SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For fiscal year ended December 31, 1996
Commission file number 1-9887
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Oregon Steel Mills, Inc. Employee Stock Ownership Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
OREGON STEEL MILLS, INC.
1000 BROADWAY BUILDING SUITE 2200
PORTLAND, OR 97205
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
OREGON STEEL MILLS, INC. EMPLOYEE STOCK OWNERSHIP PLAN
/s/ L. Ray Adams
------------------------
L. Ray Adams, Trustee
May 30, 1997
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
------------
REPORT ON AUDITS OF FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
for the two years in the period
ended December 31, 1996
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK
OWNERSHIP PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1996 AND 1995
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE
Report of Independent Accountants..................................... 1
Statement of Net Assets Available for Benefits........................ 2
Statement of Changes in Net Assets Available for Benefits............. 3
Notes to Financial Statements......................................... 4
Supplemental Information Required by ERISA
Schedule 1 - Schedule of Assets Held for Investment Purposes..... 7
Schedule 2 - Schedule of Reportable Transactions................. 8
Schedule 3 - Schedule of Non-exempt Transactions................. 9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
March 19, 1997
To the Board of Trustees of
Oregon Steel Mills, Inc.
Employee Stock Ownership Plan
In our opinion, the accompanying statement of net assets available for benefits
at December 31, 1996 and 1995 and the related statement of changes in net assets
available for benefits for the year ended December 31, 1996 present fairly, in
all material respects, the net assets available for benefits of the Oregon Steel
Mills, Inc. Employee Stock Ownership Plan at December 31, 1996 and 1995, and the
changes in net assets available for benefits for the year ended December 31,
1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the plan's management; our
responsibility is to express an opinion on these statements based on our audits.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules 1, 2 and 3 is presented for purposes of additional analysis and is not
a required part of the basic financial statements but is additional information
required by ERISA. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Price Waterhouse LLP
-1-
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
- -------------------------------------------------------------------------------
DECEMBER 31,
1996 1995
------------ -------------
ASSETS
Cash and cash equivalents $ 15,190 $ 38,973
Investment in Oregon Steel Mills, Inc.
common stock, at fair value 34,015,448 31,913,472
------------ ------------
Net assets available for plan benefits $ 34,030,638 $ 31,952,445
============ ============
The accompanying notes are an integral part of this statement.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income:
Net appreciation in fair value of investments $ 6,008,612
Dividends 1,231,418
Interest 1,904
Employer contributions 945
------------
Total additions 7,242,879
------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits distributed to participants 3,723,506
Transfer of assets to the Oregon Steel Mills, Inc. Thrift Plan 209,762
Pass-through of dividends to participants 1,231,418
------------
Total deductions 5,164,686
------------
Net increase 2,078,193
Net assets available for benefits:
Beginning of year 31,952,445
------------
End of year $ 34,030,638
============
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
GENERAL
The Oregon Steel Mills, Inc. (the Company) Employee Stock Ownership Plan
(the Plan) was established by the Company on November 27, 1980 and amended
and restated effective January 1, 1994 to invest primarily in common stock
of the Company for the benefit of eligible employees. All employees with at
least six months of service for the Company, other than those whose terms
and conditions of employment are determined by collective bargaining
agreements that do not provide for participation in the plan, are eligible
to participate in the plan. Wells Fargo Bank is the Plan Trustee.
Administration of the Plan is performed by an administrative committee
appointed by the Company's Chief Executive Officer.
CONTRIBUTIONS
Under the provisions of the Plan, a defined contribution plan, the employer
may make discretionary contributions to the Plan, generally in the form of
newly issued shares of the Company's common stock. Employer contributions
are allocated to each participant's account based on the proportion that
each participant's compensation bears to total compensation, subject to
specified limitations. Voluntary contributions by employees are not
permitted. Any forfeitures resulting from the termination of participants
not fully vested are allocated among the accounts of persons who are
participants on the last day of the Plan's fiscal year, or whose
participation in the Plan terminated during the year because of Normal
Retirement (as defined in the Plan), death, total disability or layoff, in
the proportion that each such person's compensation taken into account
under the Plan bears to such compensation of all those persons for the
fiscal year.
ELIGIBILITY, VESTING AND BENEFITS
Each eligible employee becomes a participant in the Plan on the first day
after completing six months of service. Each participant's account under
the Plan includes the Company's contributions and the participant's
allocated share of income, losses, and the unrealized appreciation or
depreciation of Plan investments. A participant becomes fully vested after
completing seven years of credited service or in the event of death or
termination from employment as a result of permanent disability, or upon
reaching the age of 65. Participants terminating for any other reason who
have less than seven years of service are credited with amounts vested
under the seven-year vesting schedule in which participants' accounts are
vested at a rate of 10% per year for each of the first four years, and 20%
for each of the next three years. Vested benefits are distributable in the
form of common stock to the participants upon termination of employment in
a lump sum payment, except, at the election of the participant, payment may
be deferred until the participant reaches age 70 1/2 if the vested account
balance exceeds $3,500. In addition, eligible active participants may elect
a sale of common stock by the Plan and a transfer of the proceeds from the
sale to the Company's Thrift Plan.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN (CONTINUED)
TAX STATUS
The Company has received a determination letter from the Internal Revenue
Service that the Plan, as established on November 27, 1980 and amended and
restated effective January 1, 1994, is qualified under Internal Revenue
Code Section 401(a) and the related trust is exempt from taxation under
Section 501(a).
DISPOSITION OF FUNDS UPON TERMINATION OF THE PLAN
While the Company has not expressed any intent to terminate the Plan, it
may do so at its sole discretion. In the event of termination of the Plan,
participants' accounts become fully vested and nonforfeitable and the
assets of all participants' accounts will be distributed to or for the
benefit of the participants in accordance with the Plan's provisions.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments have been recorded at market values as determined by the quoted
closing market price reported on the New York Stock Exchange at December
31, 1996 and 1995.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
EXPENSES OF THE PLAN
Certain administrative functions are performed by officers or employees of
the Company or its subsidiaries. No such officer or employee receives
compensation from the Plan. Administrative expenses are paid directly by
the Company at its discretion.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
3. INVESTMENTS
The Plan's assets held for investment purposes, at December 31, are
presented in the following table:
1996 1995
----------- ------------
Oregon Steel Mills, Inc. Common Shares:
Number of Shares 2,030,773 2,300,070
=========== ===========
Cost $20,897,500 $21,077,025
=========== ===========
Market* $34,015,448 $31,913,472
Cash and Cash Equivalents 15,190 38,973
----------- -----------
Total assets held for investment purposes $34,030,638 $31,952,445
=========== ===========
* Represents greater than 5% of the Plan's net assets available for plan
benefits.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Transactions with Oregon Steel Mills, Inc. during the year ended
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
CURRENT NET GAIN
COST OF VALUE ON EACH
ASSET OF ASSET TRANSACTION
-------- --------- -------------
<S> <C> <C> <C>
Dividends received from
Oregon Steel Mills, Inc. $ - $1,231,418 $ -
Pass-through of dividends to participants - 1,231,418 -
Contribution from Oregon Steel Mills, Inc. 945 945 -
257,500 shares, par value $0.01, distributed
to participants 195,159 3,723,506 3,528,347
Sale of 13,653 shares, par value $0.01, and
transfer of cash to Oregon Steel Mills, Inc.
Thrift Plan 10,348 209,762 199,414
</TABLE>
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION - SCHEDULE 1
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES COST VALUE
--------- ----------- -----------
Oregon Steel Mills, Inc. common stock* 2,030,773 $20,897,500 $34,015,448
Stagecoach Funds, Inc. money market trust 13,384 13,384 13,384
Cash 1,806 1,806 1,806
* Represents party-in-interest investment.
-7-
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION - SCHEDULE 2
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
Transactions of an amount in excess of 5% of the current value of the Plan's
assets as of the beginning of the year, reportable under the provisions of the
Employee Retirement Income Security Act of 1974, were as follows:
<TABLE>
<CAPTION>
DESCRIPTION OF EXPENSES
TRANSACTIONS INCLUDING INCURRED IN NET GAIN
MATURITY DATE, RATE CONNECTION CURRENT OR (LOSS)
OF INTEREST, COLLATERAL PURCHASE SELLING LEASE WITH COST OF VALUE ON EACH
IDENTITY OF PARTY INVOLVED PAR OR MATURITY VALUE PRICE PRICE RENTAL TRANSACTION ASSET OF ASSET TRANSACTION
- -------------------------- -------------------------- --------- --------- -------- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Mills, Inc. 257,500 shares, par value
$0.01, distributed to
participants $ - $ - $ - $ - $195,159 $3,723,506 $3,528,347
Oregon Steel Mills, Inc. Sale of 13,653 shares, par
value $0.01, and
transfer of cash to
Oregon Steel Mills, Inc.
Thrift Plan - 209,762 - - 10,348 209,762 199,414
Oregon Steel Mills, Inc. 1,800 shares, par value
$0.01, purchased 25,043 - - - 25,043 25,043 -
</TABLE>
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION - SCHEDULE 3
LINE 27E - SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
Party-in-interest transactions reportable under the provisions of the Employee
Retirement Income Security Act of 1974 for the year ended December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
RELATIONSHIP DESCRIPTION OF EXPENSES
TO PLAN, TRANSACTIONS INCLUDING INCURRED IN NET GAIN
EMPLOYER OR MATURITY DATE, RATE CONNECTION CURRENT CURRENT
IDENTITY OF PARTY OTHER PARTY- OF INTEREST, COLLATERAL PURCHASE SELLING LEASE WITH COST OF VALUE ON EACH
INVOLVED IN-INTEREST PAR OR MATURITY VALUE PRICE PRICE RENTAL TRANSACTION ASSET OF ASSET TRANSACTION
- ----------------- --------------- -------------------------- -------- ------- ------- ------------ ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Sponsor Company Dividends received from
Mills, Inc. Oregon Steel Mills, Inc. $ - $ - $ - $ - $ - $1,231,418 $ -
Oregon Steel Sponsor Company Pass-through of dividends
Mills, Inc. to participants - - - - - 1,231,418 -
Oregon Steel Sponsor Company Contribution from
Mills, Inc. Oregon Steel Mills, Inc. - - - - 945 945 -
Oregon Steel Sponsor Company 1,800 shares, par value
Mills, Inc. $0.01, purchased 25,043 - - - 25,043 25,043 -
</TABLE>
-9-
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-26739) of Oregon Steel Mills, Inc. of our report
dated March 19, 1997 relating to the Oregon Steel Mills, Inc. Employee
Stock Ownership Plan appearing on page 1 of this Form 11-K.
/s/ Price Waterhouse LLP
- -------------------------
PRICE WATERHOUSE LLP
Portland, Oregon
June 4, 1997
