OREGON STEEL MILLS INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549

FORM 10-Q

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

	For the quarterly period ended March 31, 2005

	OR

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

For the transition period from ___________________________ to

Commission File Number 1-9887

OREGON STEEL MILLS, INC.

(Exact name of registrant as specified in its charter)

Delaware		94-0506370

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1000 S.W. Broadway, Suite 2200, Portland, Oregon		97205

(Address of principal executive offices)		(Zip Code)

(503) 223-9228

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Yes x

No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x

No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $.01 Par Value		35,428,588

Class		Number of Shares Outstanding (as of April 29, 2005)

OREGON STEEL MILLS, INC.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION		2

	Item 1.	Consolidated Financial Statements of Oregon Steel Mills, Inc.	2

		Notes to Consolidated Financial Statements	5

		Consolidated Financial Statements of New CF&I, Inc.	14

		Notes to Consolidated Financial Statements	17

		Financial Statements of CF&I Steel, L.P.	22

		Notes to Financial Statements	25

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36

	Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION		36

	Item 1.	Legal Proceedings	36

	Item 6.	Exhibits	36

	SIGNATURES		37

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

OREGON STEEL MILLS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)

	March 31, 2005			December 31, 2004

	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including restricted cash of $12,407 and none	$	65,954		$	77,026
Short-term investments		50,946			60,110
Trade accounts receivable, less allowance for doubtful accounts of $4,167 and $4,660		109,442			118,952
Inventories		333,843			235,010
Deferred income taxes		9,937			4,680
Other		14,191			9,881
Assets held for sale		28,337			28,448

Total current assets		612,650			534,107

Property, plant and equipment:
Land and improvements		20,794			19,934
Buildings		55,731			55,736
Machinery and equipment		793,128			795,571
Construction in progress		18,612			14,779

		888,265			886,020
Accumulated depreciation		(438,256	)		(434,346	)

Net property, plant and equipment		450,009			451,674

Intangibles, net		32,747			33,396
Other assets		15,526			10,524

TOTAL ASSETS	$	1,110,932		$	1,029,701

LIABILITIES
Current liabilities:
Current portion of long-term debt	$	7,423		$	2,459
Accounts payable		96,417			79,509
Accrued expenses		80,304			61,918
Liabilities related to assets held for sale		1,063			1,160

Total current liabilities		185,207			145,046
Long-term debt		321,315			313,699
Deferred employee benefits		77,932			76,607
Environmental liability		27,446			27,833
Deferred income taxes		18,686			5,164
Other long-term liabilities		79			138

Total liabilities		630,665			568,487

Minority interests		12,205			22,706

Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share, 1,000 shares authorized; none issued		—			—
Common stock, par value $.01 per share; 45,000 shares authorized; 35,429 and 35,338 shares issued and outstanding		354			353
Additional paid-in capital		360,372			359,350
Retained earnings		118,666			90,316
Accumulated other comprehensive loss:
Cumulative foreign currency translation adjustment		(543	)		(724	)
Minimum pension liability		(10,787	)		(10,787	)

Total stockholders’ equity		468,062			438,508

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,110,932		$	1,029,701

The accompanying notes are an integral part of the consolidated financial statements.

OREGON STEEL MILLS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)

	Three Months Ended March 31,

	2005			2004

Sales:
Product Sales	$	288,832		$	241,811
Freight		7,133			10,585

		295,965			252,396
Costs and expenses:
Cost of sales		220,096			214,600
Labor dispute settlement charges (Note 10)		—			7,000
Selling, general and administrative expenses		16,059			13,910
Incentive compensation		5,328			2,046
Gain on disposal of assets		(87	)		(263	)

		241,396			237,293

Operating income		54,569			15,103
Other income (expense):
Interest expense		(8,642	)		(8,569	)
Minority interests		(3,076	)		355
Other income		1,505			637

Income before income taxes		44,356			7,526
Income tax expense		(16,006	)		(2	)

Net income	$	28,350		$	7,524

Basic income per share	$	0.80		$	0.28
Diluted income per share	$	0.79		$	0.28
Weighted average common shares and common share equivalents outstanding:
Basic		35,398			26,489
Diluted		35,676			26,661

The accompanying notes are an integral part of the consolidated financial statements.

OREGON STEEL MILLS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended March 31,

	2005			2004

Cash flows from operating activities:
Net income	$	28,350		$	7,524
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization		9,731			9,791
Tax benefit on employee stock option plans		634			—
Deferred income taxes		8,265			(133	)
Gain on disposal of assets		(87	)		(263	)
Minority interests		3,076			(355	)
Other, net		884			516
Changes in current assets and liabilities:
Trade accounts receivables		9,510			(6,451	)
Inventories		(98,833	)		4,174
Operating liabilities		26,523			(23,212	)
Labor dispute settlement charges (Note 10)		—			7,000
Other		(3,275	)		6,088

Net cash provided (used) by operating activities		(15,222	)		4,679

Cash flows from investing activities:
Purchases of short-term investments		(9,292	)		—
Sales and maturities of short-term investments </