UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 1-9887
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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
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B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive officer:
Oregon Steel Mills, Inc.
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1000 Broadway Building, Suite 2200, Portland, Oregon 97205
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK
OWNERSHIP PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1998 AND 1997
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
DECEMBER 31, 1998 AND 1997
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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 the 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
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
and the related statement of changes in net assets available for benefits
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,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended, 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 financial 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/ PricewaterhouseCoopers LLP
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Pricewaterhouse Coopers LLP
Portland, Oregon
June 1, 1999
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
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1998 1997
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ASSETS
Cash and cash equivalents $ 14,295 $ 2,502
Investment in Oregon Steel Mills, Inc.
Common stock, at fair value 20,810,201 39,806,656
Employer contribution receivable - 1,500,000
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Total assets $20,824,496 $41,309,158
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LIABILITIES
Pass-through dividends payable 13,263 -
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Net assets available for benefits $20,811,233 $41,309,158
=========== ===========
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 YEARS ENDED DECEMBER 31, 1998 AND 1997
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<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net (depreciation) appreciation in fair value of investments $(17,329,379) $ 9,550,744
Dividends received 1,049,938 1,103,699
Interest income 1,008 256
Employer contributions 493 1,500,911
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Total additions (deductions) (16,277,940 12,155,610
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits distributed to participants 3,170,047 3,249,046
Transfer of assets to the Oregon Steel Mills, Inc. Thrift Plan - 524,345
Pass-through of dividends to participants 1,049,938 1,103,699
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Total deductions 4,219,985 4,877,090
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Net (decrease) increase (20,497,925) 7,278,520
Net assets available for benefits:
Beginning of year 41,309,158 34,030,638
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End of year $ 20,811,233 $41,309,158
============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
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1. DESCRIPTION OF THE PLAN
GENERAL
Oregon Steel Mills, Inc. (the Company) established the Employee Stock
Ownership Plan (the Plan) on November 27, 1980 and amended and restated it
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 this 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,
except for fractional shares, which are purchased from the participant by
the Plan at market value on the distribution date. These shares remain in
the Plan and are allocated to participants in the same manner as normal
contributions. The cash used to purchase these fractional shares is
obtained from the Company in the form of additional contributions to the
Plan. In 1998 and 1997, $493 and $911, respectively, were contributed to
the Plan to purchase fractional shares from participants. At the election
of the participant, payment may be deferred until the participant reaches
age 70 1/2 if the vested account balance exceeds $5,000.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
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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, 1998 and 1997.
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 income and expense 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
DECEMBER 31, 1998 AND 1997
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3. INVESTMENTS
The Plan's assets held for investment purposes at December 31 are presented
in the following table:
1998 1997
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Oregon Steel Mills, Inc. common shares:
Number of shares 1,752,438 1,867,761
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Cost $22,139,569 $20,787,798
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Market* $20,810,201 $39,806,656
Cash and cash equivalents 14,295 2,502
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Total assets held for investment purposes $20,824,496 $39,809,158
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* Represents greater than 5% of the Plan's net assets available for benefits.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
Transactions with Oregon Steel Mills, Inc. during the year ended
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSET AT NET GAIN
COST OF TRANSACTION ON EACH
ASSET DATE TRANSACTION
------------ ------------ -------------
<S> <C> <C> <C>
Dividends received from
Oregon Steel Mills Inc. $ - $1,049,938 $ -
Pass-through of dividends to participants - 1,049,938 -
Contribution from Oregon Steel Mills, Inc. 493 493 -
Purchase of 83,454 shares, par value $0.01 1,502,445 1,502,445 -
198,777 shares, par value $0.01, distributed
to participants 150,653 3,169,554 3,018,901
</TABLE>
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<PAGE>
ADDITIONAL INFORMATION
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
ADDITIONAL INFORMATION - SCHEDULE 1
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
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<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, NUMBER OF MARKET
LESSOR OR SIMILAR PARTY SHARES COST VALUE
- ------------------------------------------ ---------- ----------- -----------
<S> <C> <C> <C>
Oregon Steel Mills, Inc. common stock* 1,752,438 $22,139,569 $20,810,201
Stagecoach Funds, Inc. money market trust 14,295 14,295 14,295
* Represents party-in-interest investment.
</TABLE>
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<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, 1998
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Transactions of an amount in excess of 5% of the 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
TRANSACTION INCLUDING INCURRED IN NET GAIN
MATURITY DATE, RATE CONNECTION CURRENT OR (LOSS)
IDENTITY OF OF INTEREST, COLLATERAL PURCHASE SELLING LEASE WITH COST OF VALUE ON EACH
PARTY INVOLVED PAR OR MATURITY VALUE PRICE PRICE RENTAL TRANSACTIONS ASSET OF ASSET TRANSACTION
-------------- --------------------- -------- ------- ------ ------------ ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Mills, 198,777 shares, par value
Inc. $0.01, distributed to
participants $ - $ - $ - $ - $ 150,653 $3,169,554 $3,018,901
Oregon Steel Mills, 83,454 shares, par value
Inc. $0.01 purchased 1,502,445 - - - 1,502,445 1,502,445 -
</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, 1998
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Party-in-interest transactions reportable under the provisions of the Employee
Retirement Income Security Act of 1974 for the year ended December 31, 1998 were
as follows:
<TABLE>
<CAPTION>
DESCRIPTION
OF
TRANSACTIONS
INCLUDING
MATURITY
DATE, RATE OF EXPENSES
RELATIONSHIP TO INTEREST, INCURRED IN NET GAIN
PLAN,EMPLOYER COLLATERAL CONNECTION CURRENT OR (LOSS)
IDENTITY OF OR OTHER PARTY- PAR OR PURCHASE SELLING LEASE WITH COST OF VALUE OF ON EACH
PARTY INVOLVED IN-INTEREST MATURITY VALUE PRICE PRICE RENTAL TRANSACTIONS ASSET ASSET TRANSACTION
-------------- ---------------- --------------- -------- ------- ------ ------------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Mills,
Inc. Sponsor Company Dividends
received from
Oregon Steel
Mills, Inc. $ - $ - $ - $ - $ - $1,049,938 $ -
Oregon Steel Mills,
Inc. Sponsor Company Pass-through
of dividends
to participants - - - - - 1,049,938 -
Oregon Steel Mills,
Inc. Sponsor Company Contribution
from Oregon
Steel Mills,
Inc. - - - - 493 493 -
Oregon Steel Mills,
Inc. Sponsor Company 83,454
shares, par
value $0.01
purchased 1,502,445 - - - 1,502,445 1,502,445 -
</TABLE>
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securitiies Exchange Act of 1934,
the trustees have duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 25, 1999
OREGON STEEL MILLS, INC.
By /s/ L. Ray Adams
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Vice President of Finance and
Chief Financial Officer
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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 June 1, 1999 relating to the financial statements of Oregon Steel Mills,
Inc. Employee Stock Ownership Plan, which appears in this Form 11-K.
/S/ PRICEWATERHOUSECOOPERS LLP
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PRICEWATERHOUSECOOPERS LLP
Portland, Oregon
June 25, 1999
