-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C7xWatHMHT3yBplC6NIoUzKmoASeZagD4X8ZPOFqCRuLM4lmnQx1hcEscfG9Dx8e 5EA+HjCYdw1JcrwcdW9Tfg== 0000830260-04-000074.txt : 20040727 0000830260-04-000074.hdr.sgml : 20040727 20040727091233 ACCESSION NUMBER: 0000830260-04-000074 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040630 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OREGON STEEL MILLS INC CENTRAL INDEX KEY: 0000830260 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 940506370 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09887 FILM NUMBER: 04932227 BUSINESS ADDRESS: STREET 1: 1000 SW BROADWAY STREET 2: STE 2200 CITY: PORTLAND STATE: OR ZIP: 97205 BUSINESS PHONE: 5032405788 MAIL ADDRESS: STREET 1: PO BOX 5368 CITY: PORTLAND STATE: OR ZIP: 97228 8-K 1 os8k704fin.txt OSM 2ND QUARTER 2004 FINANCIALS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 27, 2004 OREGON STEEL MILLS, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 1-9887 94-0506370 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) 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) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits EXHIBIT NUMBER DESCRIPTION 99.1 Oregon Steel Mills, Inc. Company Press Release dated July 27, 2004, announcing financial results for the quarter ended June 30, 2004. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 27, 2004, the Company issued a press release announcing its financial results for the quarter ended June 30, 2004. A copy of the press release is filed as Exhibit 99.1 to this report and is incorporated herein by reference. The Company provides in the press release certain non-GAAP financial measures, including: (1) earnings before interest, taxes, depreciation and amortization ("EBITDA"); (2) EBITDA before the non-cash portion of the Settlement Charge (as defined in the press release) and fixed and other asset impairment charges; (3) net income exclusive of the Settlement Charge; and (4) operating income (loss) before the Settlement Charge and fixed and other asset impairment charges. "GAAP" refers to accounting principles generally accepted in the United States. The press release contains a reconciliation table of items 1 and 2 above to the most directly comparable GAAP measures. The Company believes the non-GAAP measure in item 1 above is useful to investors because it is a basis upon which the Company assesses its financial performance, it provides useful information regarding the Company's ability to service its debt and it is a commonly used financial analysis tool for measuring and comparing companies in several areas of liquidity, operating performance and leverage. The Company believes the non-GAAP measures in items 2, 3, and 4 are useful to investors when comparing to prior periods because it believes the excluded items are nonrecurring, except for additional labor dispute settlement charges that may occur based on the market value of the Company's shares of common stock issued as part of the settlement. The Company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company's operating performance. A reconciliation table of items 3 and 4 above is set forth below. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled items reported by other companies.
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Operating (loss) income $ 20,343 ($48,563) $ 35,447 ($55,134) Add back labor dispute settlement adjustment 31,868 -- 38,868 -- Add back fixed asset and other impairment charges -- 36,113 -- 36,113 -------- -------- -------- -------- Operating income (loss) before labor dispute settlement adjustment and fixed and other asset impairment charges $ 52,211 ($12,450) $ 74,315 ($19,021) ======== ======== ======== ========
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Net income (loss) $ 14,020 ($51,947) $ 21,545 ($60,973) Add back labor dispute settlement adjustment 31,868 -- 38,868 -- -------- -------- -------- ------- Net income (loss) before labor dispute settlement adjustment $ 45,888 ($51,947) $ 60,413 ($60,973) ======== ======== ======== ========
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OREGON STEEL MILLS, INC. - -------------------------------------------------------------------------------- (Registrant) Date: 7/27/04 By: /s/ Jeff S. Stewart ------------------------------ --------------------------------- Jeff S. Stewart Corporate Controller (Principal Accounting Officer) EX-99 2 osmq204press.txt OSM 2ND QTR. 2004 PRESS RELEASE EXHIBIT 99.1 OREGON STEEL MILLS, INC. Portland, Oregon FOR IMMEDIATE RELEASE July 27, 2004 - ------------------------------------------------------------------------------- Contact: Ray Adams (503) 240-5223 OREGON STEEL MILLS, INC. ANNOUNCES SECOND QUARTER RESULTS HIGHLIGHTS: - ----------- [BULLET] SALES WERE $281.8 MILLION, UP 48 PERCENT FROM THE SECOND QUARTER OF 2003 [BULLET] RECORDED AN ADDITIONAL LABOR DISPUTE SETTLEMENT CHARGE OF $31.9 MILLION OF WHICH $28.7 MILLION WAS NON-CASH [BULLET] EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION, BEFORE THE NON-CASH CHARGE OF $28.7 MILLION, WAS $60.8 MILLION [BULLET] NET INCOME WAS $14.0 MILLION ($.53 PER SHARE), A QUARTERLY RECORD FOR THE COMPANY. BEFORE THE LABOR DISPUTE SETTLEMENT CHARGE, NET INCOME WAS $45.9 MILLION ($1.73 PER SHARE) [BULLET] CASH FLOW FROM OPERATIONS WAS $51.1 MILLION Portland, Oregon, July 27, 2004/Business Wire/--Oregon Steel Mills, Inc. (NYSE: OS) today reported second quarter of 2004 net income of $14.0 million ($.53 per share), a quarterly record for the Company, which includes an additional labor dispute settlement charge of $31.9 million ("Settlement Charge"). This compares to a net loss of $51.9 million (a negative $1.97 per share) for the second quarter of 2003. Net income for the second quarter of 2004 exclusive of the Settlement Charge was $45.9 million ($1.73 per share). Sales for the second quarter of 2004 were $281.8 million, a quarterly record for the Company. This compares to second quarter 2003 sales of $189.9 million. Average sales price per ton in the second quarter of 2004 was $654 compared to $450 in the second quarter of 2003. Total shipments for the second quarter of 2004 were 431,000 tons compared to the second quarter of 2003 shipments of 422,400 tons. This increase in shipments is primarily due to increased shipments of plate, coil, structural tubing, rail, rod and bar products partially offset by lower welded and seamless pipe shipments. The increases in sales and average sales price were primarily due to higher average selling prices for plate, coil, welded pipe, rail and rod and bar products and the increased shipments noted above. Operating income for the second quarter of 2004 was $20.3 million (an average of $47 per ton), including the $31.9 million Settlement Charge. Operating income before the Settlement Charge was $52.2 million (an average of $121 per ton). This compares to an operating loss of $48.6 million in the second quarter of 2003, which included impairment charges of $36.1 million. The operating loss for the second quarter of 2003 before the asset impairment charges was $12.5 million. -1- During the second quarter of 2004, the Company recorded a pretax Settlement Charge of $31.9 million, of which $28.7 million was non-cash, related to the previously announced tentative agreement to issue four million shares of Company common stock to a labor dispute settlement trust ("Trust") as part of the settlement of the labor dispute ("Settlement") at the Company's majority-owned subsidiary, Rocky Mountain Steel Mills. The non-cash portion of the charge is a result of adjusting the previously recorded value at March 31, 2004 of the four million shares of Company common stock ($30.2 million at $7.56 per share) to market at June 30, 2004. The closing price of the Company's common stock on the New York Stock Exchange at June 30, 2004 was $14.74 per share, resulting in an additional non-cash charge of $28.7 million. The Company will continue to adjust the common stock portion of the Settlement at the end of each quarter either up or down for the change in the price of the Company's common stock through the effective date of the Settlement. The Company expects the Settlement will be finalized in August. In addition, as part of the Settlement, the Company agreed, under certain circumstances, to pay on behalf of the Trust, certain expenses that would otherwise be incurred by the Trust related to the issuance of the four million shares. Accordingly, the Company recorded an additional charge in the second quarter of 2004 of approximately $3.2 million as part of the cost of Settlement related to the issuance of the shares to the Trust. The second quarter of 2003 included after-tax asset impairment charges of $40.4 million ($1.53 per share). These asset impairments consisted of fixed assets and related dedicated stores and other assets at the Company's Portland, Oregon and Pueblo, Colorado steelmaking facilities totaling $36.1 million pre-tax ($22.9 million after-tax) and a $17.5 million charge to income tax expense due to a valuation allowance on recorded deferred tax assets. During the second quarter of 2003, the Company shut down its Portland, Oregon melt shop and recorded an impairment charge of $27.0 million for the fixed assets and related assets. This decision was predicated on the determination that purchasing steel slabs was a better financial decision than continuing to operate the melt shop over the long term. In addition, the Company recognized an asset impairment charge of $9.1 million on a caster and related assets at the Rocky Mountain Steel Mills Division. The Company completed design specifications in the second quarter of 2003 for the new single furnace due to begin operation in late 2005. The new single furnace will only require one caster. Accordingly, it was determined that one of the casters and related assets would have no future service potential. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2004 was $32.1 million (or $60.8 million exclusive of the $28.7 million non-cash portion of the Settlement Charge) compared to a negative $34.8 million (or $8.2 million in the second quarter of 2003 exclusive of the asset impairment charges). A reconciliation of EBITDA and EBITDA as adjusted is provided in the last table of this press release. The higher operating income and EBITDA during the second quarter of 2004 compared to the second quarter of 2003 reflects increased volume and higher average selling prices, as discussed above, partially offset by higher steel slab costs at the Company's Oregon Steel Division, and higher scrap costs at the -2- Company's Rocky Mountain Steel Division. Average steel slab cost and average scrap cost were up 32% and 57%, quarter to quarter, respectively. EBITDA is a non generally accepted accounting principles ("GAAP") liquidity measure. The Company believes that EBITDA is useful to investors because it is a basis upon which we assess our financial performance, it provides useful information regarding our ability to service our debt and because it is a commonly used financial analysis tool for measuring and comparing companies in several areas of liquidity, operating performance and leverage. We believe EBITDA excluding the effects of the non-cash portion of the labor dispute settlement charges and fixed and other asset impairment charges is useful to investors because the Company believes the excluded items are nonrecurring, except for additional labor dispute settlement charges that may occur based on the market value of the Company's shares of common stock to be issued as part of the Settlement. Jim Declusin, the Company's President and CEO, stated, "We at Oregon Steel are very pleased to announce second quarter results that are a record for the Company, its stockholders and its 1,400 employees. These results were fueled by very strong steel markets, both domestically and globally, that have increased demand for the products we produce. All of our market segments have shown strength during the second quarter and for the most part are forecasted to remain that way through the third quarter. Our ability to raise steel prices during the period has certainly contributed to our record profitability but other very important factors have been the ongoing efforts of our workforce to achieve cost reductions, quality improvements and productivity gains across all product lines." LIQUIDITY At June 30, 2004, the Company maintained a $65 million revolving credit facility of which $5.0 million was restricted, an additional $15.4 million was restricted under outstanding letters of credit and $44.6 million was available for use. There were no amounts outstanding on the revolving credit facility as of June 30, 2004. During the quarter the Company generated $51.1 million of cash flow from operations and as a result, total debt outstanding, net of cash of $53 million, was $259 million at June 30, 2004. This compares to total debt, net of cash, of $296 million at December 31, 2003 and $305 million at March 31, 2004. During the second quarter of 2004, the Company incurred capital expenditures of $5.1 million; depreciation and amortization was $9.7 million. For all of 2004, the Company anticipates that capital expenditures and depreciation and amortization will be approximately $28 million and $39 million, respectively. 2004 OUTLOOK For 2004, the Company expects to ship approximately 1,720,000 tons of products and generate over $1 billion in sales. In the Oregon Steel Division the sales product mix is expected to consist of 615,000 tons of plate and coil, 175,000 tons of welded pipe and 70,000 tons of structural tubing. At these shipment levels the Company expects to run its Portland combination mill at approximately 80 percent of its rated capacity, the welded pipe mills at approximately 25 percent of their rated capacities and the structural tubing mill at approximately 50 percent of its rated capacity. The Company's RMSM Division expects to sell approximately 362,000 tons and 500,000 tons of rail and rod -3- and bar products, respectively. At these shipment levels the rail and rod mills would be at approximately 90 percent and 100 percent, respectively, of their rated capacities. Seamless pipe shipments will be dependent on market conditions in the drilling industry. At the present time the Company's large diameter weld pipe and seamless pipe mills are not operating. -4- FILING OF S-3 REGISTRATION STATEMENT FOR UNION SETTLEMENT SHARES The Company filed today, in anticipation of the finalization of the Settlement, a Registration Statement on Form S-3 with the Securities and Exchange Commission to register the four million shares of its common stock to be issued in connection with the Settlement. The shares to be registered will be owned by the Trust created as part of the Settlement. After the registration statement is effective, the resale of the shares will be restricted by law and by a registration rights agreement. The registration is not for the purpose of raising new capital but is registering new securities to be issued by the Company. The Registration Statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold under this registration nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The registration statement and all other SEC filings by the Company are available for review at http://www.sec.gov/. A written prospectus, when available, meeting the - ------------------- requirements of Section 10 of the Securities Act of 1933 may also be obtained from L. Ray Adams, Vice President Finance, Oregon Steel Mills, Inc., 1000 SW Broadway, Suite 2200, Portland, Oregon 97205. FORWARD-LOOKING STATEMENTS Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties and actual results could differ materially from those projected. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive products and pricing, as well as fluctuations in demand; potential equipment malfunction; and plant construction and repair delays. For more detailed information, please review the discussion of risks, which may cause results to differ materially, in our most recently filed Form 10-K, Form 10-Q and other SEC reports. CONFERENCE CALL WEBCAST On July 27, 2004 at 8:00 a.m. PT (11:00 p.m. ET), the Company will hold a conference call to discuss the results of the second quarter. You are invited to listen to a live broadcast of the Company's conference call over the Internet, accessible at www.osm.com on the Investor Relations' page. Oregon Steel Mills, Inc. is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Oregon, Napa, California and Camrose, Alberta, Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado, produces steel rail, rod, bar, and tubular products. -5- OREGON STEEL MILLS, INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED INCOME STATEMENTS(FN1) (In thousands, except tonnage and per share amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------------- ------------------------- 2004 2003 2004 2003 ---------- --------- --------- --------- Sales $ 281,769 $ 189,894 $ 534,165 $ 365,576 Cost of sales 212,772 190,006 427,372 359,607 Gain on sale of assets (30) (213) (293) (274) Labor dispute settlement adjustment 31,868 -- 38,868 -- Fixed and other asset impairment charges -- 36,113 -- 36,113 Selling, general and administrative expenses 16,816 12,551 32,771 25,264 --------- --------- --------- --------- Operating income (loss) 20,343 (48,563) 35,447 (55,134) Interest expense, net (8,461) (8,352) (17,029) (16,561) Other income, net 836 459 1,472 735 Minority interest 1,259 2,204 1,614 2,462 --------- --------- --------- --------- Income (loss) before income taxes 13,977 (54,252) 21,504 (68,498) Income tax benefit 43 2,305 41 7,525 --------- --------- --------- --------- Net income (loss) $ 14,020 $ (51,947) $ 21,545 $ (60,973) ========= ========= ========= ========= Basic earnings (loss) per share $ 0.53 $ (1.97) $ 0.81 $ (2.31) Diluted earnings (loss) per share $ 0.52 $ (1.97) $ 0.81 $ (2.31) Basic weighted average shares outstanding 26,567 26,388 26,528 26,388 Diluted weighted average shares outstanding 26,832 26,388 26,697 26,388 Operating income per ton $ 47.20 $ (114.97) $ 39.05 $ (67.11) Operating margin 7.2% (25.6)% 6.6% (15.1)% Depreciation and amortization $ 9,709 $ 11,227 $ 19,500 $ 21,691 EBITDA (see attached table) $ 32,076 $ (34,780) $ 57,922 $ (30,460) EBITDA as adjusted (see attached table) $ 60,796 $ (8,208) $ 93,642 $ (3,888) Total tonnage sold: Oregon Steel Division Plate and coil 135,900 125,900 309,700 234,600 Welded pipe 49,400 79,000 108,200 130,200 Structural tubing 18,500 -- 28,900 -- Slab 300 -- 400 -- --------- --------- --------- --------- 204,100 204,900 447,200 364,800 --------- --------- --------- --------- Rocky Mountain Steel Mills Division Rail 93,200 86,800 193,900 199,700 Rod/Bar 133,200 117,400 263,300 232,900 Seamless pipe 500 13,300 3,300 24,200 --------- --------- --------- --------- 226,900 217,500 460,500 456,800 --------- --------- --------- --------- Total Company 431,000 422,400 907,700 821,600 ========= ========= ========= ========= Sales: Oregon Steel Division $ 156,433 $ 104,496 $ 302,059 $ 187,622 Rocky Mountain Steel Mills Division 125,336 85,398 232,106 177,954 --------- --------- --------- --------- Total Company $ 281,769 $ 189,894 $ 534,165 $ 365,576 ========= ========= ========= ========= Average selling price per ton: Oregon Steel Division $ 766 $ 510 $ 675 $ 514 Rocky Mountain Steel Mills Division $ 552 $ 393 $ 504 $ 390 Total Company $ 654 $ 450 $ 588 $ 445 (FN1) Certain reclassifications have been made in prior year's periods to conform to the current period presentations. Such reclassifications do not effect results of operations as previously reported.
-6- OREGON STEEL MILLS, INC. AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS(FN1) (In thousands) June 30, December 31, 2004 2003 ----------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 52,958 $ 5,770 Trade accounts receivable, net 93,013 80,190 Inventories 154,435 139,623 Deferred taxes and other current assets 17,292 35,141 -------- -------- 317,698 260,724 Property, plant and equipment, net 482,189 477,581 Goodwill 520 520 Intangibles, net 11,662 11,803 Other assets 11,488 15,514 -------- -------- Total assets $823,557 $766,142 ======== ======== Current liabilities $136,014 $133,997 Long-term debt 309,550 301,832 Deferred taxes 7,979 20,442 Other liabilities(FN2) 143,697 106,048 -------- -------- 597,240 562,319 Minority interest 17,199 16,571 Stockholders' equity 209,118 187,252 -------- -------- Total liabilities and stockholders' equity $823,557 $766,142 ======== ======== (FN1) Certain reclassifications have been made in prior year's periods to conform to the current period presentations. Such reclassifications do not effect results of operations as previously reported. (FN2) Included in other liabilities is an accrued liability of $59.0 million and $23.2 million at June 30, 2004 and December 31, 2003, respectively, for the value of the 4 million shares of Company common stock to be issued as part of the Settlement. OREGON STEEL MILLS, INC. AND SUBSIDIARY COMPANIES RECONCILIATION OF EBITDA AND EBITDA AS ADJUSTED (In thousands) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ------------------------ ----------------------- 2004 2003 2004 2003 -------- --------- -------- --------- Net income (loss) $14,020 $(51,947) $21,545 $(60,973) Income tax benefit (43) (2,305) (41) (7,525) ------- -------- -------- -------- Pre-tax income (loss) 13,977 (54,252) 21,504 (68,498) Add back: Interest income (71) (107) (111) (214) Interest expense 8,699 8,674 17,486 17,167 Interest capitalized (238) (322) (457) (606) Depreciation 9,676 11,197 19,435 21,630 Amortization 33 30 65 61 ------- --------- -------- -------- 18,099 19,472 36,418 38,038 ------- -------- -------- -------- EBITDA 32,076 (34,780) 57,922 (30,460) Add back: Labor dispute settlement adjustment 28,720 -- 35,720 -- Fixed and other asset impairment charges -- 26,572 -- 26,572 ------- -------- ------- -------- EBITDA as adjusted $60,796 $(8,208) $93,642 $ (3,888) ======= ======= ======= ========
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