UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 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, 1999
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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, 1999 AND 1998
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
DECEMBER 31, 1999 AND 1998
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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....... 8
Schedule 2 - Schedule of Reportable Transactions................... 9
Schedule 3 - Schedule of Non-Exempt Transactions................... 10
*Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
<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 (the "Plan") at
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended, in conformity with accounting principles generally
accepted in the United States. 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 auditing standards generally accepted in the
United States, 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 supplemental schedules of assets held
for investment purposes, reportable transactions and non-exempt transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
are the responsibility of the Plan's management. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 26, 2000
1
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OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
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1999 1998
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Cash and cash equivalents $ 1,458 $ 14,295
Investment in Oregon Steel Mills, Inc.
common stock, at fair value 11,733,467 20,810,201
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Total assets 11,734,925 20,824,496
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Pass-through dividends payable - 13,263
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Net assets available for benefits $11,734,925 $20,811,233
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The accompanying notes are an integral part
of this statement.
2
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
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1999 1998
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Dividends $ 894,597 $ 1,049,938
Interest 344 1,008
Employer contributions 411 493
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Total additions 895,352 1,051,439
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Net depreciation in fair value of investments 5,609,045 17,329,379
Benefits distributed to participants 3,322,326 3,170,047
Transfer of assets to the
Oregon Steel Mills, Inc. Thrift Plan 146,895 -
Pass-through of dividends to participants 893,394 1,049,938
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Total deductions 9,971,660 21,549,364
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Net decrease (9,076,308) (20,497,925)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 20,811,233 41,309,158
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End of year $11,734,925 $ 20,811,233
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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
DECEMBER 31, 1999 AND 1998
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1. DESCRIPTION OF THE PLAN
GENERAL
The Oregon Steel Mills, Inc. Employee Stock Ownership (the Plan) was
established by Oregon Steel Mills, Inc. (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 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. Total
forfeitures credited back to the Plan and allocated to the remaining
participants' accounts were $1,745 and $4,419 in 1999 and 1998,
respectively.
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
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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1. DESCRIPTION OF THE PLAN (CONTINUED)
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 percent per
year for each of the first four years, and 20 percent 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 1999 and 1998, $411 and $493, 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 attains age 70 1/2 if the vested account
balance exceeds $5,000.
TAX STATUS
The Company has received a determination letter dated May 20, 1998 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.
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments have been recorded at fair value as determined by the
quoted closing market price reported on the New York Stock Exchange at
December 31, 1999 and 1998.
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.
3. INVESTMENTS
The fair value of Plan assets that represent a holding greater than 5
percent of the Plan's net assets available for benefits at December 31
are as follows:
1999 1998
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Oregon Steel Mills, Inc. common shares:
Fair value $11,733,467 $20,810,201
6
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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4. TRANSACTIONS WITH PARTIES-IN-INTEREST
<TABLE>
<CAPTION>
CURRENT VALUE NET GAIN
COST OF OF ASSET AT ON EACH
ASSET TRANSACTION DATE TRANSACTION
------- ---------------- -----------
<S> <C> <C> <C>
Transactions with Oregon Steel
------------------------------
Mills, Inc.
-----------
Dividends received $ - $ 894,597 $ -
Employer contribution 411 411 -
</TABLE>
5. SUBSEQUENT EVENT
Common stock of Oregon Steel Mills, Inc. represents substantially all
of the assets of the Plan. The value of the stock decreased from
$7.94 per share at December 31, 1999 to $2.31 per share as of June 26,
2000. The resulting decrease in fair value was approximately $8.3
million for the Plan assets that were held as of December 31, 1999.
7
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE 1
FORM 5500 SCHEDULE H, PART IV, LINE 4I - SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES
DECEMBER 31, 1999
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IDENTITY OF ISSUE, BORROWER, FAIR
LESSOR OR SIMILAR PARTY COST VALUE
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Oregon Steel Mills, Inc. common stock* 21,945,318 11,733,467
Stagecoach Funds, Inc. money market trust 1,458 1,458
* Represents party-in-interest investment
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<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE 2
FORM 5500 SCHEDULE H, PART IV, LINE 4J - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1999
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Transactions of an amount in excess of 5 percent 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>
EXPENSES
DESCRIPTION OF TRANSACTION INCURRED IN
INCLUDING MATURITY DATE, RATE OF CONNECTION CURRENT NET GAIN
IDENTITY OF PARTY INTEREST, COLLATERAL PAR OR PURCHASE SELLING LEASE WITH COST OF VALUE ON EACH
INVOLVED MATURITY VALUE PRICE PRICE RENTAL TRANSACTION ASSET OF ASSET TRANSACTION
----------------- -------------------------------- --------- -------- ------ ----------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Mills, Inc. 264,330 shares par value $0.01,
distributed to participants $ - $ - $ - $ - $200,336 $3,322,326 $3,121,990
</TABLE>
9
<PAGE>
OREGON STEEL MILLS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
SCHEDULE 3
FORM 5500 SCHEDULE G, PART III-SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
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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, 1999 were
as follows:
<TABLE>
<S> <C>
<CAPTION>
DESCRIPTION OF EXPENSES
TRANSACTIONS INCLUDING INCURRED IN
RELATIONSHIP TO PLAN, MATURITY DATE, RATE OF CONNECTION
IDENTITY OF PARTY EMPLOYER OR OTHER INTEREST, COLLATERAL, PURCHASE SELLING LEASE WITH COST OF
INVOLVED PARTY-IN-INTEREST PAR OR MATURITY VALUE PRICE PRICE RENTAL TRANSACTION ASSET
----------------- -------------------- ---------------------- -------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Oregon Steel Mills, Inc. Sponsor Company Dividends received from $ - $ - $ - $ - $ -
Oregon Steel Mills, Inc.
Oregon Steel Mills, Inc. Sponsor Company Pass-through of
dividends to
participants - - - - 411
<S> <C>
<CAPTION>
DESCRIPTION OF
TRANSACTIONS INCLUDING
RELATIONSHIP TO PLAN, MATURITY DATE, RATE OF CURRENT NET GAIN
IDENTITY OF PARTY EMPLOYER OR OTHER INTEREST, COLLATERAL, VALUE ON EACH
INVOLVED PARTY-IN-INTEREST PAR OR MATURITY VALUE OF ASSET TRANSACTION
----------------- -------------------- ---------------------- -------- -----------
<S> <C> <C> <C> <C>
Oregon Steel Mills, Inc. Sponsor Company Dividends received from $894,597 $ -
Oregon Steel Mills, Inc.
Oregon Steel Mills, Inc. Sponsor Company Contribution from
Oregon Steel Mills, Inc. 411 -
</TABLE>
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