling  expenses in the first quarter of
2000.

     General and administrative expenses during the 2001 first quarter decreased
$1.7 million to $3.3  million  from $5.0  million in the 2000 first  quarter due
primarily to lower insurance expense in 2001, a $650,000  reimbursement of legal
fees  received  in 2001 and the  impact  of  reductions  in  salaried  headcount
resulting from employees  accepting  Keystone's early retirement  package during
the fourth quarter of 2000.

     The overfunded  defined benefit pension credit in the first quarter of 2001
was  $750,000 as compared  to  $736,000 in the first  quarter of 2000.  Keystone
currently  anticipates the total 2001 overfunded  defined benefit pension credit
will approximate $3.0 million.

     Interest  expense in the first quarter of 2001 was slightly higher than the
first quarter of 2000 due principally to slightly higher interest rates. Average
borrowings by the Company under its revolving credit facilities,  term loans and
Senior Secured Notes approximated $150.0 million in the first

<PAGE>


     quarter of 2001 as compared to $150.7 million in the first quarter of 2000.
During the first quarter of 2001, the average  interest rate paid by the Company
was 9.5% per annum as compared to 9.4% per annum in the first quarter of 2000.

     The principal reasons for the difference between the U.S. federal statutory
income tax rate and the  Company's  effective  income tax rates are explained in
Note 4 to the Consolidated Financial Statements.

     As a result of the items  discussed  above,  Keystone  incurred  a net loss
during the first  quarter of 2001 of $3.7  million as  compared to a net loss of
$1.9 million in the first quarter of 2000.

     Keystone has  announced a $15 per-ton  increase in carbon steel rod selling
prices for all  shipments  after  April 1, 2001 and a $15  per-ton  increase  in
industrial  wire  selling  prices  for all  shipments  after  May 14,  2001.  In
addition,  the Company has  announced  increases of from 3% to 6% in  fabricated
wire products  selling prices  effective with shipments after September 1, 2001.
Several other domestic carbon steel rod producers have announced price increases
ranging from $15 to $25 per ton effective with shipments April 1, 2001. However,
Keystone  management  currently believes it is too early to determine the extent
to which the  announced  price  increases  will be  realized.  Carbon  steel rod
imports continue to cause disruption in the marketplace as evidenced by a $7 per
ton decline in carbon steel rod selling  prices from the fourth  quarter of 2000
and a $16 per ton decline  from the average  for all of 2000.  Import  levels in
March 2001 exceeded  300,000 tons and  represented the highest amount of imports
in any single month during the last five years.  As such,  despite strong market
demand and anticipated  increased selling prices,  management  believes Keystone
will record a loss during the second  quarter of 2001 and for calendar  2001 due
primarily to higher energy and interest costs, continued high levels of imported
carbon steel rod and lower overall product selling prices.

LIQUIDITY AND CAPITAL RESOURCES:

     The  Company's  cash flows from  operating  activities  are affected by the
seasonality  of  its  business  as  sales  of  certain   products  used  in  the
agricultural and construction industries are typically highest during the second
quarter  and  lowest  during the fourth  quarter  of each year.  These  seasonal
fluctuations  impact  the timing of  production,  sales and  purchases  and have
typically  resulted  in a use of  cash  from  operations  and  increases  in the
outstanding  balance under  Keystone's  revolving credit  facilities  during the
first quarter of each year.

     At March 31, 2001 Keystone had negative  working  capital of $43.1 million,
including  $711,000 of notes payable and current maturities of long-term debt as
well as outstanding  borrowings under the Company's  revolving credit facilities
of $52.5  million.  The amount of  available  borrowings  under these  revolving
credit  facilities is based on  formula-determined  amounts of trade receivables
and  inventories,  less the amount of outstanding  letters of credit.  Under the
terms of the indenture related to the Company's Senior Secured Notes, Keystone's
ability to borrow under its revolving credit facilities may be limited. At March
31, 2001,  unused credit  available for borrowing  under  Keystone's $60 million
revolving  credit  facility,  which expires  December 31, 2001, EWP's $7 million
revolving  credit  facility,  which  expires June 30, 2002 and Garden  Zone's $4
million  revolving  credit  facility,  which expires December 1, 2001, were $9.6
million,  $600,000, and $700,000  respectively.  The terms of the indenture will
permit Keystone to borrow all of the $9.6 million unused credit  available under
Keystone's $60 million  revolving  credit  facility during the second quarter of
2001.  Keystone's  $60 million  revolving  credit  facility  requires daily cash
receipts be used to reduce outstanding borrowings,  which results in the Company
maintaining  zero cash balances when there are balances  outstanding  under this
credit  facility.  Keystone's  $60 million  revolving  credit  facility  expires
December  31,  2001.  The  Company  presently  intends to renew or replace  that
facility upon its expiration.

     During the first  quarter of 2001,  Keystone's  operating  activities  used
approximately $8.0 million of cash compared to $8.7 million in the first quarter
of 2000. Lower earnings, a higher increase in receivables and a lower decline in
inventories  in the 2001 period  were more than  offset by a higher  increase in
accounts payable.

     During the first quarter of 2001, the Company made capital  expenditures of
approximately  $197,000 as compared to $2.9  million in the 2000 first  quarter.
Capital  expenditures  for  calendar  year 2001 are  currently  estimated  to be
approximately  $10 million and are related  primarily to upgrades of  production
equipment.  Keystone  currently  anticipates these capital  expenditures will be
funded using cash flows from  operations  together with  borrowing  availability
under the Company's revolving credit facilities.

     At March 31, 2001, the Company's  financial  statements  reflected  accrued
liabilities  of $16.3  million for  estimated  remediation  costs  arising  from
environmental  issues.  There is no assurance  regarding  the  ultimate  cost of
remedial measures that might eventually be required by environmental authorities
or  that  additional   environmental   hazards,   requiring   further   remedial
expenditures,  might not be asserted  by such  authorities  or private  parties.
Accordingly, the costs of remedial measures may exceed the amounts accrued.

     In addition to the planned reductions in fixed costs discussed  previously,
the Company is taking additional  action towards improving its liquidity.  These
actions   include,   but  are  not  limited  to,   attempting  to  negotiate  an
"over-advance"  facility  with its  primary  lender for a short  period of time,
reducing inventory levels through more efficient production schedules,  offering
enhanced  cash  discounts  to  significant  customers  for  prepayment  of their
purchase orders and reducing capital expenditures.  Keystone is also considering
the sale of certain  divisions or subsidiaries that are not necessary to achieve
the Company's long-term business objectives.  However, there can be no assurance
the Company  will be  successful  in any of these or other  efforts,  or that if
successful,  they will provide sufficient liquidity for the Company's operations
during the next year.

     Keystone  incurs  significant  ongoing  costs for plant and  equipment  and
substantial employee medical benefits for both current and retired employees. As
such,  the Company is vulnerable  to business  downturns and increases in costs,
and accordingly, routinely compares its liquidity requirements and capital needs
against its estimated  future operating cash flows. As a result of this process,
the Company has in the past, and may in the future,  reduce  controllable costs,
modify  product  mix,  acquire and dispose of  businesses,  restructure  certain
indebtedness,  and raise  additional  equity capital.  Keystone will continue to
evaluate the need for similar  actions or other  measures in the future in order
to meet its obligations.  The Company also routinely  evaluates  acquisitions of
interests in, or  combinations  with,  companies  related to Keystone's  current
businesses.  Keystone  intends to consider  such  acquisition  activities in the
future and, in connection with this activity,  may consider  issuing  additional
equity  securities  or  increasing  the  indebtedness  of the Company.  However,
Keystone's  ability  to incur new debt in the future may be limited by the terms
of the indenture related to its Senior Secured Notes.

     Management  currently  believes  cash flows from  operations  together with
funds  available  under  the  Company's  revolving  credit  facilities  will  be
sufficient to fund the anticipated needs of the Company's operations and capital
improvements  for the year ending  December 31, 2001.  This belief is based upon
management's assessment of various financial and operational factors, including,
but not limited to, assumptions  relating to product shipments,  product mix and
selling prices, production schedules, productivity rates, raw materials, energy,
labor,  employee  benefits and other fixed and variable  costs,  interest rates,
repayments of long-term debt,  capital  expenditures,  and available  borrowings
under the Company's revolving credit facilities. However, there are many factors
that could cause actual future results to differ  materially  from  management's
current assessment.  While it is not possible to identify all factors,  Keystone
continues  to face many risks and  uncertainties.  Among the factors  that could
cause actual future results to differ materially are the risks and uncertainties
discussed in this Quarterly  Report and those described from time to time in the
Company's other filings with the Securities and Exchange Commission,  including,
but not  limited  to,  future  supply  and  demand  for the  Company's  products
(including  cyclicality  thereof),  customer  inventory  levels,  changes in raw
material and other operating costs (such as scrap and energy),  general economic
conditions,   competitive  products  and  substitute   products,   customer  and
competitor  strategies,  the impact of pricing  and  production  decisions,  the
possibility of labor disruptions, environmental matters (such as those requiring
emission and discharge  standards for existing and new  facilities),  government
regulations and possible changes therein, any significant  increases in the cost
of  providing  medical  coverage to active and retired  employees,  the ultimate
resolution of pending  litigation,  successful  implementation  of the Company's
capital improvements plan, international trade policies of the United States and
certain foreign countries and any possible future litigation and other risks and
uncertainties as discussed in this Quarterly Report. Should one or more of these
risks materialize (or the consequences of such a development  worsen), or should
the  underlying  assumptions  prove  incorrect,   actual  results  could  differ
materially  from those  forecasted  or  expected  and as a result,  could have a
material adverse effect on the future liquidity, financial condition and results
of  operations  of  the  Company.  Additionally,  significant  declines  in  the
Company's   end-user   markets  or  market  share,  the  inability  to  maintain
satisfactory billet and rod production levels, or other unanticipated  costs, if
significant, could result in a need for funds greater than the Company currently
has available.  There can be no assurance the Company would be able to obtain an
adequate amount of additional financing. See Notes 13 and 15 to the Consolidated
Financial Statements in the Annual Report.



<PAGE>


PART II.

ITEM 1. Legal Proceedings

     Reference  is  made to  disclosure  provided  under  the  caption  "Current
litigation" in Note 15 to the Consolidated  Financial Statements included in the
Annual Report.

ITEM 6. Exhibits and Reports on Form 8-K.
        --------------------------------

(a)     The following exhibits are included herein:

        None

 (b)    Reports on Form 8-K filed during the quarter ended March 31, 2001:

        None


<PAGE>



                               S I G N A T U R E S



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                 Keystone Consolidated Industries, Inc.
                                 (Registrant)


Date:  May 14, 2001              By /s/Bert E. Downing, Jr.
                                     ----------------------------------
                                    Bert E. Downing, Jr.
                                    Vice President and Corporate Controller
                                    (Principal Financial and Accounting Officer)