Operating performance before pension and OPEB for the first quarter of 2010 was significantly better than the first quarter of 2009 primarily due to a substantial increase in shipment volumes and production levels as discussed above.
Other items affecting the comparability of Keystone's operating performance before pension and OPEB include:
•Decreased cost of raw material included in cost of goods sold during 2010 as products sold during the first quarter of 2009 were produced with ferrous scrap purchased during the last half of 2008 when market prices were at unprecedented high levels.
•A $1.5 million impairment charge during the first quarter of 2009 as compared to only a $92,000 impairment charge during the first quarter of 2010 to reduce certain inventories to net realizable value.
•Bad debt expense of $949,000 during the first quarter of 2009 primarily due to the Chapter 11 proceedings of one of Keystone's customers while bad debt expense during the first quarter of 2010 was $44,000.
•Lower selling prices during 2010 as selling prices during the first quarter of 2009 were driven by the extremely high levels of ferrous scrap costs during the last half of 2008.
•Higher incentive compensation expense during 2010 due to increased profitability.
•A $4.5 million decrease in the Company's LIFO reserve and cost of goods sold during the first quarter of 2009 as compared to a $399,000 increase in the Company's LIFO reserve and cost of goods sold during the first quarter of 2010.