| For      the quarter ended June 30,      2008 | Commission      file number 1-3919 |
|-----------------------------------------------|------------------------------------|

| 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 |
|----------------------------------------------------------------|----------------|
|                                                           |           |

----

| Part      I.     FINANCIAL INFORMATION                                                                                                                                                                                                            |  Page  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                                                                                                                                                                                  |             |
| Item      1.     Financial Statements                                                                                                                                                                                                             |             |
|                                                                                                                                                                                                                                                                  |             |
| Condensed      Consolidated Balance Sheets –                           December      31, 2007; June 30, 2008 (unaudited) | 3                |
|                                                                                                                                                                                                                                                                  |             |
| Condensed      Consolidated Statements of Operations (unaudited) -  Three      months and six months ended June 30, 2007 and 2008                                                                                                                           | 5                |
|                                                                                                                                                                                                                                                                  |             |
| Condensed      Consolidated Statements of Cash Flows (unaudited)–  Six      months ended June 30, 2007 and 2008                                                                                                                                       | 6                |
|                                                                                                                                                                                                                                                                  |             |
| Condensed      Consolidated Statement of Stockholders' Equity  and      Comprehensive Income -  Six months ended  June      30, 2008 (unaudited)                                                                                        | 7                |
|                                                                                                                                                                                                                                                                  |             |
| Notes      to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                                                                 | 8                |
|                                                                                                                                                                                                                                                                  |             |
| Item      2.     Management's Discussion and Analysis of      Financial  Condition and Results      of Operations                                                                                                                       | 17               |
|                                                                                                                                                                                                                                                                  |             |
| Item      3.     Quantitative and Qualitative Disclosures About      Market Risk                                                                                                                                                                  | 30               |
|                                                                                                                                                                                                                                                                  |             |
| Item      4.     Controls and Procedures                                                                                                                                                                                                          | 30               |
|                                                                                                                                                                                                                                                                  |             |
| PART      II. OTHER INFORMATION                                                                                                                                                                                                                                       |             |
|                                                                                                                                                                                                                                                                  |             |
| Item      1.      Legal Proceedings                                                                                                                                                                                                          | 32               |
|                                                                                                                                                                                                                                                                  |             |
| Item      1A.   Risk Factors                                                                                                                                                                                                                                | 32               |
|                                                                                                                                                                                                                                                                  |             |
| Item      6.      Exhibits                                                                                                                                                                                                                   | 32               |
|                                                                                                                                                                                                                                                                  |             |
| Items      2, 3, 4 and 5 of Part II are omitted because there is no information to      report.                                                                                                                                                                       |             |

----

|                                                           |   | December      31, |    |   | June      30, |   |
|----------------------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|
| ASSETS                                                         |   | 2007              |    |   | 2008          |   |
|                                                           |   |              |    |   | (unaudited)   |   |
|                                                           |   |              |    |   |          |   |
| Current      assets:                                           |   |              |    |   |          |   |
|   Accounts      receivable, net                      |   | $                 | 54,891  |   |          | $      | 83,524 |   |
|   Inventories                                        |   |              | 53,551  |   |          |   | 56,500 |   |
|   Deferred      income taxes                         |   |              | 10,055  |   |          |   | 10,055 |   |
|   Prepaid      expenses and other                    |   |              | 2,465   |   |          |   | 1,388 |   |
|                                                           |   |              |    |   |          |   |   |   |
|     Total      current assets              |   |              | 120,962 |   |          |   | 151,467 |   |
|                                                           |   |              |    |   |          |   |   |   |
| Property,      plant and equipment:                            |   |              |    |   |          |   |   |   |
|   Land                                               |   |              | 1,272   |   |          |   | 1,236 |   |
|   Buildings      and improvements                    |   |              | 58,946  |   |          |   | 58,731 |   |
|   Machinery      and equipment                       |   |              | 315,874 |   |          |   | 316,864 |   |
|   Construction      in progress                      |   |              | 3,675   |   |          |   | 6,145 |   |
|                                                           |   |              | 379,767 |   |          |   | 382,976 |   |
|   Less      accumulated depreciation                 |   |              | 287,298 |   |          |   | 294,120 |   |
|                                                           |   |              |    |   |          |   |   |   |
|     Net      property, plant and equipment |   |              | 92,469  |   |          |   | 88,856 |   |
|                                                           |   |              |    |   |          |   |   |   |
| Other      assets:                                             |   |              |    |   |          |   |   |   |
|   Restricted      investments                        |   |              | 2,245   |   |          |   | 2,260 |   |
|   Pension      asset                                 |   |              | 545,656 |   |          |   | 577,814 |   |
|   Other,      net                                    |   |              | 1,691   |   |          |   | 1,608 |   |
|                                                           |   |              |    |   |          |   |   |   |
|     Total      other assets                |   |              | 549,592 |   |          |   | 581,682 |   |
|                                                           |   |              |    |   |          |   |   |   |
|                                                           |   |              |    |   |          |   |   |   |
|     Total      assets                      |   | $                 | 763,023 |   |          | $      | 822,005 |   |
|                                                           |   |              |    |   |          |   |   |   |

----

| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                             |   | December      31, |    |   | June      30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|
|                                                                                                                                                                                                                                                  |   | 2007              |    |   | 2008          |   |
|                                                                                                                                                                                                                                                  |   |              |    |   | (unaudited)   |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |
| Current      liabilities:                                                                                                                                                                                                                             |   |              |    |   |          |   |
|   Notes      payable and current maturities of long-term      debt                                                                                                                                                                     |   | $                 | 62,175  |   |          | $      | 58,303 |   |
|   Accounts      payable                                                                                                                                                                                                                     |   |              | 14,078  |   |          |   | 14,381 |   |
|   Accrued      OPEB cost                                                                                                                                                                                                                    |   |              | 4,482   |   |          |   | 4,482 |   |
|   Income      taxes payable                                                                                                                                                                                                                 |   |              | -       |   |          |   | 1,112 |   |
|   Other      accrued liabilities                                                                                                                                                                                                            |   |              | 19,597  |   |          |   | 25,758 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
|     Total      current liabilities                                                                                                                                                                                                |   |              | 100,332 |   |          |   | 104,036 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
| Noncurrent      liabilities:                                                                                                                                                                                                                          |   |              |    |   |          |   |   |   |
|   Long-term      debt                                                                                                                                                                                                                       |   |              | 29,402  |   |          |   | 16,011 |   |
|   Accrued      OPEB cost                                                                                                                                                                                                                    |   |              | 27,167  |   |          |   | 26,214 |   |
|   Deferred      income taxes                                                                                                                                                                                                                |   |              | 194,728 |   |          |   | 210,889 |   |
|   Other      accrued liabilities                                                                                                                                                                                                            |   |              | 6,700   |   |          |   | 6,373 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
|     Total      noncurrent liabilities                                                                                                                                                                                             |   |              | 257,997 |   |          |   | 259,487 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
| 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 June 30,      2008 |   |              | 100     |   |          |   | 125 |   |
|   Additional      paid-in capital                                                                                                                                                                                                           |   |              | 75,423  |   |          |   | 100,111 |   |
|   Accumulated      other comprehensive income                                                                                                                                                                                               |   |              | 215,462 |   |          |   | 209,008 |   |
|   Retained      earnings                                                                                                                                                                                                                    |   |              | 114,505 |   |          |   | 150,034 |   |
|   Treasury      stock                                                                                                                                                                                                                       |   |              | (796    | )      |          |   | (796 | ) |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
|     Total      stockholders' equity                                                                                                                                                                                               |   |              | 404,694 |   |          |   | 458,482 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |
|     Total      liabilities and stockholders’ equity                                                                                                                                                                         |   | $                 | 763,023 |   |          | $      | 822,005 |   |
|                                                                                                                                                                                                                                                  |   |              |    |   |          |   |   |   |

----

|                                                                  |   | Three      months ended June 30, |         |   | Six      months ended June 30, |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|--------------|--------|-------------------------------------|--------|
|                                                                  |   | 2007                                  |         |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                                  |   | (unaudited)                           |         |   | (unaudited)                         |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |
| Net      sales                                                        |   | $                                     | 122,665      |   |                                | $      | 178,027 |   |   | $ | 235,763 |   |   | $ | 312,166 |   |
| Cost      of goods sold                                               |   |                                  | (115,997     | )      |                                |   | (156,290 | ) |   |   | (222,728 | ) |   |   | (283,303 | ) |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Gross      margin                                         |   |                                  | 6,668        |   |                                |   | 21,737 |   |   |   | 13,035 |   |   |   |  28,863 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other      operating income (expense):                                |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Selling      expense                                      |   |                                  | (1,753       | )      |                                |   | (1,892 | ) |   |   | (3,431 | ) |   |   | (3,763 | ) |
|   General      and administrative expense                   |   |                                  | (3,745       | )      |                                |   | (3,990 | ) |   |   | (6,721 | ) |   |   | (7,663 | ) |
|   Defined      benefit pension credit                       |   |                                  | 20,379       |   |                                |   | 17,938 |   |   |   | 40,757 |   |   |   | 36,934 |   |
|   Other      postretirement benefit credit                  |   |                                  | 2,201        |   |                                |   | 2,338 |   |   |   | 4,401 |   |   |   | 4,536 |   |
|   Gain      on legal settlement                             |   |                                  | 5,400        |   |                                |   | - |   |   |   | 5,400 |   |   |   | - |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Total      other operating income |   |                                  | 22,482       |   |                                |   | 14,394 |   |   |   | 40,406 |   |   |   | 30,044 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                                 |   |                                  | 29,150       |   |                                |   | 36,131 |   |   |   | 53,441 |   |   |   | 58,907 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Nonoperating      income (expense):                                   |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Interest      expense                                     |   |                                  | (1,792       | )      |                                |   | (932 | ) |   |   | (2,989 | ) |   |   | (2,245 | ) |
|   Other      income (expense), net                          |   |                                  | 302          |   |                                |   | (92 | ) |   |   | 440 |   |   |   | 298 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Total      nonoperating expense   |   |                                  | (1,490       | )      |                                |   | (1,024 | ) |   |   | (2,549 | ) |   |   | (1,947 | ) |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Income      before income taxes                           |   |                                  | 27,660       |   |                                |   | 35,107 |   |   |   | 50,892 |   |   |   | 56,960 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                       |   |                                  | (10,419      | )      |                                |   | (13,188 | ) |   |   | (19,187 | ) |   |   | (21,431 | ) |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Net      income                                           |   | $                                     | 17,241       |   |                                | $      | 21,919 |   |   | $ | 31,705 |   |   | $ | 35,529 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted income per share                               |   | $                                     | 1.72         |   |                                | $      | 1.81 |   |   | $ | 3.17 |   |   | $ | 3.25 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted weighted average shares outstanding       |   |                                  |  10,000 |   |                                |   |  12,102 |   |   |   |  10,000 |   |   |   | 10,948 |   |
|                                                                  |   |                                  |         |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                             |   | Six      months ended June 30, |        |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|
|                                                                                             |   | 2007                                |        |   | 2008 |   |
|                                                                                             |   | (unaudited)                         |        |
|                                                                                             |   |                                |        |   |   |   |
| Cash      flows from operating activities:                                                       |   |                                |        |   |   |   |
|   Net      income                                                                      |   | $                                   | 31,705      |   |   | $ | 35,529 |   |
|   Depreciation      and amortization                                                   |   |                                | 7,847       |   |   |   | 7,892 |   |
|   Deferred      income taxes                                                           |   |                                | 19,085      |   |   |   | 20,051 |   |
|   Defined      benefit pension credit                                                  |   |                                | (40,757     | ) |   |   | (36,934 | ) |
|   OPEB      credit                                                                     |   |                                | (4,401      | ) |   |   | (4,536 | ) |
|   OPEB      payments                                                                   |   |                                | (1,814      | ) |   |   | (1,985 | ) |
|   Other,      net                                                                      |   |                                | 362         |   |   |   | 527 |   |
|   Change      in assets and liabilities (net of acquisition):                          |   |                                |        |   |   |   |   |   |
|     Accounts      receivable                                                 |   |                                | (32,417     | ) |   |   | (28,671 | ) |
|     Inventories                                                              |   |                                | 10,292      |   |   |   | (2,949 | ) |
|     Accounts      payable and accrued liabilities                            |   |                                | (3,633      | ) |   |   | 7,287 |   |
|     Legal      settlement receivable                                         |   |                                | (5,400      | ) |   |   | - |   |
|     Other,      net                                                          |   |                                |  1,798 |   |   |   | 892 |   |
|                                                                                             |   |                                |        |   |   |   |   |   |
|       Net      cash used in operating activities                   |   |                                | (17,333     | ) |   |   | (2,897 | ) |
|                                                                                             |   |                                |        |   |   |   |   |   |
| Cash      flows from investing activities:                                                       |   |                                |        |   |   |   |   |   |
|   Capital      expenditures                                                            |   |                                | (11,317     | ) |   |   | (4,762 | ) |
|   Acquisition      of CaluMetals’ assets                                         |   |                                | (6,240      | ) |   |   | - |   |
|   Restricted      investments, net                                                     |   |                                | (151        | ) |   |   | (15 | ) |
|   Other,      net                                                                      |   |                                |  646   |   |   |   | 360 |   |
|                                                                                             |   |                                |        |   |   |   |   |   |
|       Net      cash used in investing activities                   |   |                                | (17,062     | ) |   |   | (4,417 | ) |
|                                                                                             |   |                                |        |   |   |   |   |   |
| Cash      flows from financing activities:                                                       |   |                                |        |   |   |   |   |   |
|   Issuance      of common stock                                                        |   |                                | -           |   |   |   | 24,713 |   |
|   Revolving      credit facilities, net                                                |   |                                | 44,710      |   |   |   | (3,633 | ) |
|   Other      notes payable and long-term debt:                                         |   |                                |        |   |   |   |   |   |
|     Additions                                                                |   |                                | 4,065       |   |   |   | - |   |
|     Principal      payments                                                  |   |                                | (14,165     | ) |   |   | (13,622 | ) |
|   Deferred      financing costs paid                                                   |   |                                |  (215  | ) |   |   | (144 | ) |
|                                                                                             |   |                                |        |   |   |   |   |   |
|       Net      cash provided by financing activities               |   |                                | 34,395      |   |   |   | 7,314 |   |
|                                                                                             |   |                                |        |   |   |   |   |   |
| 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                                 |   | $                                   | 2,793       |   |   | $ | 2,173 |   |
|     Income      taxes, net                                                   |   |                                | 322         |   |   |   | 207 |   |
|                                                                                             |   |                                |        |   |   |   |   |   |
|   Non-cash      issuance of debt for acquisition of      CaluMetals’ assets |   |                                | 781         |   |   |   | - |   |

----

|                                                                                    |   | Common      |    |   | Additionalpaid-in |   |           | Accumulated      other comprehensive income |   |   | Retained  |   |   | Treasury |        |   |   |   |    | Comprehensive |   |
|-----------------------------------------------------------------------------------------|--------|-------------|---------|--------|-------------------|--------|----------------|--------------------------------------------------|--------|--------|-----------|--------|--------|----------|-------------|--------|--------|--------|---------|---------------|--------|
|                                                                                    |   | stock       |    |   | capital           |   |           | Pensions                                         |   |   | OPEB      |   |   | earnings |        |   | stock  |   |    | Total         |   |   | income |   |
|                                                                                    |   | (unaudited) |    |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |
| Balance      – December 31, 2007                                                  |   | $           | 100     |   |              | $      | 75,423         |                                             |   | $      | 164,763   |   |   | $        | 50,699      |   |   | $      | 114,505 |          |   | $ | (796 | ) |   | $ | 404,694 |   |   |   |   |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                         |   |        | -       |   |              |   | -              |                                             |   |   | -         |   |   |     | -           |   |   |   | 35,529  |          |   |   | - |   |   |   | 35,529 |   |   | $ | 35,529 |   |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock, net of issuance costs                                    |   |        | 25      |   |              |   | 24,688         |                                             |   |   | -         |   |   |     | -           |   |   |   | -       |          |   |   | - |   |   |   | 24,713 |   |   |   |  - |   |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of actuarial  (gains)      losses, net of tax               |   |        |  - |   |              |   |  -        |                                             |   |   | (3,363    | )      |   |     |  2,031 |   |   |   |  - |          |   |   | - |   |   |   | (1,332 | ) |   |   | (1,332 | ) |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost   (credit),      net of tax |   |        |  - |   |              |   |    - |                                             |   |   |  383 |   |   |     | (5,505      | )      |   |   |  - |          |   |   |  - |   |   |   | (5,122 | ) |   |   | (5,122 | ) |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      – June 30, 2008                                                      |   | $           | 125     |   |              | $      | 100,111        |                                             |   | $      | 161,783   |   |   | $        | 47,225      |   |   | $      | 150,034 |          |   | $ | (796 | ) |   | $ | 458,482 |   |   |   |   |   |
|                                                                                    |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive      income                                                   |   |        |    |   |              |   |           |                                             |   |   |      |   |   |     |        |   |   |   |    |          |   |   |   |   |   |   |   |   |   | $ | 29,075 |   |

----

----

| ·   | 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 (“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      (“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.  We acquired the assets of Calumet’s operations on      March 23, 2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | Three      months ended June 30, |    |   | Six      months endedJune 30, |   |
|-----------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------|--------|
|                                                      |   | 2007                                  |    |   | 2008                          |   |   | 2007 |   |   | 2008 |   |
|                                                      |   | (In      thousands)                   |    |   | (In      thousands)           |   |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |
| Net      sales:                                           |   |                                  |    |   |                          |   |   |   |   |   |   |   |
|   KSW                                           |   | $                                     | 116,040 |   |                          | $      | 173,129 |   |   | $ | 226,806 |   |   | $ | 304,169 |   |
|   EWP                                           |   |                                  | 15,093  |   |                          |   | 21,127 |   |   |   | 26,070 |   |   |   | 34,179 |   |
|   Calumet                                       |   |                                  | 1,315   |   |                          |   | 5,402 |   |   |   | 1,315 |   |   |   | 8,705 |   |
|   Elimination      of intersegment sales   |   |                                  | (9,783  | )      |                          |   | (21,631 | ) |   |   | (18,428 | ) |   |   | (34,887 | ) |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|      Total      net sales        |   | $                                     | 122,665 |   |                          | $      | 178,027 |   |   | $ | 235,763 |   |   | $ | 312,166 |   |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss):                             |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|   KSW                                           |   | $                                     | 1,993   |   |                          | $      | 16,890 |   |   | $ | 3,001 |   |   | $ | 19,300 |   |
|   EWP                                           |   |                                  | 2,499   |   |                          |   | 3,188 |   |   |   | 3,495 |   |   |   | 4,666 |   |
|   Calumet                                       |   |                                  | (464    | )      |                          |   | (150 | ) |   |   | (549 | ) |   |   | (842 | ) |
|   Pension      credit                           |   |                                  | 20,379  |   |                          |   | 17,938 |   |   |   | 40,757 |   |   |   | 36,934 |   |
|   OPEB      credit                              |   |                                  | 2,201   |   |                          |   | 2,338 |   |   |   | 4,401 |   |   |   | 4,536 |   |
|   Gain      on legal settlement                 |   |                                  | 5,400   |   |                          |   | - |   |   |   | 5,400 |   |   |   | - |   |
|   Other(1)                                      |   |                                  | (2,858  | )      |                          |   | (4,073 | ) |   |   | (3,064 | ) |   |   | (5,687 | ) |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|      Total      operating income |   |                                  | 29,150  |   |                          |   | 36,131 |   |   |   | 53,441 |   |   |   | 58,907 |   |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Nonoperating      income (expense):                       |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|   Interest      expense                         |   |                                  | (1,792  | )      |                          |   | (932 | ) |   |   | (2,989 | ) |   |   | (2,245 | ) |
|   Other      income (expense), net              |   |                                  | 302     |   |                          |   | (92 | ) |   |   | 440 |   |   |   | 298 |   |
|                                                      |   |                                  |    |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|   Income      before income taxes               |   | $                                     | 27,660  |   |                          | $      | 35,107 |   |   | $ | 50,892 |   |   | $ | 56,960 |   |

----

|                                           |   | December      31,   |   |   | June      30, |   |
|------------------------------------------------|--------|---------------------|--------|--------|---------------|--------|
|                                           |   | 2007                |   |   | 2008          |   |
|                                           |   | (In      thousands) |   |
|                                           |   |                |   |   |          |   |
|   Raw      materials                 |   | $                   | 6,954  |   |          | $      | 6,902 |   |
|   Billets                            |   |                | 8,158  |   |          |   | 8,465 |   |
|   Wire      rod                      |   |                | 12,897 |   |          |   | 15,958 |   |
|   Work      in process               |   |                | 5,079  |   |          |   | 7,158 |   |
|   Finished      products             |   |                | 24,855 |   |          |   | 26,960 |   |
|   Supplies                           |   |                | 19,900 |   |          |   | 21,494 |   |
|                                           |   |                |   |   |          |   |   |   |
|     Inventory      at FIFO |   |                | 77,843 |   |          |   | 86,937 |   |
|     Less      LIFO reserve |   |                | 24,292 |   |          |   | 30,437 |   |
|                                           |   |                |   |   |          |   |   |   |
|       Total      |   | $                   | 53,551 |   |          | $      | 56,500 |   |
|                                           |   |                |   |   |          |   |   |   |

|                                                 |   | December      31,   |   |   | June      30, |   |
|------------------------------------------------------|--------|---------------------|--------|--------|---------------|--------|
|                                                 |   | 2007                |   |   | 2008          |   |
|                                                 |   | (In      thousands) |   |
|                                                 |   |                |   |   |          |   |
| Wachovia      revolving credit facility              |   | $                   | 46,261 |   |          | $      | 42,628 |   |
| 8%      Notes                                        |   |                | 17,160 |   |          |   | 9,240 |   |
| UC      Note                                         |   |                | 2,501  |   |          |   | - |   |
| Term      loans:                                     |   |                |   |   |          |   |   |   |
|   Wachovia                                 |   |                | 16,286 |   |          |   | 13,619 |   |
|   County                                   |   |                | 8,499  |   |          |   | 7,980 |   |
| Other                                                |   |                | 870    |   |          |   | 847 |   |
|                                                 |   |                |   |   |          |   |   |   |
|     Total      debt              |   |                | 91,577 |   |          |   | 74,314 |   |
|     Less      current maturities |   |                | 62,175 |   |          |   | 58,303 |   |
|                                                 |   |                |   |   |          |   |   |   |
|     Total      long-term debt    |   | $                   | 29,402 |   |          | $      | 16,011 |   |

----

|                              |   | Six      months ended June 30, 2008 |   |
|-----------------------------------|--------|------------------------------------------|--------|
|                              |   | (In      thousands)                      |   |
|                              |   |                                     |   |
| Balance      at December 31, 2007 |   | $                                        | 5,282  |   |
| Payments                          |   |                                     | (262   | ) |
|                              |   |                                     |   |   |
| Balance      at June 30, 2008     |   | $                                        | 5,020  |   |

----

----

----

|                                           |   | December      31,   |   |   | June      30, |   |
|------------------------------------------------|--------|---------------------|--------|--------|---------------|--------|
|                                           |   | 2007                |   |   | 2008          |   |
|                                           |   | (In      thousands) |   |
| Current:                                       |   |                |   |   |          |   |
|   Employee      benefits             |   | $                   | 10,881 |   |          | $      | 16,168 |   |
|   Self      insurance                |   |                | 3,755  |   |          |   | 4,429 |   |
|   Environmental                      |   |                | 217    |   |          |   | 214 |   |
|   Other                              |   |                | 4,744  |   |          |   | 4,947 |   |
|                                           |   |                |   |   |          |   |   |   |
| Total                                          |   | $                   | 19,597 |   |          | $      | 25,758 |   |
|                                           |   |                |   |   |          |   |   |   |
| Noncurrent:                                    |   |                |   |   |          |   |   |   |
|   Environmental                      |   | $                   | 5,065  |   |          | $      | 4,806 |   |
|   Workers      compensation payments |   |                | 1,494  |   |          |   | 1,420 |   |
|   Other                              |   |                | 141    |   |          |   | 147 |   |
|                                           |   |                |   |   |          |   |   |   |
| Total                                          |   | $                   | 6,700  |   |          | $      | 6,373 |   |

|                                                              |   | Three      months ended June 30, |    |   | Six      months ended June 30, |   |
|-------------------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|
|                                                              |   | 2007                                  |    |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                              |   | (In      thousands)                   |    |
|                                                              |   |                                  |    |   |                                |   |   |   |   |   |   |   |
| Service      cost                                                 |   | $                                     | 969     |   |                                | $      | 861 |   |   | $ | 1,938 |   |   | $ | 1,722 |   |
| Interest      cost                                                |   |                                  | 5,267   |   |                                |   | 5,579 |   |   |   | 10,534 |   |   |   | 11,157 |   |
| Expected      return on plan assets                               |   |                                  | (23,013 | )      |                                |   | (21,989 | ) |   |   | (46,025 | ) |   |   | (45,035 | ) |
| Amortization      of accumulated other comprehensive income: |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Prior      service cost                               |   |                                  | 306     |   |                                |   | 307 |   |   |   | 612 |   |   |   | 614 |   |
|   Actuarial      gains                                  |   |                                  | (3,908  | )      |                                |   | (2,696 | ) |   |   | (7,816 | ) |   |   | (5,392 | ) |
|                                                              |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                             |   | $                                     | (20,379 | )      |                                | $      | (17,938 | ) |   | $ | (40,757 | ) |   | $ | (36,934 | ) |

|                                                                   |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                   |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                                   |   | (In      thousands)                   |   |
|                                                                   |   |                                  |   |
| Service      cost                                                      |   | $                                     | 60     |   |                                | $      | 53 |   |   | $ | 121 |   |   | $ | 105 |   |
| Interest      cost                                                     |   |                                  | 480    |   |                                |   | 393 |   |   |   | 960 |   |   |   | 926 |   |
| Amortization      of accumulated other comprehensive      income: |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Prior      service credit                                  |   |                                  | (4,411 | )      |                                |   | (4,412 | ) |   |   | (8,822 | ) |   |   | (8,823 | ) |
|   Actuarial      losses                                      |   |                                  | 1,670  |   |                                |   | 1,628 |   |   |   | 3,340 |   |   |   | 3,256 |   |
|                                                                   |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                  |   | $                                     | (2,201 | )      |                                | $      | (2,338 | ) |   | $ | (4,401 | ) |   | $ | (4,536 | ) |

----

|                                           |   | Six      months ended |   |
|------------------------------------------------|--------|-----------------------|--------|
|                                           |   | June 30,              |   |
|                                           |   | 2007                  |   |   | 2008 |   |
|                                           |   | (In      thousands)   |   |
|                                           |   |                  |   |   |   |   |
| Expected      tax provision, at statutory rate |   | $                     | 17,811 |   |   | $ | 19,938 |   |
| U.S.      state income taxes, net              |   |                  | 1,345  |   |   |   | 1,456 |   |
| Other,      net                                |   |                  | 31     |   |   |   | 37 |   |
|                                           |   |                  |   |   |   |   |   |   |
| Provision      for income taxes                |   | $                     | 19,187 |   |   | $ | 21,431 |   |

----

----

| ·   | 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 standards for      existing and new facilities), |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | Our      ability to renew or refinance creditfacilities, |
|--------------------|----------------------------------------------------------|

| ·   | Any      possible future litigation, and |
|--------------------|------------------------------------------|

| ·   | Other      risks and uncertainties as discussed in this Quarterly Report and the 2007      Annual Report, including, without limitation, the section referenced      above. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                            |   | Three      months ended June 30, |    |   | Six      months ended June 30, |   |
|-------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|
|                                            |   | 2007                                  |    |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                            |   | (In      thousands)                   |    |
| Operating      income as reported               |   | $                                     | 29,150  |   |                                | $      | 36,131 |   |   | $ | 53,441 |   |   | $ | 58,907 |   |
|   Defined      benefit pension credit |   |                                  | (20,379 | )      |                                |   | (17,938 | ) |   |   | (40,757 | ) |   |   | (36,934 | ) |
|   OPEB      credit                    |   |                                  | (2,201  | )      |                                |   | (2,338 | ) |   |   | (4,401 | ) |   |   | (4,536 | ) |
| Operating      income before pension and OPEB   |   | $                                     | 6,570   |   |                                | $      | 15,855 |   |   | $ | 8,283 |   |   | $ | 17,437 |   |

| ·   | higher      per-ton product selling prices resulting from price increases we      implemented to offset our increased costs for ferrous scrap as well as      increased demand for domestic wire rod as discussed  below; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      shipment volumes of bar products due to Calumet’s success in regaining      former market share and obtaining recurring monthly  orders; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | decreased      costs for zinc of 38% and 32% during the second quarter and first six      months of 2008, respectively; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | cost      savings of approximately $500,000 during the second quarter of 2008,      resulting from KSW’s reduction-in-force during the first quarter of 2008      (cost savings during the first six months of 2008 were offset by the      related $800,000 severanceexpense); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | increased      costs for ferrous scrap of 57% and 47% during the second quarter and first      six months of 2008, respectively; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased      costs for natural gas at our largest manufacturing facility of 49% and 29%      during the second quarter and first six months of 2008,      respectively; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      costs in 2008 for certain excise taxes as a result of the expiration of      certain exemptions for which we previously  qualified; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

|                                      |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|-------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                      |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
| Sales      volume (000 tons):             |   |                                  |   |   |                                |   |   |   |   |   |   |   |
|   Fabricated      wire products |   |                                  | 30     |   |                                |   | 26 |   |   |   | 64 |   |   |   | 56 |   |
|   Wire      mesh                |   |                                  | 16     |   |                                |   | 18 |   |   |   | 29 |   |   |   | 32 |   |
|   Industrial      wire          |   |                                  | 16     |   |                                |   | 19 |   |   |   | 38 |   |   |   | 36 |   |
|   Coiled      Rebar             |   |                                  | 2      |   |                                |   | 4 |   |   |   | 8 |   |   |   | 7 |   |
|   Bar                           |   |                                  | 2      |   |                                |   | 6 |   |   |   | 2 |   |   |   | 10 |   |
|   Wire      rod                 |   |                                  | 105    |   |                                |   | 110 |   |   |   | 191 |   |   |   | 216 |   |
|   Billets                       |   |                                  | -      |   |                                |   | 1 |   |   |   | (1) |   |   |   | 1 |   |
|     Total             |   |                                  | 171    |   |                                |   | 184 |   |   |   | 333 |   |   |   | 358 |   |
|                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| (1)      Less than 1,000 tons.            |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton selling prices:      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Fabricated      wire products |   | $                                     | 1,079  |   |                                | $      | 1,385 |   |   | $ | 1,073 |   |   | $ | 1,276 |   |
|   Wire      mesh                |   |                                  | 907    |   |                                |   | 1,154 |   |   |   | 895 |   |   |   | 1,062 |   |
|   Industrial      wire          |   |                                  | 771    |   |                                |   | 1,100 |   |   |   | 749 |   |   |   | 980 |   |
|   Coiled      Rebar             |   |                                  | 619    |   |                                |   | 859 |   |   |   | 550 |   |   |   | 767 |   |
|   Bar                           |   |                                  | 726    |   |                                |   | 957 |   |   |   | 726 |   |   |   | 845 |   |
|   Wire      rod                 |   |                                  | 562    |   |                                |   | 818 |   |   |   | 542 |   |   |   | 721 |   |
|   Billets                       |   |                                  | -      |   |                                |   | 565 |   |   |   | 132 |   |   |   | 406 |   |
|   All      products             |   |                                  | 707    |   |                                |   | 966 |   |   |   | 701 |   |   |   | 867 |   |

| ·   | lower      defined benefit pension credit as we expect the 2008 credit to approximate      $74.0 million as compared to the $80.4 million credit recorded in 2007;      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      interest expense in 2008 as a result of lower balances on our revolving      credit facility due to the pay down of our revolving credit facility with      the proceeds from our subscription rights offering during the first      quarter of 2008 and as a result of our increased      profitability. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | 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 (“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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                             |   | KSW                 |     |   | EWP    |   |    | Calumet |   |   | Other(1) |   |   | Total       |        |
|------------------------------------------------------------------|--------|---------------------|----------|--------|--------|--------|---------|---------|--------|--------|----------|--------|--------|-------------|-------------|
|                                                             |   | (In      thousands) |     |
| Three      months ended June 30, 2007:                           |   |
|                                                             |   |                |     |   |   |   |    |    |   |   |     |   |   |        |        |
|  Net      sales                                             |   | $                   | 116,040  |   |   | $      | 15,093  |    |   | $      | 1,315    |   |   | $           | (9,783      | ) |   | $ | 122,665 |   |
|  Cost      of goods sold                                    |   |                | (110,435 | )      |   |   | (11,640 | )       |   |   | (1,601   | )      |   |        |  7,679 |   |   |   | (115,997 | ) |
|    Gross      margin (loss)                       |   |                | 5,605    |   |   |   | 3,453   |    |   |   | (286     | )      |   |        | (2,104      | ) |   |   | 6,668 |   |
|                                                             |   |                |     |   |   |   |    |    |   |   |     |   |   |        |        |   |   |   |   |   |
|  Selling      and administrative expense               |   |                | (3,612   | )      |   |   | (954    | )       |   |   | (178     | )      |   |        | (754        | ) |   |   | (5,498 | ) |
|  Gain      on legal settlement                              |   |  -             |     |   |   | -      |    |    |   | -      |     |   |   |  5,400 |        |   |   | 5,400 |   |
|  Operating      income (loss) before      pension/OPEB |   | $                   | 1,993    |   |   | $      | 2,499   |    |   | $      | (464     | )      |   | $           | 2,542       |   |   | $ | 6,570 |   |
|                                                             |   |                |     |   |   |   |    |    |   |   |     |   |   |        |        |   |   |   |   |   |
| Three      months ended June 30, 2008:                           |   |
|                                                             |   |
|  Net      sales                                             |   | $                   | 173,129  |   |   | $      | 21,127  |    |   | $      | 5,402    |   |   | $           | (21,631     | ) |   | $ | 178,027 |   |
|  Cost      of goods sold                                    |   |                | (152,531 | )      |   |   | (16,767 | )       |   |   | (5,282   | )      |   |        | 18,290      |   |   |   | (156,290 | ) |
|    Gross      margin                              |   |                | 20,598   |   |   |   | 4,360   |    |   |   | 120      |   |   |        | (3,341      | ) |   |   | 21,737 |   |
|                                                             |   |                |     |   |   |   |    |    |   |   |     |   |   |        |        |   |   |   |   |   |
|  Selling      and administrative      expense          |   |                | (3,708   | )      |   |   | (1,172  | )       |   |   | (270     | )      |   |        | (732        | ) |   |   | (5,882 | ) |
|  Operating      income (loss) before      pension/OPEB |   | $                   | 16,890   |   |   | $      | 3,188   |    |   | $      | (150     | )      |   | $           | (4,073      | ) |   | $ | 15,855 |   |

| Six      months ended June 30, 2007:                             |   |
|------------------------------------------------------------------|--------|
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      sales                                             |   | $ | 226,806 |   |   | $ | 26,070 |   |   | $ | 1,315 |   |   | $ | (18,428 | ) |   | $ | 235,763 |   |
|  Cost      of goods sold                                    |   |   | (216,554 | ) |   |   | (20,768 | ) |   |   | (1,677 | ) |   |   | 16,271 |   |   |   | (222,728 | ) |
|    Gross      margin (loss)                       |   |   | 10,252 |   |   |   | 5,302 |   |   |   | (362 | ) |   |   | (2,157 | ) |   |   | 13,035 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling      and administrative expense               |   |   | (7,251 | ) |   |   | (1,807 | ) |   |   | (187 | ) |   |   | (907 | ) |   |   | (10,152 | ) |
|  Gain      on legal settlement                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,400 |   |   |   |  5,400 |   |
|  Operating      income (loss) before      pension/OPEB |   | $ | 3,001 |   |   | $ | 3,495 |   |   | $ | (549 | ) |   | $ | 2,336 |   |   | $ | 8,283 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Six      months ended June 30, 2008:                             |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      sales                                             |   | $ | 304,169 |   |   | $ | 34,179 |   |   | $ | 8,705 |   |   | $ | (34,887 | ) |   | $ | 312,166 |   |
|  Cost      of goods sold                                    |   |   | (277,523 | ) |   |   | (27,531 | ) |   |   | (9,114 | ) |   |   | 30,865 |   |   |   | (283,303 | ) |
|    Gross      margin (loss)                       |   |   | 26,646 |   |   |   | 6,648 |   |   |   | (409 | ) |   |   | (4,022 | ) |   |   | 28,863 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling      and administrative      expense          |   |   | (7,346 | ) |   |   | (1,982 | ) |   |   | (433 | ) |   |   | (1,665 | ) |   |   | (11,426 | ) |
|  Operating      income (loss) before      pension/OPEB |   | $ | 19,300 |   |   | $ | 4,666 |   |   | $ | (842 | ) |   | $ | (5,687 | ) |   | $ | 17,437 |   |

----

|                                               |   |  Three months ended June      30, |     |
|----------------------------------------------------|--------|----------------------------------------|----------|
|                                               |   | 2007                                   |     |   | %      ofsales |   |   | 2008 |   |   | %      ofsales |   |
|                                               |   | ($      in thousands)                  |     |
|                                               |   |                                   |     |   |   |   |   |   |   |   |   |   |
| Net      sales                                     |   | $                                      | 116,040  |   |   |   | 100.0 | % |   | $ | 173,129 |   |   |   | 100.0 | % |
| Cost      of goods sold                            |   |                                   | (110,435 | ) |   |   | (95.2 | ) |   |   | (152,531 | ) |   |   | (88.1 | ) |
|    Gross      margin                |   |                                   | 5,605    |   |   |   | 4.8 |   |   |   | 20,598 |   |   |   | 11.9 |   |
|                                               |   |                                   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense            |   |                                   | (3,612   | ) |   |   | (3.1 | ) |   |   | (3,708 | ) |   |   | (2.1 | ) |
| Operating      income before pension and OPEB |   | $                                      | 1,993    |   |   |   | 1.7 | % |   | $ | 16,890 |   |   |   | 9.8 | % |

|                                               |   |  Six months ended June    30, |     |
|----------------------------------------------------|--------|------------------------------------|----------|
|                                               |   | 2007                               |     |   | %      ofsales |   |   | 2008 |   |   | %      ofsales |   |
|                                               |   | ($      in thousands)              |     |
|                                               |   |                               |     |   |   |   |   |   |   |   |   |   |
| Net      sales                                     |   | $                                  | 226,806  |   |   |   | 100.0 | % |   | $ | 304,169 |   |   |   | 100.0 | % |
| Cost      of goods sold                            |   |                               | (216,554 | ) |   |   | (95.5 | ) |   |   | (277,523 | ) |   |   | (91.2 | ) |
|    Gross      margin                |   |                               | 10,252   |   |   |   | 4.5 |   |   |   | 26,646 |   |   |   | 8.8 |   |
|                                               |   |                               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense            |   |                               | (7,251   | ) |   |   | (3.2 | ) |   |   | (7,346 | ) |   |   | (2.4 | ) |
| Operating      income before pension and OPEB |   | $                                  | 3,001    |   |   |   | 1.3 | % |   | $ | 19,300 |   |   |   | 6.4 | % |

----

|                                                         |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|--------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                         |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
| Sales      volume (000 tons):                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |
|   Fabricated      wire products                    |   |                                  | 30     |   |                                |   | 26 |   |   |   | 64 |   |   |   | 56 |   |
|   Industrial      wire                             |   |                                  | 16     |   |                                |   | 19 |   |   |   | 38 |   |   |   | 36 |   |
|   Coiled      rebar                                |   |                                  | 2      |   |                                |   | 4 |   |   |   | 8 |   |   |   | 7 |   |
|   Wire      rod                                    |   |                                  | 121    |   |                                |   | 130 |   |   |   | 221 |   |   |   | 254 |   |
|   Billets                                          |   |                                  | 6      |   |                                |   | 8 |   |   |   | 6 |   |   |   | 14 |   |
|   Total      sales                                 |   |                                  | 175    |   |                                |   | 187 |   |   |   | 337 |   |   |   | 367 |   |
|                                                         |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Per-ton      selling prices:                                 |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Fabricated      wire products                    |   | $                                     | 1,079  |   |                                | $      | 1,385 |   |   | $ | 1,073 |   |   | $ | 1,276 |   |
|   Industrial      wire                             |   |                                  | 771    |   |                                |   | 1,100 |   |   |   | 749 |   |   |   | 980 |   |
|   Coiled      rebar                                |   |                                  | 619    |   |                                |   | 859 |   |   |   | 550 |   |   |   | 767 |   |
|   Wire      rod                                    |   |                                  | 548    |   |                                |   | 819 |   |   |   | 538 |   |   |   | 722 |   |
|   Billets                                          |   |                                  | 471    |   |                                |   | 658 |   |   |   | 463 |   |   |   | 568 |   |
|   All      products                                |   |                                  | 657    |   |                                |   | 921 |   |   |   | 663 |   |   |   | 826 |   |
|                                                         |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton ferrous scrap      purchase cost   |   | $                                     | 253    |   |                                | $      | 398 |   |   | $ | 239 |   |   | $ | 351 |   |
|                                                         |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      electricity cost      per kilowatt hour(1) |   | $                                     | 0.05   |   |                                | $      | 0.05 |   |   | $ | 0.05 |   |   | $ | 0.06 |   |
|                                                         |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      natural gas cost      per therm(1)         |   | $                                     | 0.77   |   |                                | $      | 1.15 |   |   | $ | 0.77 |   |   | $ | 0.99 |   |

| ·   | decreased      costs for zinc of 38% and 32% during the second quarter and first six      months of 2008, respectively; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | cost      savings of approximately $500,000 during the second quarter of 2008,      resulting from KSW’s reduction-in-force during the first quarter of 2008      (cost savings during the first six months of 2008 were offset by the      related $800,000 severanceexpense); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | higher      costs in 2008 for certain excise taxes in Illinois as a result of the      expiration of certain exemptions for which we previously      qualified. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                          |   | Three months ended June 30, |    |
|-----------------------------------------------|--------|-----------------------------|---------|
|                                          |   | 2007                        |    |   | %      of sales |   |   | 2008 |   |   | %      ofsales |   |
|                                          |   | ($      in thousands)       |    |
|                                          |   |                        |    |   |   |   |   |   |   |   |   |   |
| Net      sales                                |   | $                           | 15,093  |   |   |   | 100.0 | % |   | $ | 21,127 |   |   |   | 100.0 | % |
| Cost      of goods sold                       |   |                        | (11,640 | ) |   |   | (77.1 | ) |   |   | (16,767 | ) |   |   | (79.4 | ) |
|         Gross margin                |   |                        | 3,453   |   |   |   | 22.9 |   |   |   | 4,360 |   |   |   | 20.6 |   |
|                                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense       |   |                        | (954    | ) |   |   | (6.3 | ) |   |   | (1,172 | ) |   |   | (5.5 | ) |
| Operating      income before pension and OPEB |   | $                           | 2,499   |   |   |   | 16.6 | % |   | $ | 3,188 |   |   |   | 15.1 | % |

|                                          |   | Six months ended June 30, |    |
|-----------------------------------------------|--------|---------------------------|---------|
|                                          |   | 2007                      |    |   | %      of sales |   |   | 2008 |   |   | %      ofsales |   |
|                                          |   | ($      in thousands)     |    |
|                                          |   |                      |    |   |   |   |   |   |   |   |   |   |
| Net      sales                                |   | $                         | 26,070  |   |   |   | 100.0 | % |   | $ | 34,179 |   |   |   | 100.0 | % |
| Cost      of goods sold                       |   |                      | (20,768 | ) |   |   | (79.7 | ) |   |   | (27,531 | ) |   |   | (80.5 | ) |
|         Gross margin                |   |                      | 5,302   |   |   |   | 20.3 |   |   |   | 6,648 |   |   |   | 19.5 |   |
|                                          |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense       |   |                      | (1,807  | ) |   |   | (6.9 | ) |   |   | (1,982 | ) |   |   | (5.8 | ) |
| Operating      income before pension and OPEB |   | $                         | 3,495   |   |   |   | 13.4 | % |   | $ | 4,666 |   |   |   | 13.7 | % |

|                                                     |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|----------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                     |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                     |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Sales      volume (000 tons) – Wire      mesh |   |                                  | 16     |   |                                |   | 18 |   |   |   | 29 |   |   |   | 32 |   |
|                                                     |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Per-ton      selling prices – Wire      mesh  |   | $                                     | 907    |   |                                | $      | 1,154 |   |   | $ | 895 |   |   | $ | 1,062 |   |
|                                                     |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton wire rod purchase      cost    |   | $                                     | 569    |   |                                | $      | 852 |   |   | $ | 550 |   |   | $ | 747 |   |

----

|                                                     |   | Three months ended June 30, |   |
|----------------------------------------------------------|--------|-----------------------------|--------|
|                                                     |   | 2007                        |   |   | %      of sales |   |   | 2008 |   |   | %      ofsales |   |
|                                                     |   | ($      in thousands)       |   |
|                                                     |   |                        |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                           |   | $                           | 1,315  |   |   |   | 100.0 | % |   | $ | 5,402 |   |   |   | 100.0 | % |
| Cost      of goods sold                                  |   |                        | (1,601 | ) |   |   | (121.7 | ) |   |   | (5,282 | ) |   |   | (97.8 | ) |
|   Gross      margin (loss)                     |   |                        | (286   | ) |   |   | (21.7 | ) |   |   | 120 |   |   |   | 2.2 |   |
|                                                     |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense                  |   |                        | (178   | ) |   |   | (13.5 | ) |   |   | (270 | ) |   |   | (5.0 | ) |
|   Operating      loss before pension/OPEB |   | $                           | (464   | ) |   |   | (35.2 | )% |   | $ | (150 | ) |   |   | (2.8 | )% |

|                                                     |   | Six months ended June 30, |   |
|----------------------------------------------------------|--------|---------------------------|--------|
|                                                     |   | 2007                      |   |   | %      of sales |   |   | 2008 |   |   | %      ofsales |   |
|                                                     |   | ($      in thousands)     |   |
|                                                     |   |                      |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                           |   | $                         | 1,315  |   |   |   | 100.0 | % |   | $ | 8,705 |   |   |   | 100.0 | % |
| Cost      of goods sold                                  |   |                      | (1,677 | ) |   |   | (127.5 | ) |   |   | (9,114 | ) |   |   | (104.7 | ) |
|   Gross      margin (loss)                     |   |                      | (362   | ) |   |   | (27.5 | ) |   |   | (409 | ) |   |   | (4.7 | ) |
|                                                     |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling      and administrative expense                  |   |                      | (187   | ) |   |   | (14.2 | ) |   |   | (433 | ) |   |   | (5.0 | ) |
|   Operating      loss before pension/OPEB |   | $                         | (549   | ) |   |   | (41.7 | )% |   | $ | (842 | ) |   |   | (9.7 | )% |

|                                                |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|-----------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volume (000 tons) - Bar                  |   |                                  | 2      |   |                                |   | 6 |   |   |   | 2 |   |   |   | 10 |   |
|                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Per-ton      selling prices - Bar                   |   | $                                     | 726    |   |                                | $      | 957 |   |   | $ | 726 |   |   | $ | 845 |   |
|                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Average      per-ton billet purchase      cost |   | $                                     | 482    |   |                                | $      | 574 |   |   | $ | 482 |   |   | $ | 493 |   |

----

|                                 |   | Three      months ended June 30, |    |   | Six      months ended June 30, |   |
|--------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|
|                                 |   | 2007                                  |    |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                 |   | ($      in thousands)                 |    |
|                                 |   |                                  |    |   |                                |   |   |   |   |   |   |   |
| Average      debt balance            |   | $                                     | 108,239 |   |                                | $      | 71,809 |   |   | $ | 98,700 |   |   | $ | 82,340 |   |
|                                 |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average interest rates |   |                                  | 6.5     | %      |                                |   | 4.8 | % |   |   | 5.9 | % |   |   | 5.2 | % |

|                                                     |   | December      31,   |   |   | June      30, |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|---------------|--------|
|                                                     |   | 2007                |   |   | 2008          |   |
|                                                     |   | (In      thousands) |   |
|                                                     |   |                |   |   |          |   |
| Working      capital                                     |   | $                   | 20,630 |   |          | $      | 47,431 |   |
| Outstanding      balance under revolving credit facility |   |                | 46,261 |   |          |   | 42,628 |   |
|                                                     |   |                |   |   |          |   |   |   |
| Borrowing      availability                              |   |                | 22,836 |   |          |   | 33,177 |   |

----

| ·   | higher      operating income before pension/OPEB in 2008 of $9.2    million; |
|--------------------|------------------------------------------------------------------------------|

| ·   | lower      net cash used due to relative changes in our accounts receivable in 2008      of $3.7 million primarily due to an abnormally high accounts receivable      balance at December 31, 2007 as a result of exceptional demand during the      fourth quarter of 2007 (the seasonality of our business generally results      in lower accounts receivable at the end of each year) partially offset by      significant increases in our sellingprices; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      $5.4 million legal settlement accrued as of June 30, 2007 which was not      collected until the third quarter of2007; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      net cash generated from relative changes in our inventory in 2008 of $13.2      million primarily due to increased costs of ferrous scrap and energy;      and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      net cash used as a result of relative changes in our accounts payable and      accrued liabilities of $10.9 million in 2008 due in part to higher      accruals for employee incentive compensation in  2008. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | $7.9      million on our 8% Notes, |
|--------------------|------------------------------------|

| ·   | $2.7      million on our Wachovia Term Loans, |
|--------------------|-----------------------------------------------|

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

| ·   | $500,000      on our County Term Loan. |
|--------------------|----------------------------------------|

| ·   | $8.3      million on our 8% Notes, |
|--------------------|------------------------------------|

| ·   | $2.6      million on our Wachovia Term Loans, |
|--------------------|-----------------------------------------------|

| ·   | $2.3      million on our UC Note, and |
|--------------------|---------------------------------------|

| ·   | $1.0      million on our County Term Loan. |
|--------------------|--------------------------------------------|

----

----

|   | · | 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 Condensed Consolidated Financial      Statements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a) | We      have retained a signed original of any exhibit listed below that contains      signatures, and we will provide any such exhibit to the Commission or its      staff upon request.  The following exhibit is included      herein: |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Certification. |
|--------|------|----------------|

|   | 31.2 | Certification. |
|--------|------|----------------|

|   | 32.1 | Certification. |
|--------|------|----------------|

----

| Date:  August      8, 2008  | By/s/ Bert E. Downing,      Jr.                                                                                      Bert      E. Downing, Jr.Vice      President, Chief Financial Officer, Corporate      Controller and Treasurer |
|--------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----